PBPB - Earnings call transcript Q1 2020

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Operator

This is the conference operator. Welcome to the Potbelly Corporation First Quarter 2020 Earnings Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions]

I would now like to turn the conference over to Matt Revord, please go ahead.

Matt Revord

welcome first and earnings everyone, afternoon, to quarter our call. Good

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

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

Executive today VP and are presenters our questions. our open your Chief Alan Chief the Johnson, Cirulis, we'll Our Senior Financial remarks, Steve Officer; and prepared After Officer. call for

Alan. over now turn the to call I'll

Alan Johnson

afternoon, And Matt. good and today. everyone, thank joining you, Thank for you us

offer would to this the first my I on responders Before like crisis thanks begin, frontline. sincere fighting we first the to

is commitment during Potbelly and inspiring. to pandemic our and Their my employees. unwavering gratitude express to ever-changing dedication want thanks I Secondly, this all

make turnaround on and corporate and the our health serving our our safety to pandemic to one As very customers curve the number ensuring difficult evolved, decisions COVID our all shifted business. momentum in shops This across us and our and from office employees, forced of changed building communities. situation our our

and them our of majority employees the continue high-traffic our best and the for procedures the and know adjustments employees. off-premise stringent looking the of safety for emerging shift, open of start before line and they each our parts pickup cash they acrylic with check to dine-in shops, food is and necessary includes masks gloves the the with This with our employees options We of to quality vast areas, and we Potbelly of and as are making barriers state we their addition shop into options. in tables can cleaning closed move and brand our use out want In adequate adhere various temperature protocol shops While at Thermometers align we to both for future that customers in to that mandates, now those registers the remain shop. to off-premise practices. trust enhanced spacing recovery.

Our to our and fortify business. second Plain priority on taking focused simple. support the necessary and steps

and proactive focused are the we the business crisis, the We intent control, we things We've conditions the have, not in taken we to the this on conditions and an urgent solely running cash. can is preserve with posture had.

balanced and labor our shop G&A, realities. COGS our to the local new each cost our We and adjusted of We've significantly streamlined realities structure level business these market. to

about maintenance continue marketing corporate and XXXX. We and We and capital with immediate office closing up necessary suspended these of over our by on of executives had XXX corporate of half all salaries and conversation of active contemplating April All our our promotions, expenditure to XX and Board our compensation and were for temporarily back bonuses, reduced increases, shops are We only, the and XX%, about limited landlords discussions decisions spend. furloughed to rent employees we our X/X and safety permanently. merit an employees, and painful. match. leases. We pulled XXX(k) We first to for advertising deferred have closed shops

inefficiencies, We continue scale to through on by increased pandemic. the waste work and delivery brought costs

Our now. February and year are predominant. that from proving growth investments channel week XX.X% and us now Uber to digitally digitally-enabled in we digital The revenue increased partners, strong digital Digital sales business our this pickup before Grubhub Since will made through capability us sales. of well well same as last April revenue the Eats. our is recovery. delivery off-premise improve in crucial and and in for of as profitability delivery with XX.X% period environment our during order to website Customers different a amplified January, XXXX. DoorDash, XXXX Digital all can this in the across now position growth area in crisis, second app was channels of of is shop XX.X% COVID-XX is and shop the through year,

Accessibility is key to remaining competitive.

the customers to a one our shop contactless Curbside or curbside the continued order up to safe adaptability have their with is Potbelly. at can and nimbleness, their food is bring employees of way complement Our car our enjoy drive-thru pick new their have our and It on evolving focus our XX pickup. food to needs. another is and customer existing their to delivered emblematic of door,

access same without a We the convenience drive are the but of traditional excited expense. associated curbside capital provides through, and

broadly. configuration shop more portfolio drive-thrus ability estate real limit deploy and our to Our

Another as essentials launch our Potbelly this environment to Pantry meat for took and a rapid ideation only during days launch XX small deli the of team the started innovation the in is as saw cheese. Potbelly example such bread, concept. this national from for It of customer-focused we Pantry. demand crisis

famous mix, such cookies continued, up just demand orders Most makes of are items at innovations numbers. home. at not dough cookie Cookie pantry QX XX,XXX identified X baked in now customers these dough our in as cookies for weeks. of home we additional to XX% the stay-at-home reflected have make over As and our

is which fun have of of where seen to received keep attention. not new ways top at likely also there our brand national mind ways. smile of low-cost much We These Many are campaigns, are you to driving about. our demand relevant a and in media social other some time creative

budgeted While our has for X.X%. comp us, same-store we accelerating February and we our out pace on show felt improvement QX the confident sequential positive and important COVID-XX won't sales strategic positive the January ended as of with is into our projections. posted a the that we XXXX. X.X%, flat changed make comp comparable occasion, comps, momentum our straight things beyond. this pandemic were is were We quarter nearly applicable to positive sales. recovery XXXX built XXXX breaking we prior building in we comp quarter of of habit foundation many as quarterly We ahead to but and same-store were monthly it first comps We of Both of fourth fourth to since record on of remain

in as the last launched messaging experience. environment. that that the XX decision however, from We current COVID-XX of new the markets Aurora initiative find to but as promotional orientated QX, Such test and our from what customer components the some unfortunately, pause these There want. delicious continuing of sandwiches these of in worked March are to are initial practical and test, away early quarter, such what they launch. designed in we across discussed also growth to us tests, move customers certain all-encompassing We're shops toasted closure first consolidated multiple experience and positive markets. easier cases encountered across it tests, Project our as our with we towards As Enhanced in the these only ingredients. be tests saw originally for on build encouraging results room, these marketing in place. menu within This, they triggered were in-shop fresh QX a dining still for makes formally aren't our in elements days of design to few highlighting coupled

our materially still are are week-to-week our than improvements aggregate the lower of recent people. trajectory, in our sales our brand of our examples resiliency and encouraging pre-COVID-XX While

Will in a the invaluable be also and reality such in strategic post-COVID-XX Atkins, instrumental planning, of were developing Project Cirulis he Strategy consulting our the perfect our for now, who been will I excellent Steve world. strategy time and financial and navigate retail the senior has restaurant is of excited Panera, test, Controller, Aurora His role. Financial months to positions Chief design period, insights Chief This thank with enduring Officer. and track extensive Steve begin in VP did job and assume previously business. and for our of analytical Potbelly interim to for serving now, a new in proven record has this as and Officer And McDonald's announce I'm includes Steve as Gap. leadership to role implementation his This our The as and executing we the the like time crucial with an X the to growth spaces. and would

over us who Steve With that, I will quarter. performance financial would like to the call to through walk the Steve? in first our turn

Steve Cirulis

Potbelly. before as appointed Chief I Thanks, CFO I'm Officer afternoon, and good Alan, everyone. be begin, want and to to express honored I excited and that Strategy And of

I'm to company's navigate transformation and in As stranger look history. and Alan no the Potbelly time critical mentioned, turnarounds this forward business helping to

shops certainly circumstances. will of positively While strategic overshadowed the gradually in prior business, our COVID-XX as I place impact framework pandemic to believe customers put impact has our to this the progress, stay-at-home continue this to return from

pandemic the as our with additional quarter and changed look I'll what provide provide a details at business currently the we on how on a context seeing. are whole,

gaining to As business and outbreak, February. Alan unquestionably mentioned, strength our COVID-XX was January the prior in

of immediately business went sales almost that closures As decreased states instituted room comp orders, was dining mandated by completely majority We end stay-at-home from March. our XX.X% to over one a the off-premise. and dine-in

resulted in in our investments for each in week first week improvement dedication hitting negative XX.X% coupled delivery prior employees, of have the May. and since innovation digital Our with of the sales consistent partnerships, same-store and

company-operated QX momentum, but sales by quarter depressed once expect recent clearly COVID-XX our of some to down offset results. abrupt of in XX.X%. still by revenues first quarter. X.X%, same-store We the This impact are $XX.X we average our grew again sales, finished the encouraged check Breaking before by the traffic with affected The from grow. XX.X% decreasing by declined time total XX.X% decline sales We for a million. same-store

was sales as compared prior to Our the for sandwich quarter shop of in first XX.X% level year. shop X.X% margin the profit

of Adjusted basis indication $XX.X total closure Our of a revenue, costs, the excludes a exit last our was general last or core the costs, flat is which best restructuring which costs to XX.X% and first the of on the G&A was and year. absolute proxy we $X.X relative expenses quarter dollar total year. in quarter XX.X% revenue, quarter The in million decrease business, related in or first XX in store believe payment closures were of of terms points. decrease and expenses shop which result approximately of and first G&A, was lease administrative the million

We the to manage our will expenses control tightly light in G&A and continue environment. of current

lower in to Adjusted away our increase year. XXX the $X.X points, primarily by from a increase mix negative example changes in XXX And fountain to combined positive last due drinks. of seeing $X.X first a are shop was XX.X% of percentage quarter from shift toward sold driven COVID-XX. by a for an sandwiches, XX.X% an with points quarter, mid-March. delivery operating an expenses million we was quarter, basis Cost primarily the shift decline The Further, big-sized first other fees. were customer is since of as sandwich third-party sales behavior driven the EBITDA sales goods of was compared in basis a million of this

For COVID-XX the sales driven increase points, deleverage. XX.X%, roughly also quarter, of basis by labor XXX was an

over Challenges next will the months. several persist

to balance focus our protecting will we to sheet. will can and continue we what We control on continue control,

costs preserve discussed, we moved and adjust spread of our the with COVID-XX. As to team capital radically immediately

that cash future. We and foreseeable an extremely don't have the operating been under changing see for conservative preservation position

working all advance paramount actions. us appropriately down of measure, facility operating things us to reactive We $XX number modifications and agreement our balance credit COVID-XX. management comfortable Cash to is are realities available position continue As to moving, a credit under scenarios, our for multiple precautionary enables our us. million proactive to under we with reflect a our and and drew toward sheet. balance cash where opportunities we'll feel our to further protect are to recovery Evaluating

shop the crisis. opened we X As shops due to call, profitability carryover We our lack the closed in XXXX were of plan. which the from X in XXXX, first shops quarter XX we announced temporarily quarter company-operated on of under a first our fourth months the

We are to of shop our continuing and to contemplating evaluate the shops permanent closures. up XXX profitability are

We not in new will shops any XXXX. build company-operated

million, is our have this impacted in We with by an driven income Act. that supply not, CARES working do QX of refund also chain changes. are through currently in associated provisions various and tax significant business we our tax closely with continue benefit to any the nor of point. disruptions new $X.X worth regulatory One tax an work foresee, partners supply that at our we noting also chain anticipated It's

to turn before And the like I guidance discuss back call I'd our to position. Alan, over

withdrew As like, we sight refrain late have continue many of in our looks we know, March. guidance. will line And we of guidance the to forward-looking recovery better what a fiscal you XXXX until from quantitative providing into

with remarks. I'll for things pass Alan And that, over closing to back his

Alan Johnson

Steve. Thanks,

we are plenty still As the unknown. prepare there of for world, post-COVID-XX

a however, can we on grasp have, firm business. control things We our the within

data of protect and our urgency and preserve We our to the our best opportunities. ways present to ability with cash, innovative are to acting find franchise people grow

what scenarios multiple evaluating like. constantly are look the recovery will We of

fully ready different as And success this reality. be be new operations the will acknowledge out for to We our that will of with organization ,our we coming pandemic. the prepared this to consumer align wane. behavior crisis So need be

We post-COVID-XX continue moves our prepared wish and are making we this everyone as as now. fight right our That virus success. to future will virus shaping not this our a And nation. health allow by determine I we to we are safety remarks. concludes the

And Q&A. over I the for the turn to will now operator call

Operator

Sandler. first Our with from Long Piper question Instructions] [Operator Joshua comes

Joshua Long

appreciate today. of to see I to we Great. that dig into the I from improvement seen lows. wanted might you've if able the be time some

also imagine, May. XX% in the or to of able what context you adjust get the at been I in of levels? make a to like the cost of were now. look mentioned Also gone least, -- some in depressed similar But context and than peers, lot those of You occurring level of or you've being to at them. week costs lot could down. then changes first remove imagine you've management sense you those a do, down the I these of tried through probably And trying the think just store faster a margins could to

little context about breathing in thinking sales could we curious store a on be different have some some elements, we provide the room, of of these if on that bit here two, level next now the and how just levels. you So of should identified perhaps, quarter cost or some depressed margins

Alan Johnson

the to cost the Steve. part, and answer first I'll I'll Josh, leave up

in the the think saw the So I mean, stores. first was we And almost as the all weeks, a I across in to same board, the drop comments, couple mentioned impact of across XX% across board. the you anywhere from XX%

nonetheless, was sort the They or shops been you The As catering Washington imagine, that airport probably so Chicago. to the weeks ones an the XX a requirements a improvement. those, stay store, got really only home relaxed, but of we number were X would impacted but as there it lot got have then locations, in can incidents we around hit. the closedown serious, instantly most of see And which of that and to the of store, be and sort the negative. have XX were CBD of sort the the hovered were is the tests where of relating that good anything at news reported, started and we more as to have X hardest

of lot very at stores the points saw XX they So XX got to state a second relax, started we We've improvement. there. in Texas. for a is an to of example The least

what almost XX experiencing minus they and was at instantly. XX, So the that contrast at were company minus

such are time news for university, the the struggle like as we opened good where they expect diners future and to return. trends struggling, still stores when until I students have So the Obviously, it's up.

please? address like second Steve, part would question, of to maybe the you Josh's

Steve Cirulis

this To recall, which immediately the times, pretty we shop it a but be inefficiency all system, quickly, I You remains there as Normalizing us. some the X thing that right? analytical a to standpoint. there mean level margin. And moved not in labor, control, you’ll have immediately as at may although a Alan little of think, needs I happen people sales. on adjusting that from bit an be on obviously, to to we're the moved effective of in as was standpoint, shop for described, things didn't from we big falling have We right? could big practical

in start would some to now leverage are different as we before. things We've recover, level or say, base that sales And as to that get cost obviously, present expect, increase. -- more to that got that cost that were not I and should shock margin

business, keep with the on delivery the we the impact COGS. to will for shop delivery in And eye, our that example, margin. So fees obviously, obviously, more there's increase an continue

the for I good visibility but earlier those concern through we costs supply continue we think into kinds some in to crisis. as we as things our good over a large call, time, we because to move pretty those have mentioned don't the of continue have chain we'll watch

Alan Johnson

so then, of And which the Focus both. took. to X a your but revolved question, we trends, ways focused do that driving around unassisted We've to on was those initiatives -- the costs like, the top third line. the of part got some you There's on this if solve by were also there problem. Josh,

-- of Meal curbside week, on speed and our we Family Pantry Uber with Deal. a We which in in launched this our at with shops. the launched moving crisis, DSPs. shops we of was nationally, Eats, so all And mid-April, the all the launched of launched And we

Joshua Long

the lot you started guests Just some messaging you'd makes there? comments, sense built which and But any a off a sort have you've of you there's back, improvements work you I because already done restaurant, marketing, there. that sense a anticipate in? the mentioned to with branding new little then getting connection noise guests A those terms or a back of the consumer to guests see into Is in and already pulled the with back there? you've do attribute those or leaned the coming X those of the in Because in that When in lot your follow-up. as there in that of with? come you environment. Great. follow-up bit you do you of that saw And had relationship coming of

Alan Johnson

going QX, invested pitched point we in in say, like had I for the positive I look mean it you flat that I Yes, we the drove I for And in to functionality, accident. right there with digital those and leaving kind investments, to -- the mean case, up having like a of adding came can to you half sure. what the we second dust that. customers but in part, a year. cannot seen the a deliver, what that maybe XXXX as web those would in point partnerships. -- with certainly in imagine with that And comp. we did X XXXX. combination of our haven't don't QX. a of QX, making we started out, the would by initiatives momentum app, while business not we for right was most that the last I of were The the had parts strategy QX PX X.X% specific

shelves And some DoorDash, we If Sandwich changed and how we of shop inside to you Eat. in single XXXX, Uber how our one and on with and shops. on all the operated. consistency. pickup could more find people We a we also made added recall, on operated every in Grubhub we executed a improvements sudden, also And of now Potbelly

that new existing a lot sure, for brought And customers. So I back think of customers.

Joshua Long

of the or high wanted last testing and me dig some that from cash and/or revolver a for cost, could to level the into visibility of every of at you're the the would I'm into store I business. we down drawn had breakeven a you if you management the to having some both the sure sort Great. be and scenarios even at of could provide modeling think through some you time burn at level, at level And aspect the which having the helpful now looking store if cash levels see But the kind level, perspective. with just one and enterprise was work at

Steve Cirulis

Sure. appreciate question. Sure. I the

things those probably now. we rate burn to us I rapidly as Alan we that most immediate south think burn from were drop as our a And quickly cash important helped that as as actions saw we is outlined. mid-March soon falling by the XX%. here heading what's where business That's did, took rate

So I that's important understand. think to

ball. Now have we don't crystal a clear obviously perfectly

So difficult L-shaped to we recovery, us are right, adequate scenarios, cautious, under recovery say But every But say look to the business get and to it's the to through I this, recovery, helps for the our with of virus to us visibility will hard way those the expect we're but ultimately helps evolve. given like and things. do as comfortable down where us then things might revolver, more tell we about it's we're And obviously, again, position with V-shaped this liquidity. that will how about able what Pulling as evolve. W-shaped we to we we an will think working be cash XXXX, really will a a day, what which be. we're more continue learn recovery. get

Operator

comes America. next Gregory question from Our Instructions] Bank [Operator Francfort of with

Gregory Francfort

up had of any to the I have change just so country? areas open up. seeing than was or opened more or in on that in inflection other first starting Are you any The dates markets those

Alan Johnson

an So, result. two first I'll the we saw most XX- one relaxing Dallas, to XX-point improvement the Houston, already-improving markets, to The they start give requirements, immediate were the you Texas the examples. of on of and

that it's that day-to-day I same thing. we fact I can Phoenix, that and So for a in sure, see you have changes, as think, -- thing, the

restricted People capacity, is still even stage. and is the environment, enjoy to that good albeit dining business news the want to capacity at to not still room's So the to come which forward the at our are to but as we for XX% occupancy those okay I that of dine-in some moment, the XX% and in Potbelly the dead. -- is full of being using look the XX% only markets,

Gregory Francfort

of guessing hours Got most just have back labor terms And of -- the guess, back? them your it. people in reduced. helpful. think have And been in I you I'm into been you been of what Any of portion of asked companies And if are terms a then pulling that's open, been, I off That's environment, the of I stores. laid this in stores lot -- one would but helpful kind hire is have questions guys like of guess, be them who back. you Anything of indication on front have come willing to perspective. that

Alan Johnson

I Yes, read sure to are practical Well, a on And make question back. I as the one, with heads up current Julie, not headline, had operations too. that bringing a and interesting. difficulty a yesterday thoughtful sure. things. who very having had people it's our discussion long most A we

to people. come that back And we In actually -- have XX as would cases mean in some important fact, because retrain to this where only we it can provide. have people XXX% that's of to recovery. had, far, situations difficult overall, be do best. isolated -- she been I that want And and think, And than -- but so we've morning, I otherwise, more there's environment, today's there

time employees, and safe, is cleaning our think employees our mandated we build with people to an all have when environment concerned part and for all we to. trust we decide of customers the employees. shop, did the that's that somebody And also as about, gloves, it our precautions but at and change have until such that confidence that's do obviously, uniform, Potbelly the that only masks, brings so need our we the that wear creating And deep go And of to why is I have for we are that all wear not the that. through

Gregory Francfort

Got last for me. it. And maybe one perspective. Helpful just one

XX that How if evaluating You're closure? anything to stores. or talk possible versus Can If would process? stores? start closing as that you a about or like Is talking the curious a guess you look Can you're hope thought in in talk that thinking I we what's urban about XX about return common the just guess, about rationale? I little out that suburban that? there's normal. maybe And for bit to markets any up XXX themes, they're those I on needs months, the because I'm maybe guess, near things I of cash months or them. to term,

Steve Cirulis

Yes.

closing course, frankly, around we're shops a they're challenged. coming the been effort in which, strengthen not shops that for shops, this even the closure of contemplating of fact, way So in previously more we as And have out to pre-COVID, the were crisis, crisis, during business of profitable the that XX% prioritized this impaired.

and the from closed So contemplating if important at we've And between us that permanently. perspective. for there's that we're look even a those you closing shops those long-term rarely thus far, a overlap high

no as coming hope term, as think support it's be also, we us long expect gives question, us of out and this, well. competitive helps some it to I obviously, but highly that way So it

Operator

Long. comes question Joshua from next Our

Joshua Long

be sales leaning particular, in pretty might got Curbside I the new Pantry, exciting of into, nice and able as the wanted Great. other Potbelly some that into, talk then and we to able and the see to about pieces channels pivot. to say, see well, you brand if to be

it we off you've brand to mentioned or or seen paying of continue team, how has brand if of as that you lot with channels other in consumers we reception So work this was what to legs forward? on the go just and the brand? from environment. there the maybe that current if redefining what maybe into heavy some think or might terms lifting in something -- or is it, that I the for sales you now hard normal side a And channel of date think you aligns this in Curious that on continue a these out this or going some are short-term come that temporary might be new that when invest is

Alan Johnson

you, Josh. Thank Yes.

a to much as amazing. Pantry grow first. idea. defensive And that sitting deal going It opportunities for sort we're down just listen, that here. stuff. generates take all with cash. me look we're We're let said, Pantry to going a control as not the up work team, of in the hard was So posture top cost at But the were We to came with days, team going line aggressively to and XX and

Potbelly kind you bread. the few in of started would if got And chains of Pantry. national saying, a a cookies? at weeks, quite was we over had and can of literally fact, and sort have daily cookies? thought we that access we be X bake-at-home lot to done where launch And pickles, look the to just meats, off first Then the small, buy quickly timing, of just over offered feedback have sold In the XX,XXX weeks, would cheeses what we some our can X buy we who in hey, one a

you a do, atmosphere. it that's affair out and about the Potbelly as things right, for the parent, put family. to talk in activity a of the brand also running cook, if an the you're brand. warm to So, relaxed speaks to with you're of with been a has a willing always brand, fun love the It oven and warmth

you visit it, so if fun And can't the being bring home. to, able

little mix. So sell X-gallon the or bit I of yes. so $XX is cost, a of bit but at then the where with this stressful, of little drum this we Cookies I never still pickle buy important. the a remember, have people imagined And a XX% a nearly that. We of fun is I -- And $XX, fun think can't it. for like time had there's that. would -- who purposes having

capital locations. capital, customer. intensive. labor. the experience very are Curbside, for It's in little A, a This with the occasion an think bit rent got area. contactless engage of like our get is benefit little Potbelly. and few more is great leverages to I about. of can this I'm not and more cash. off the And the just a Clearly, It got we've desperate brand We've get consumer of ways can the you and upside very things with there really where XX% of incremental XX% can in you excited business

like we never this experience. drive-thru have We they It's crisis the and we've drive-thrus. ever just committed should consumer some launched since Potbelly know numbers. unwasted. systems. a wants Whether the have XX It's healthy of seen we it, that go don't we've no part have as don't not that long-term say, We to not Clearly, the business.

to So add off-premise I'm really excited curbside offerings. our to

Steve Cirulis

just me thing that. Let add one to

As little bit. this has a daypart our has evolved, shifted mix

but alternative us We're dinner parts the Potbelly putting some that's of and obviously, out as beyond different things with about think I we of making the office the Potbelly Pantry it's uptick, for are workers, think the we're the there, just business business seeing offerings whether period. may in had, experimenting run strong this. I we makes think, as helping that that relevant seeing in future, out with encouraging or us be with we lunch we

So those for encouraging things are us.

Alan Johnson

week the where dayparts I'm times those and that growth in the not I'll repeat was, we're virus, dayparts. we the lot that, sure had and this at important, most if most a weekend, dinner improvement just of part which of for the is post important most room you caught are where seeing

Joshua Long

sense. leans that maybe talking with through and you how as obviously just but a around about pulling for versus digital, clarification. be branding, high high to going of digital. forward, at your brand, about I forward about the and things can at how guests makes thinking a it also imagine heavily about guest pre-crisis? Thanks what When we might we menu level you're were that shifting curious But Great. level, think marketing, think description the talk innovation, the we going marketing, engaging off some either commentary

Alan Johnson

I don't important. less more digital important becoming to see Yes. becoming

fun crisis lot you commercials our fact, have the on platforms. of of those, that that seen And various same bit the use some with activity produced actually harnessed from work was social waste rather during Project the markets. digital them did actually we they time. digital Aurora. us of had distribution a non-Aurora at for we and the some the We were very well than In that on a in And existing little played

all that which You'll sandwich I there's recognition, most was other think one looks of against for inside And strength. one is a no providers, brand you Potbelly tee us all of When that distinctive celebrate up differentiators. the very that branding to that's note like the the Potbelly. that shop, important

very slowing But relation the are marketing like just markets my want think that, I that's of that, we consolidated I make down is in the be on menu. from comments sure test clear. those Aurora. decisions, regarding news did to Apart most successful with proving Project that elements to the great to in leave

less signage a ingredients. throughout design, or new the SKUs. in our locations. different menu of of different, Interestingly the in are brand know, you easier X the reduction A enough, in-shop menu some As the speaks shop X to SKUs, elements and to delicious navigate. And significant they it's is spread

eat could is of the that photography fact, In almost signage, so you good. part

Joshua Long

Fair average to could of we check. there, mentioned down see enough. the if about think we I some components want you mix break that When Steve,

and the comments then that One to menu work comment, but the also done and done with a a that of your partners. you've higher beverages. the saw shift consolidation juxtapose wanted was of we Bigs from some away you've lot that towards imagine against your the work on that I of a And beverage level

uptick of in some in meal seen a the least terms at you've attached think deal. test I or units, the beverage of selling nice

back consumers the of curious moves pulled if that So everything the trends back here. larger case overshadowed the some gets was as And maybe in still just by just March. that there as

Steve Cirulis

Yes.

percentage I think test small of our all of are markets still pretty the fleet.

that of any meaningful show see way. up don't really in you So any

of think, order chips And I lower think the right? people the given product now of that and I that, we in in seen beverages increase to we upgrades general, where though, is that, and partially consumed, some way attachment do see have and of menu an like some even cookies sales. other the shakes increase offset and avocado smoothie like elements in and our

as it's those try things we're continue continue to going we'll right? the think we As and understand to behaviors watch, how something evolve, I to consumer that to tend to -- So happen.

As completely consolidated it we some relates to items there, the test shops, the of and got menu so menu were rid forth. and boards

of system. shift, as if related the will we place. kind mix we will the try those obviously, good to menu got can ideas, than our I spread to But see we've that boards standard markets be different we So in with see quickly them across think, as we

Alan Johnson

point also I'll out.

think I customer more, this, but spends know dinner the we so all does customer. the off-premise

through the makes the us you're dinner for right? bigger to spend you You're ordering folks So It what the spend. to size. coming party Xx and than are while a serving this typically dine-in, typically, eat-in ordering that typical weekend for sense, customer would channel more much

Operator

question next from Blair. comes Our William Sharon with Zackfia

Sharon Zackfia

week, mentioned from I a Could put that? you maybe mean, if could suburban. XX% underperforming was granularly. bit CBD talk the And big looks of like, around some and hoping some that they're last your you how more of markets know kind gave what some you regionally, down I you down maybe Texas us texture I other then numbers break looking? around comp is and little

it of kind And you now relates how how cost? we much interesting touched of I'm as is really about has food really and then it mix to Pantry, just it though, think the that to initiative. a grown which sure not on,

Alan Johnson

Okay.

the is The and XX up as obvious. shops type doing -- I'm lot shops and recent X. I CBD doing mentioned, are we And this break the The X have are The most the The in the that for are this suburban numbers, of asset Good we better only The the those. of pieces. is is than is universities, about their performance talking airports, the is a than reasons performance. we've shops. we good urban airports about by and better don't struggling why best the them. universities. got the that's the got So news most, news

open in are in the points I room all not in and better Texas, of to terms the the that XX% -- that to -- market, only discernible changes Phoenix Kansas percent up, City, restrictions markets really are dining XX% start better. those sorry, of the the As mentioned, doing

comp they operating lower XX points lower lower by So requirements negative than those at before relaxation to were play. came comp, the into XX trend

point can to that. So we

anything. their when a cash to do -- an Who opportunistic Pantry. to It's amazing peak, from to no buy at Potbelly X% a upload You X% is difference. had Look, of not today's straight we've all it. add doubt we to to the make didn't we money not do between environment, its ranges and product. that, I app, -- We're was allowing king, the having -- now, question people had website pretty which want And sales, spent and have right knows, doing the customers on pictures is it website. on meats the is Pantry these think in long-term the our got is anything, percentages daily order for to off it a those probably thing. But offered

Sharon Zackfia

Yes.

performing than with go are I companies about think I the talking was regional to coast. trying question. there the the country other Was center the better of that are

just for than, wondering of reopenings huge other better so if independent or just Texas I Coast you and states, Chicago. in are the some center country markets have you holding places? East the say, of obviously, was of other Chicago up other And presence, the a or some

Alan Johnson

have Yes. don't on as Well, Yes. the you West know, any we Coast.

New really we ones is York. only the have So

the has of by, epicenter they're been U.S. York for obviously, New virus impacted the badly the

improved. of the market-by-market. front can Chicago, Pantry, don't in tested Eats, deal our Meal Family York I number not also And the and we lion instructional. really of that New we what's improved concentration of curbside, driven really you, sort the nicely. just has in share tell -- Uber a off-premise Grubhub, the shops. have So has I is I me, addition of you have DoorDashes, it -- don't of that I where can't provide it's

So distinct a see geographically, pattern. I don't

Sharon Zackfia

break sales to you've weekly given the of then And of stores, the taken Okay. at think you you out at average about what even us kind point labor restaurant? this the could help need

Steve Cirulis

This is Yes. Steve.

us I obviously, see comps need to of order we think but in improve, I it double-digit shop, range to think, kind to point. that depends the the in get low on

Operator

the closing concludes Johnson any session. the would to back for to This conference like turn remarks. Alan I question-and-answer over

Alan Johnson

the to the forward I call. you stay bye. your safe. our look your today and support. a in again Bye, Thank next evening, time Thank continued on updating and great progress best. earnings All for you, Anastasia. you Have

Operator

conference This concludes call. today's

your disconnect And Thank day. pleasant for have lines. you may a You participating.

Potbelly (PBPB) 15 May 202020 Q1 Earnings call transcript