PBPB - Earnings call transcript Q2 2018

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Operator

Good afternoon everyone and welcome to Potbelly Corporation Second Quarter Fiscal 2018 Earnings Conference Call. The call will begin with prepared comments by management followed by question-and-answer-session. Today’s call is being recorded. I would now like to turn the call over to Mr. Matthew Revord, Potbelly’s Chief Legal Officer. ahead. go Please

Matthew Revord

and call. everyone our quarter second Good welcome earnings XXXX afternoon to

performance, Before note XXXX regarding like made I'd including of we started, get such Any the to XXXX. other the financial periods, should call statements, future guarantees contain nor Act the Private of These Company. Securities upon or management statements the outlook in they will that any as forward-looking of events be considered statements any views for should future meaning future forward-looking relied be as our Litigation future performance of or this statements subsequent not comments certain forward-looking within are representing Reform date. of

from those due number significant uncertainties. risks a involve presented and and of statements events risks materially or and to Forward-looking differ uncertainties, results could

in our MD&A and be and Form today our and concerning Securities with subsequent detailed filings that at the are the cause our our information Additional and sec.gov. Factors most materially information results risks other the under forward-looking we'll available could these on found from and Commission, factors differ Risk in which giving to headings can actual statements recent Report the Exchange business regarding be XX-K

provide and up more Alan. future to turn ongoing strategic today for call now and in initiatives. I'll Coyne, the then a Mike Alan Officer; second discussion his with presenters questions. the our Officer. Chief Alan outlook begin performance will results before financial and our of our Executive Our are Johnson, Mike your we will Financial the our Chief detail, review open call perspective quarter on over

Alan Johnson

for afternoon call. Good the everyone joining Thanks, and thank you Matt.

delivered a with quarter where pleased million adjusted share of revenue the second and are our in per earnings We of $X.XX. XXX performance we

improvement quarter, it X.X% negative compared best the the was same second quarterly first result was flat which nearly in fourth delighted sales our and quarter X.X% in as to at importantly, we’re negative XXXX. a since store the trend, with the in More quarter, our of

trends which stronger were place comp traffic right me Our effectively check, strategies driven second that and higher are traffic initiatives. we to our by executing and quarter building we have in the confirms

made would highlight to symbol change will associates want the and confidence our through And outlook I'll the that for call. us to to be team the be detail to like would update it the execution, reiterate review progress we I first I a to without later for their greater provide year first, is to and early very Mark we’re have in commitments by Potbelly I provides turnaround still strategy. in this efforts daily fit our want right to the our But opportunity plus to year take turnaround on financial then reiterate I significant XXXX strategic would with year. expected That guidance Potbelly. our X,XXX for half and encouraged Our not transition of is the dedication in to for very results early initiatives. the turnaround and to our XXXX possible. performance the said, note to progress an our think

our leadership experience with critical set successfully right the focused to to in required having team is a on are our skill place execute the We assembling and plan, team turnaround success.

leadership months, executives franchising, business. in HR talented the strengthening have our with to we real great few team Over made and lead estate, marketing, our additional the off-premise past strides

mobile grew social, Brandon Potbelly specifically Rhoten, who space. introduce from digital the up for John's previously First, joined like in I in and June looking Papa was from who Wendy's. to would I someone in

media White marketing and Potbelly Potbelly catering, roles industry-wide be recognition curbside campaigns, Debbie and has business. Bell Brandon brand. leadership which Domino's, the day PepsiCo, fits go, his storyteller across successful capture digital certainly and sense parts mold. and lead across a he's She He's turnaround plus our Taco will team and works, sales, the growth joined with of to and addition great off-premise a Brandon a and brings great to good and at Someone to help what quirky the received grab years all potential instrumentally pickup. XX brand experience highly impactful Wendy’s. lead helping delivery, significant in of for our and

Chief has with Revord our involved Officer. very Finally, our historically been HR also Chief has Matt People Legal Officer closely Matt appointed our been team.

is repurpose the G&A been appropriate. This an responsibilities very certain has by example transition taking of been in HR ways one responsibilities consolidating over of smooth. the we've So, May to able where

in As advantages mentioned under and brought realigned franchise we've growth our Jeff full last Development had company also to effort. the of our up development we of quarter, Strategy. have strategy Welch Jeff take Since head our then to synergies and we

by responsibilities appropriate. consolidating Another able G&A been repurpose where way, we've to

LaRoche hired announced head Innovation. Ryan we to Culinary that Chef our previously Finally, we’ve up

we leadership each. long Younglove-Webb, looks years right at of building it Maryann Julie to continue great the Byrdak off made IT; Revord CFO; to X Legal who believe for and our skills very XX Mike bolster our the strategy. and team, to our have Officer team, with to complementary Potbelly rest look responsible seasoned CPO, all with Chief As I is we execute in opportunities to recognize turnaround whose Matt tenure important team to Coyne progress executives our spending Operations; our is for

to like an update to would a provide minutes on few initiatives. I Now, strategic our spend

traffic put foundation overtime. Our to priorities Potbelly us to growth establish main this year sales the stain and same-store is position

that outlined laser last performance. to improve key we’re operating on I executing substantially initiatives earnings our call, strategic several focused the During

on these. Let update briefly you me

must become we First, more sales-focused a organization.

converting one When one we on joined over the and I selling. I average spend more are translates last consistently item, As now customer time XX%. Potbelly, all to directly we into comp. X% and positive visit achieved of sold one dollar we quarter, add the first of mentioned intensely focused The more more power to suggestive time, suggestively

optimize While so efforts progress our to I'm still embrace work there’s quickly the remaining pleased capture opportunities. that but our much see the be OneMore, am imperative to concept by to of I done. we it team encouraged this missed is

the across second that works our doesn't. different work. what would tested certain isn't costs, every one we try During Eventually, don't XXX disciplined next segmented and really things a of change and run working different it believe week. through of failing to in quarter, we promotion what out something this offers we a will stores if a over process learn week, We

our we earnings are not combination balanced quickly the roll approach, marketing adapt So, promotion. dynamic and has we farm to pivot the we and need with test, to winning how any begin rapid as given betting single engine valuable on utilize to and with an of us approach learn find and growth. This

become the going our as we and be we our We continue offers across will to capture targeted forward. data test invaluable more in markets

Second, we incremental engineering innovation. drive to aim sales and through menu product

sandwich quarter, Pork Last positive sauce. second coleslaw our the little while introduced cheddar sweet Pulled this Potbelly’s buds pork We jalapeno exceeded comes pulled comes mix Barbecue indulging tender spicy and of Cuban rates barbecue worth enjoy Barbecue sandwich. introduced the Pulled premium roasted, sandwich. the to attachment and ways with crisps, saw slow the as cheese quarter. Barbecue to unique for featured two premium with with week, unique delicious contributed smoky and we with our solid During Pork sandwiches we which with twist signature definitely your Classic The a start Pulled our our Both Potbelly’s a taste and expectations sandwich, sandwich heat. Pork

sales. our customer feedback premium menu Turkey and which strong provides While we LTOs of just a if launched, early our incremental customers we opportunity Cuban continue the engineering on include an innovation the Gyro, Pork driver product. by performance recent believe Club important followed this are the now validate product to Pulled Barbecue of further will pay We LTO. for very encouraged deliver and be innovate the sandwiches, will the The compelling to by and sandwiches that

Chef can't in is show by of innovation his Ryan excited are up I whipping kitchen. pipeline We and to you our wait what menu

we’ll Third, and more and engagement. marketing through customers improved brand the It focus we quirky connect and imperative our in increase targeted customer technology. storytelling that and investment with is span

on conversation. social providing of content it the compelling in captures differentiates that of quirky way part focused voice a the very the that a brand are and We makes Potbelly

to to like say, In entertaining. all we we believe even taste makes food you As going it should be likely that it if is smile first. better, that

few Let through me examples. walk recent a

promotion with any the play of $X app. was Turkey to Month very Tender our National sandwich, right swipe First, all Turkey where of we dating fun a customers which the we encouraged Tinder Turkey popular for celebrated

to Shake number smoothie shakes smoothie on-trade heat beat timely relevant also significant heat a free wave got traffic. and that we Second, the front drove encouraged This of customers with Friday and with Free offer in record a drove served our with promo shaker a purchase. an very and of the

Finally, cream XXth, ice to app. over tremendous as in wire a week offer This was served a typical as members of for we in free a huge Friday uplift several only we a or sandwich the XX,XXX saw that hundred compared offered recognition with sandwiches purchase Perk with ice week. success cream

of and from right when Perk wire focused We analysis both more to key existing credit to are will app third-party the intensely talk at us creative. we the reached about we power our platform the enable which We confirms customer Our customers, as we engagement that more impact spending as or right then our them. to traffic be from ability well growing purchases our our to trial with through to program to audience cost message loyalty able to track able Potbelly customers. time trends as And of Perk harness drive the interesting membership positively a are effectively with learn customers. on customers frequency view right and new

to our and third to for we the see With opportunities of occasions, Perks curbside business off-premise registrant strong we the quarter. the growth welcome of Perk catering, and for catering underpenetrated potential travels to is product invest that X and to we across go most growing leverage pickup. off-premise vastly continue delivery are in a continue We grab million and we brand. business during and customer in to a see expect an will and feedback credible well our delivery, Fourth, perfect adoption

double-digit we a this benefit low from see our customers we added margin convenience growth a the quarter, saw off-premise from During perspective. is our the We business. win-win in as benefit second and

non-peak Potbelly recently a In all select during at where addition, day utilizing are introduced company delivery to we period. we delivery delivery a augment shops third-party

by backline in strategically invest owned is new positive traction and for the hit Potbelly has encouraged shop are company the early running spent, short room is and Welch has growth plan a ground and shop growth the in growth. traffic much mix but working decelerating to been we there improvement. of franchise he and with We results growth. that the in Fifth, positive increasing profitable by he develop the Jeff time to

We more expect update to provide our the a strategies development coming in quarters. on comprehensive

productivity Finally, and savings we continue in our to in opportunities structure for our cost shops. look drive to

mentioned I responsibilities As increase senior productivity flatter have to earlier, with consolidated strive we as we organization. several a

we In of a cost number supply have costs. purchasing refining we our drive expect to Finally, we engineer technology savings, implemented addition, to model and which focused on old date using and chain remain initiatives,

formally to I some Mike. go it will of now as the as of for the details turn quarter example, over of our remainder second that P&L in online. XXXX. Mike and the administrative GMs our expectations the As the taken outline will the it do through shop well had now have can an who work they we for done

Mike Coyne

good and Alan, afternoon Thanks, everyone.

you our with associated I total shops five increased some in X% Starting mentioned, with of give will results. million to new the quarter three-company provide outlook Alan top the for remainder I XXX our highlights line, of will quarter, franchised. summary the of also including the the second As P&L review operated opened a second we XXXX. revenue and two

combination a X.X%. mix. were average same-store negative Breaking approximately same-store price the driven will second company quarter, operated flat sales sales, and nearly During our of X.X%, down and check by our

costs, expense quarter shop compared as XX.X% second sales of Cost margin Our of goods basis XX.X% the basis about year by improved in the points and company-operated versus the inflation wage which prior period. quarter in was Labor increase of the Occupancy price an level was XX.X%, from XX for offset of improvement by increases was primarily partially was year, sold second XX.X% prior deleverage quarter, an points and common second occupancy Operating to XX of the points including to year period. deleverage the driven XX.X% and XX productivity. taxes in year prior was in due and sales. area basis increase prior directly expense related were sales expenses second largest XX.X% other quarter, certain due year's increase expenses basis renewals, maintenance. as to items lease variable to utilities and estate the repairs, over prior XX inflation the not operating an the such and sales points compared maintenance, in of with and real

expenses that the during contain and total administrative in including our costs. in $XX.X were XXX,XXX transition second costs restructuring store note XX.X% general were from Our items quarter quarter closure million of million would second $X.X revenue. CEO several I expenses the discrete G&A cost, approximately the XX,XXX to

our would or million have discrete expense Excluding revenue. G&A XX.X% $XX.X items, total been of

the quarter, a prior XX.X period. in Our which X.X% from million year was the adjusted of EBITDA is decrease

During the had income we expense tax second $XXX,XXX. quarter, of

diluted compared was second the or prior per $X.XX year adjusted for $X.X diluted to Our share million million share, period. $X.X of adjusted or $X.XX in per income the net income net quarter

Regarding company continue board stock XXX,XXX our the market as a forward. quarter, the second our open the program approximately end million of of had which we authorized At available repurchases, shares common from for quarter, total we for $X.X repurchased will second Potbelly million. the in $XX.X repurchase move we program, share in of approximately

$X.X million. Our capital expenditures approximately came in at

and Our the balance sheet the XX.X second of of zero cash remains at we balance end million very strong debt. quarter with have the

guidance we our sales for to now same-store full Turning flat reiterate outlook year company-operated the XXXX, our growth. for

of to sales range anticipate XX%. and XX.X% trend sold We as to percent costs of goods labor around to a in continue XXXX for of XX% the

the For to XX.X to range million we to be the of XX.X expect year, expense G&A in million. continue

costs as does we may to costs opportunistically the outlook G&A focused closure costs optimizing which include company proxy remain existing not restructuring, Our portfolio. related to owned or related on occur our expenses store

the $X.XX. diluted range adjusted in $X.XX to We net expect share income per of

of an XX% effective for range XX% rate to tax We expect in the XXXX.

which on impact of Excluding have tax could XXXX-XX material which update a the standards accounting impact have effective could rate. had our

expect new and company open shops new XX to weighted. XXXX XX franchise end We to shops which XX be will in XX operated to back

to in expect million million XX between CapEx XXXX. we Finally, XX spend in and

So over summary remarks. Alan? with turn I'll for to back Alan that, it

Alan Johnson

profitable both believe are I all in people which over growth we the strategies very of executing the traffic Mike. and I position the are Thanks reflected the sustainable, early closing, and the In terms in for investments initiatives on long-term. encouraged and am making tree right brand right strategic to of of process building to-date. Potbelly by progress positive our results

on is are that’s thus am done. XXXX Potbelly’s a continue ahead. days up the work far year call. on transition I to be and our open will business. truly Thank for it operator progress focus of and must you to there’s However, test being now on you our I and next affect your our our progress turnaround. be time discipline with all our We an that turn and energized maintain appreciate the questions. and to support and best over of today. We I it much this for I learn believe forward you still to providing the look patient, update Potbelly and to call by earnings

Operator

this time, from Long At first proceed question. Piper [Operator question-and-answer conducting be session. Instructions] question your a Jaffray. with we’ll of comes Please Our Joshua

Joshua Long

of at curious front right much on lot with really see in the think and a Or people human you you you, just traction that a of just and to of go Is knowing to side around, initiatives the and the it capital is them just worry gaining all about new lot this? balancing place -- here it's opportunity brand of allowing a on all doing of is execute to too strength the a a going of do prioritizing so time? there getting then one forward? function got Exciting in how with lot there so and the lot ads much about -- room of moving

Alan Johnson

Potbelly figuring then that on in growth, Getting we brand, right differentiates investment sales very fixed identify And driving that to what size those the have same-store I the is which place, in getting strategies laid the the team to vast out of have actually very-very makes the that think one is early the focused on. fixed telling driving place executing story hard right the box profitable team and comps, getting been all terms in did out thing a I shop way and cost on That’s productivity. strategies, in possible. we

We are at stage. not that expanding this

I very think focused. disciplined and come good things very from being

in I various that about that the in folks remarks, ability now and my focused I have terms through So our very the different went of execute blanks good stay in to filled I feel flawlessly. prepared

Joshua Long

low about about number the it shops? communication? promotions? do really There opportunity? right maybe is menu LTOs of your users we your is terms effectively. about maybe how that thinking of opportunity going product future -- just that's guest is of, the of you that like How think it It more you those the it opportunity of might then seems new the getting a And Potbelly How talked what the a just huge in or -- in think not and of is And come the a in of means communicating do well story you're to as. both. call bit out with little a as lot number products Or fruit engineering a innovation lot about incentivizing just products a communicating hanging think coming your and but into you there

Alan Johnson

the maximize goal while which for kicked of done if sort are quite we to beginning the through, sort for it literally about and this And to very in optimization menu And on that remember percolate menu actually And innovation is years. remind sort because one important look of that it's to I LTOs traffic off and a promotions we us I’m profitability. you initial the not holistic are results a number element. have at but quite XX the the of Yes, just project of excited ago. one is this involves is stuff of scope initiative,

complicated. is at they it and products XXX when Number one points here. used-by too actually something priority date obviously make So simplification truly more Having that’s shopable. is plus is XX I'm

when layout and it's which making an about is, they looking are the the intimidating if that for in product any. the out. at read, for that at believe the the combos LTOs lunch, easy fact We of not we rolled different XX% as they to like not promos shop at when rolled moment they that shop interesting look Potbelly but And at innovative bundles shops combination various them and design to at feature an it's sure place making a except we have don’t generally Potbelly, this sure at you that of is, they Potbelly use that mentioned in or customer you us -- don’t

the do other element a a And are already rib very I that one And of for big because very And that our important. then speak Ryan and honestly is or have decisions spin strategy looking not have we past not very can over shoulder we is do this from the to is, bit a see how on prime will making that Chef one sure more this is in incremental ticket and working learn back our for same driver, to a driver is I opportunity also that's and don’t we probably item almost best assortment reach. more on very, accommodate we example the I’m at where into time. that make it's at buy little sandwich. and missed we menu. the wrong done the steak major then is what that look looking And dollar believe committed the as they So, but will a menu where nicely new design more it traffic your

that to good different is, are take of this all price better increases. to of they evidence is times suggest So the year a very example amount a

are taking and And into that so, adjusting we account.

initiative and or it’s major of to September out anyway, doing. a in the about what And and to of XX a test learn sense first be blend So, rolling series will shops by to often of test, continue not in impact meantime, funds. rolls get this next roll, this the learn where month we has. it we’re of And

Joshua Long

terms me, it's you Very exciting, margin that. curious perspective opportunity, you more to an off-premise in opportunity there's higher One could if elaborate or there there dollar think there. higher mentioned off-premise? margin of and or is was I defiantly that for opportunity we'll for profit the on opportunity the of if a eye on keep seeing a on from just -- that's you're about last an really channel checks margin how a one

Alan Johnson

summed I for in sure end that it think up shop of It’s so different. and also for can $XX sell that bridge for the economics $XXX versus the a the too labor. of that’s order well. time I on at you higher it a quite the margins

Operator

next Karen with Sachs. proceed from with your comes Our question question. Goldman Please Holthouse

Karen Holthouse

those didn’t sort another impact how set making in no about be [Indiscernible] the Could of give For part about quarter money, color that? guidance so that stores really site on to closure? should Are of that and change. some thinking we guidance us and weren't is there just there you closures that

Mike Coyne

Mike. this most that. Karen, caught I So, of is

the So, you're specific right regarding on the was your closures closures. what I question and didn’t but

Karen Holthouse

closed. so maybe help much across were change just to stores associated way didn’t us it, begin money with those the right guidance So to model, about making they a XX or to with the were but months closure, trailing it’s sales think the really also

Alan Johnson

that's think so Yes, right. I

some renew lease. weren’t that in profitable, this the maybe are closing their shop us viable net closures, to we shops our economically which -- I also a of for as end think that natural there of are just part there to effort of met They less wasn’t life. concerted the of the close XX-year

expected reason a from some the model bottom-line say of significant little right about perspective of think more short what would've rest and wasn't the the part been refined bit probably is will that modeling take line I is closures you why close it because that we on year. a guide the of there yet. don’t top some because shops would the as impact So these in we you're Clearly, actual that

Operator

Our next question. question comes Baird. with from your Robert McNellis Mary of W. Please proceed

Mary McNellis

Could a thinking comments you you the guess comment? release trajectory comps? you're the And how could single in elaborate clarify meant of should about the is early the press be nothing anything there on seeing If in I positive the we recent about comp trend that that QX?

Mike Coyne

in think significant over Yes, same sequentially really start in is, X.X from I that the flat. first which of I'll point about can getting to the minus rather I start in, Alan was and quarter improvements This close sentences the about jump kind this quarter, out will we’re it X.X the to was in was minus the XQ

to meant on was really that. it So comment

Mary McNellis

the to you elaborate why and then can I the in? back comp ability come and gives that? guess, the for do for that implied What of the year half the X% deliver And you confidence up

Mike Coyne

other and things, Potbelly I the all next from that X% actually very I think about our both XX% will that to money excited than which increasingly more traffic another of suggestive to just apply initiatives very that and download and that profitability. commitment and brand, The and database you they feelings have social to millionth at catering of am something look projects converts maximizing And to started still platforms as team off-premise absolutely interested characteristics. celebrate to one that execute is both we is anyone XX% and important There’s gets brand. we flawlessly. that voice growing thing on internet it to I ability selling. a The our while is we display a cost culture how very optimizations differentiates of shortly, different various that opportunity, Brandon tell our story capture segment one can so I a The and way am going couple the to this into of in our important many mentioned with where if members we is office as our Instagram, ability progression see and important. delivery the can segmented you ever very how his his very

We than shop board, allows us on rather opportunity getting all are that waiting app coming us which the individual there’s right. suggestive to to for the cells is attachment a item, an for an functionality is recommend very good dynamically in traction, big beverage on so

one and allow previous that those a to We importantly, a that. the And have and time things there's our technology, path work. we’re first the down brand and us experience will very functionality as in change out actually then to probably We shortly that lowest of send SMS detection spoke coming for all push notifications. the know from rates right. industry, going And lastly very of our I about investment in

patient, predictability thinking, get bit rather the a and long-term some of right nicely the results if right that just our business sort that's the little optimistic. the told time go be with nonsense and I’ve to I thing bust, So makes longer same even and be of team that’s short me takes result at right consistency this But of are have get for things quick faster, and then and am months the the and all the what of do summary of then up that a balanced after. this coming to just boom you

Operator

of of Francfort from comes Our America. question. your you’re next Gregory proceed Please question Bank

Gregory Francfort

I've got few. guys. a Hey,

it. Just and -- give have traffic the you may check quarter. breakdown the I missed in

Alan Johnson

yet. it break I’ll didn’t for give you. we down it No,

that mix. on was is so points rate math the X So we down is and and was X-X, X-X the traffic of check the did say that of of that -- check X.X be will price the down X.X

Gregory Francfort

you're Alan, that attendant the measuring number you like was you’re doing sell your before. that that? is on think sell up And of time number I maybe are just XX% up of times is the you can then And register How comment bringing versus with rate a in that what the to up in of it starting Or that business? the then size to sale? tax is the what is up? seeing it rate? are move tax Or change Or is starting terms with or beverage in see you chips? And

Alan Johnson

Yes, selling interesting survey repeat suggest is and time now phone or way fills The you and we have first goes goes I is, survey, XX. was and is were that different the actually on various were recommended we asked prepared and one track their at joined online X% receipt we a remarks. consistently achieve where When the about that. customer let about the an me like questions the we to customer they what of enough up that questions home with bacon the in

consumers' it’s shared there, to with avocado the in a in average attachment. better growth we significant we are have managed is in like to the experience and the slow of the our is traction see good starter it's progress news natural So, Mike that the the shop. up you, component transactions. of lot at recollection And we our it look seen you they if that, as expect the attachment things there add-ons But sell had part area that progress changes that -- starting to that is rate make beverage pretty some be good although even bacon, that and yes, on and are because because of is

happen test combos reference have move made we everywhere work test next to test. actually As that menu else the in that bundles that and one seem on to to in month of and optimization will I the bundles

translate. well see we'll So, how they

Gregory Francfort

in of expect think away take? shops, optimization showing ongoing process, said process it's far I to that And the theoretically this and how I but you're an menu are business? through at long rolling How it up terms in you mean you XX process you?

Alan Johnson

that shops be taking do the read actually and even that until a if don’t project they'll that will we come an is. look one get area Johnson full example of If Well, anecdotally we look us shoppable, sort both end this be I’ll at through the on will wear manifestation the scanning good the for at customer various of tells they XX give where the will able an it anything of just pair finds because change. designs instant to in look but the combine day, they shouldn’t Alan main at a of customers different in very item because goggle -- sign. the terms at ultimate retina we more of the you and The lot. they select look they doesn't

points if will the out the number give And price XX price has the I process that you of the I’ll we on much you that one is makes think that time count which you So taken panel in the complete look center in at But rolled even so of took the test points there. XX point, will There good me now of if all XXXX. of the about be the in Instantly looking that, it XX. down front happen one right to Potbelly of more have center you panel. and shopable. that reference up to redesign but sandwiches at menu menu

sandwiches these all price point. get for You one

be also example we menu, consumer inside of will upgrade So, for you that and menu through very good not but you see add will of chips time like you were fixed what get and shop, that see very the the for sort things to and process. how add-ons x can uses a shake see at chips various will there able that first that’s do and drink and on be fountain says easily then all only different a the

Gregory Francfort

terms quick I the half. the comp back of guide two year and in And full had implied on other questions, is the what’s just first

will I of you’re that that the you’re flat sort full giving trying X% of Is a to a of think kind guidance of you more suggest directional sort backup for like year or what suggest on comp. back for sort reference frame something like do the half? you of for guys the of

Mike Coyne

really incremental the and the talked But by we the few optimistic through perfectly been could that July in but multiple point now that didn’t point so still to working, beginning I started we honest guess things update in the optimistic we’re on many, another where Alan you we quarter so many Mary's you the flattish. I I have Alan and the at really that that or Yes, pointed we were of back don’t say gave far, guidance guidance out, it’s want that and up things pointed it, bit seeking guys months we move as where update, flattish to the and elements and we’re up and at we that this and progress year, question improvement, really to I quarter including finished months the because as three have from now. same we with we opportunity, third we’re that that things this little soft, earlier range. all think world as for trajectory, kind got flat to be that successful have given a I in of we working at a has saying on about the guidance. at on would going half range give from to year saying of will there. out Those

like and any on I play with the and all would out. months three the will guidance say other its that see laid how Alan that to next So guidance initiatives hold we out of we’re

Operator

question your with Group. question. Maxim Our Stephen Anderson proceed with next Please comes from

Stephen Anderson

food And where insight your changed outlook. may One quick question any to year? cost inflation at for you all costs Has early XXXX? think can that going you headed about that this be provide

Alan Johnson

feel be basket. where terrific will year over into on right again about where the where we now much they Steve, this of we sit Yes, too our haven’t for but once cost XX, food locked XX% food now, said rest

cost we goods. kind really feel really knock the good we wood of about of So,

Stephen Anderson

last for share provide program to our be sure in think regards the announced to should quarter, account can count, with you share of your And modeling the as where average insight light that you you purposes? buyback for

Alan Johnson

We count. share in out guided haven’t past or forecasted the on

folks we out really executing and year. weren't active May. remind We over place that little little in with bit a model. and is I want the than think I new that repurchase world where and would a higher a to the plan lot you higher plan believe I for what most mid because of the the were in we bit we’re of this first start put point I part of

quarter's best, had a half worth. at we So

will before, say than more at more we this and consistent active much I'd intend be be point. all So, but to that's

Operator

from a Gregory question question Francfort of with America. a question. Mike. Bank [Operator have proceed I just Alan one of next your Instructions] question for topic, theme just Our then Francfort for a of Please comes sort follow-up Q - Gregory

that opportunity? just and as an there to as you Just business allocation in months. you has any the see and past then G&A kind sales? that of of the -- and team over need other tighten it’s Alan is, you in unit your maybe the slowed, with within to team is go of somewhat does sort there terms to of holes growth but sort out if maybe down few is your And separate tied or that planning as you’re of an fill? the do more also organization what of there’s still is for Are kind areas for built question you capabilities Or a percent structure management do Mike where any see G&A opportunity the an of of

Alan Johnson

regarding been required Mike what to I given we’ve first They’ve team, mean, Maryann, I’ve challenge are nice doesn't folks XX about keep period. counsel and together kick of X honest. so the met, in efforts that I people don't of new leadership they've am team answer now way. and why and done given me that years I memory got very they’ve they’ll to really it with each. we appreciated question the right Gregory good other each blend here and rest work in and off So and And senior where The guidance are and a Julie that just simulating the institutional and your me past happy transition the in this we've me the hired because it doesn't have

that ourselves far in investing it's how focus that tenure so in signaled set to the in It’s am and I we contributing early that we rich. as we as even everybody's came that until tell such And have the the goals rolled as what the conversations my And I Potbelly now we say safe I held group. is certainly and how out for passionate delighted I I have off towards have the though think so with held to been and time Brandon is formulating and he's that, filling marketing to so, we own out his story. he need position opinion off and in figure

publicly song well about So this, we and of take a for, And in he’ll think week. we due all not about year. over that we’re the up we’ll dance a mean, someone a course, I director big probably haven’t care very this bet and signed make I but excited creative had

the and XXth this God willing I So he on month. starts think of

the other relatively big So those are think stable that, is changes. field than and I the

out deliver Now, maximizing work value. on we got figure shareholder the to of together to and promise how just

Mike Coyne

owned to of we finding going vigilant last Alan’s Terrific borrow well as call, on side, sure Alan find also do making G&A as words is are specifically we've driving jobs. the but if driving line, that just we've just and that And just say franchise sales. from spend can to looking out I of become we’re that those some what remarks to mostly jump is to mentioned of -- in, reallocate do that around will savings talked and sense fund into but are this a Alan side, drive which clear them on I two to development set things couple just terms what here the to more of and the be call ways. about us Alan's many very to Revord everything to the been take opportunities jobs, traffic the And right that’s what in been have to think from perfect tenure makes I most doing that areas in Mr. that which very for really to prepared then to start both productive not of entire two him and this try just

asked. you of line significant exactly wouldn’t I the say in G&A near in would that because I term So improvement anticipate

Operator

question-and-answer-session. of to Ladies for closing turn the and call Alan reached Johnson to have we gentlemen, like I’d end back our to remarks. the

Alan Johnson

an to like forward update at look I you. in turnaround I’d call. everybody for much. very thank Take the you the showing everybody. Bye-bye. the you next interest call thank give Okay, on care, earnings our to and Thank

Operator

today's conference. concludes This

Thank your this lines you wonderful your for time. and disconnect at a participation may day. have You

Potbelly (PBPB) 10 Aug 182018 Q2 Earnings call transcript