Potbelly Corporation (the “Company”) is unable to file its Quarterly Report onForm 10-Q for the quarter ended March 29, 2020 (“Quarterly Report”) by the original deadline of May 8, 2020 due to the outbreak of, and local, state and federal governmental responses to, the novel coronavirus pandemic(“COVID-19 pandemic”). The Company’s operations and business have experienced disruptions due to the circumstances surrounding theCOVID-19 pandemic including, but not limited to, suggested and mandated social distancing andshelter-in-place orders, temporary store closings, and limited service in other stores. These mandates and orders and the resulting of closure of our corporate headquarters and staff reductions have severely limited access to our facilities by our financial reporting and accounting staff and impacted our ability to fulfill required preparation and review processes and procedures.
On March 4, 2020 the Securities and Exchange Commission issued an order (ReleaseNo. 34-88318) under Section 36 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) granting exemptions from specified provisions of the Exchange Act and certain rules thereunder, as amended by ReleaseNo. 34-88465 issued on March 25, 2020 (collectively, the “Order”).
In light of the impact of the factors described above, the Company believes that it will be unable to compile and review certain information required in order to permit the Company to timely file the Quarterly Report by May 8, 2020, the original filing deadline, without unreasonable effort or expense.
The Company is relying on the Order and is furnishing this Current Report on Form8-K by the original filing deadline of the Quarterly Report. The Company expects to file its Quarterly Report onForm 10- Q no later than June 22, 2020, which is 45 days after May 8, 2020, the original filing deadline of the Quarterly Report.
The Company is also filing this Current Report on Form 8-K for the purpose of revising and supplementing the risk factors disclosed in Item 1A of its Annual Report on Form 10-K for the fiscal year ended December 29, 2019 and the Current Report on Form 8-K dated March 20, 2020. The Company originally included a version of the operations risk factor in its Current Report on Form 8-K dated March 20, 2020, but is updating such risk factor to reflect new developments related to the ongoing impact of the COVID-19 pandemic on the Company’s operations.
The COVID-19 pandemic has adversely affected and could continue to adversely affect our operations and results of operations.
The COVID-19 pandemic has and may continue to impact customer traffic at our shops, may make it more difficult to staff our shops and, in more severe cases, may cause a temporary inability to obtain supplies, increase commodity costs or cause closures of our affected shops, possibly for prolonged periods of time. While some of our shops remain fully operational, the majority are temporarily only open for delivery, pick-up, take-out or drive-thru services. We have also implemented temporary closures, modified hours or reductions in on-site staff, resulting in cancelled shifts for some of our employees. COVID-19 has also adversely affect our ability to implement our business strategy, including our ability to build in both new and existing markets, increase brand awareness and expand our franchising efforts. These changes and any additional changes may materially adversely affect our business or results of operations, and may impact our liquidity or financial condition, particularly if these changes are in place for a significant amount of time.
In addition, our operations could be disrupted if any of our employees or employees of our franchisees were suspected of having COVID-19 since this could require us or our franchisees to quarantine some or all such employees or close and disinfect our shop facilities. If a significant percentage of our workforce or the workforce of our franchisees are unable to work, including because of illness or travel or government restrictions in connection with pandemics or disease outbreaks, our operations may be negatively impacted, potentially materially adversely affecting our business, liquidity, financial condition or results of operations.
Furthermore, the risk of contracting COVID-19 has caused employees and guests to avoid gathering in public places, which has had, and could further have, adverse effects on our shop guest traffic or the ability to adequately staff shops, in addition to the measures we have already taken with respect to moving certain of our shops to delivery, pick-up or drive-thru only service. We would also be adversely affected if government authorities impose additional restrictions on public gatherings, human interactions, operations of restaurants or mandatory closures, seek voluntary closures, restrict hours of operations or impose curfews, restrict the import or export of products or if suppliers issue mass recalls of products. Currently, several states and municipalities in the U.S. where we operate have temporarily restricted the operation of restaurants in light of COVID-19. Additional regulation or requirements with respect to the compensation of our employees could also have an adverse effect on our business. Such perceived risk of infection or health risk may adversely affect our business, liquidity, financial condition and results of operations.
