PBPB - Earnings call transcript Q2 2022

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Operator

Good afternoon, everyone, and welcome to Potbelly Corporation's Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the call over to Ms. Adiya Dixon, Potbelly's Senior Vice President and Chief Legal Officer. Please go ahead.

Adiya Dixon

welcome Second and Call. XXXX everyone, afternoon, to Quarter our Earnings Good

and Please presenters our a our Cirulis, remarks. and President Wright, are set our Financial and Vice Our that Bob prepared Officer; of President PowerPoint today will have that note we Chief slides Executive Senior Chief provided Officer. accompany Steve

for call open certain section regarding other within future Litigation or guarantees financial your the remainder be the and I'd After our website. representing Any management's may performance these forward-looking access company. Private our views questions. cautionary our of XXXX. date. the slides of You to in of upon forward-looking or These note performance nor future your remarks, as attention on should forward-looking are call the statements we'll statements of should statements like of X, statements for outlook the any subsequent be the contain considered any events meaning will Act of to comments as Securities the Investor not Relations such Slide this statements, Reform our relied call future periods, prepared XXXX of they future on made that including

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

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

most call will accepted of principles both to press of I'll presentation the there be non-GAAP call, comparable generally our afternoon, issued GAAP. the Investors not tab over in do items some GAAP Bob. conform the measures to or Reconciliations due of release the accounting to this directly these which in measures U.S. discussion appendix turn are investor of to included that website. a During the and available are now also

Bob Wright

Thank our to by and Potbelly continued all today for thanking I'd in employees afternoon, commitment be Adiya. thank hard joining us call like for to our today. and you, Good our company. work their you

look positivity, people Our what strong of their work of we customers. we proud heart to and seeing that accomplished brand our promise and incredibly as is diligence food allows ethic are to brand, growing. a top it I'm the forward our together operate quality as Potbelly we team our and continue

we navigating continue course, with experience and filled operating know provides Slide results summary which very Of providing quarter's with environment. value economy and money. to are challenges, We'll on we the our an broader unparalleled and are high-level X, our of ever-changing their a customers the begin customer an for happy views

We Strategy our continue to to map view X-Pillar success. as road our

the now efforts. well as story of building to brand at and strategy. against for as Our the franchising growth AUVs an visits, providing value this improvement has quarter all driven experiences, Potbelly beginning back the channels you X-Pillar profitability everyone digital refranchising executing of strategy growth. been and pandemic elevating experience bring that recovery the us leadership accelerating backbone by superior quality associate revenue The from company's Strategy our through apart food leverages while significant customer and set in and record our the excellent through in We've

line spending expansion drive resilient proven margins. flexible has the growth environmental strong and to trends, in in We and macro face business of in top challenges. and staffing broader our disciplined see improvement Additionally, notable maintain continue shop-level

differentiate highlight the $X.X leading clear of consistent and quarter. to and our highly will how marketing proud such it our are food. had us $XX,XXX revenues of EBITDA grew strong We sales value adjusted we record we per of million I later our achieved the a that business our share focused starting why achieve engines at achieve We've will delivering digital in strategy. $XXX in I'm growth proud customers, in quarter. continue the operations, brands million. have and business long-term marketing about quarter I'm of and I'd our achievements and highlight of But point confidence by our to like recent sales. continued week, X, focus drove and with to cover share maintain to $X.X AUVs elements XX% of To part with income our become to fundamental very turning the X financial Slide positive strong our strength our Steve the million of been to unique trajectory headlines clarity nearly to in have we that this growth same-store ability to net We call. Slide detail I'm objectives. quarter, XX.X% very drove in positive in additional are continue. Today, efforts an that excited performance that a that our encouraged activities by integral on And forward, always remain strategy. Looking on our development to These we

Cold sales cookie, Brew our Cheesecake rollout Lemon of the sandwich transactions. contributed have daily shake, Our and customers which and to Cubano innovative love successful LTOs, including increased

our primary marketing of paid brand broader campaigns Importantly, means traffic as our advertising. digital driving and and in awareness we not social investments only marketing maintained LTOs but the

like as targeted free methods, which resulted one, BOGO get offers, daily we incremental perks engagement to one as traffic accelerated digital-only addition and in buy downloads, increased perks In traditional well dollars our revenue brand and only and awareness promotions our one-day perks driving transactions. also

announce Potbelly. as reflects excited a with to includes of very I'm uniqueness Works. appearance that refreshed Potbelly Lastly, returning better recently our branding to updated the launched This we heritage Sandwich

website our and on at already can pompbelly.com of presentation. see today's You in colors and, logo course, our updated

results branding future. The programs QX. initiatives incorporating Our have highly marketing and online confidence be growth this drivers of in will and later will encouraging, they are the our into we updated creative work begin

progress I'd to like on franchise discuss our acceleration initiative. X, Slide growth to Moving our

and owners franchise are pleased taken continued our have Discovery pace opportunities dedicated as far and weeks refranchising pipeline to pipeline. Potbelly's the multi-unit about of attractive as state development for deal our year, areas Areas, discussions time with the allowed Days, we've few team These the well our held Alongside recent this events our new our To We the sale support progression, a quantity extremely Discovery and current so Shop and ago. and researching a penetration potential is development shop team SDAs, having market or ready unique of individualized with experienced our Days two of number just at franchisees. franchise Potbelly. most the learn place management to through were here Development identifying proactively for and

marketing continuing by Additionally, our and tactics expand integration and we sales tools the to of franchising are supported systems.

Our we look franchise-oriented specific close deal and franchising sign remain to and our goals and we activity forward top those priority, as refranchising sharing deals.

satisfaction implemented part driving streamlining measures, level as guide also for vital in-shop the new which systems higher and our important workflows. to and improvements we for shop previously further not and ongoing optimized offer control improved with the customer We're well to and momentum monitoring, customers. Slide in employees making our We've a internal believe support growth. in enhancing Turning through improvements financials company standards operational hours-based but company, best it innovative to reporting including on financial quest is satisfaction operations detail, have to great labor allow Operations an tools improving intention highlighted investments making experience, the it's we've We our we experience driving discuss too. the of our to area customer established customer We're for systems and as we we view technology highlights efficiencies. the as think X. focus of

in-shop and make experiences, bringing improving efficient in-shop Digital on-time food we've Kitchen better last new orders, Digital we've visits, our orders investments great is Additionally, digital over we're accuracy this better months. potential made increased and the of We customer digital on improved speed designed through build XX what improved calling Potbelly Kitchen. to while the also our service begun Potbelly tech customer-facing our has platform more quality. a project believe to throughput, traditional testing processing

increasingly shops to critical will over better of own staffing model. structure business Steve? corporate company. operation is operational franchise-oriented support and operate financial also second the our to but which our more growth us we performance call These detail franchise aligning as success our profitably, our in we consistency, Steve to help and now they Lastly, investments become are not predictability only quarter. a drive turn I the

Steve Cirulis

AUV, or where the XXXX presentation, to you, as X the sales and month progression same-store of afternoon, Please as the the Bob, unit Thank second turn of average volume, Slide good we outline July. well quarter and throughout everyone. of

achieve have increase continued XXXX. This continuing XX.X% and versus recovery We by growth shops. of substantive the supported to second of an sales CBD delivering our same-store the Airport quarter growth, was of

in As solid a July Bob AUVs moderated included a approximately traffic period. performance quarter. holiday pleased highlight Xth $XX,XXX this AUVs it the mentioned, record but of are is July we traditionally slightly, to as lower

other how economy. the there uncertainty some react customers is to from about restaurant concepts, of As the you've dynamics heard will

out remains of customers Potbelly far, eating our part So have routine. strong their that demonstrated a

of of specific financial to XXXX. XXXX through statement second X; to quarter and walk Turning the I'll you Slide our second income quarter for compared the performance

increases, second total quarter. were pricing by efforts of our the This revenues promotions, quarter, compared driven LTO was factors, of to in prior same-store including XX.X% marketing sales the During million advertising year number increase an $XX.X and million, and $XXX.X increases. strong strategic digital successful a

our top Additionally, types. income quarter and first of compared in our We the shop Airport Strategy strength meaningful a of period. a increase healthy $X.X CBD the year our a of impact million, the execution. loss of our net $X.X net reported alongside net recovery positive demonstrating the income supported This and since XXXX, performance million first expansion prior X-Pillar of other continued positive is to of in shops our line quarter

quarter net compared million the net with loss a of Our XXXX. income $X.X adjusted in was million $X.X second of

packaging million million, was $X.X the expanding the or Our compared $X.X revenue of percentage and This line of the was strong X.X% X Managing EBITDA breadth. EBITDA in result we sales in increase a second higher and million The period. impact times products basis was to or in paper line quarter million combination and or of period. top shop level a shop disciplined and margin X.X% beverage and a remains packaging in our of total management. primarily basis adjusted costs, costs proteins, or total protecting performance, were versus of on priority, year were $X.X step-up decrease shop F&P due specifically persistently million XX.X% driven The leverage. volumes G&A the in on of cost costs the the year ago XX.X% $XX.X second absolute ago are of the was value revenues and top notable quarter adjusted million sales for to XXXX. higher while over or $X.X Food, to F&P, as costs, of by input $XX.X bottom higher line in committed customers. margins as well input providing our an

year, able on driven in of sales to increase or full was primarily or inflation, in see million expect it to the XX.X% in we and the million we Labor For QX. $XX.X the to up that QX It by eventually shop similar period. were at F&P $XX.X XX% be moderate an higher and levels year second in of compared The ago quarter, XX.X% absolute than sales expenses line protein. expect to of our from higher and basis labor the basis last Despite as decrease the expenses due referral that to line implemented in on to wage hours-based the environment, industry guide. the wage percentage impacts our of XX initiative trailing XXX a we labor-related basis by result over been with points the positive such labor have months. initiatives, increases, bonuses, a top tipping as performance we and broader quarter

as rates labor beverage well packaging. we look anticipate forward, moderating food inflation and across As as we

expenses by third-party million midst to meet $XX.X We million staff some be to expenses continue inflation like compared largely order scale such expenses in and to the fees shops our revenue with of as of Other of XX.X% were fixed sales maintenance. with sales landscape. demand operating well encouraged the a our proportional and repairs and as utilities driven or in XX.X% challenging operating efficiently ability to year-ago or in period, delivery as that $XX.X

period, sales, expenses aligning shop to I based discussing meaningful margins adjust in XX%. a This elected of on top everyone level remind of guidance marketing Airport Before continued and our the franchise-oriented shops CBD now a level of recovery improvement and carry growth, to were certain our with percentage to by in the that X% margins beginning margins, year was Shop efficiencies. ago XXXX; organization. operational would to improved and reclassify structure XX.X%, compared exceeding QX to of like the X.X% advertising range we driven line and reporting

Our second $XX.X million, Slide the liquidity million cash credit existing channel available $XX.X evolved million our quarter of how our position at was the consisting facility. end XX $XX.X of on year. hand, over the past plus of mix has highlights on

We BOGO see marketing Perks-targeted deals remained to consistently result the attributed promotion. the relatively tech of customer reinforces ended as positive our individualized enhanced are sales royalty strong digital purchase-focused second program and Perks our digital digital response and the at engagement contribution has as and and quarter pleased XX%. to percentage such stack, enjoyed of stable have channels we a our This

saw of sequentially to as shops. with return increase in conditions percentage X and in-shop points expectations. improved more Additionally, an This dining line was customers our weather

our the mentioned objectives. priorities to which we as strong out As we foundation earlier, our achievement Strategy, guidance. a In to as XX I'll look continue focused XXXX remain XXXX as our delivering Slide executing view expansion. business to XXXX, quarter second to and conclude on our are significant against in on we AUVs discuss X-Pillar we excited the highlight

greater prioritize We our rates Potbelly digital its objectives. to guest to brand patrons. menu awareness digital Additionally, we enjoy These as activity establish marketing with platform and and our acquisition continue XXXX drive to our well deeper allows strengthen throughout achieving innovation, the our priorities to marketing as will traffic brand. loyalty believe drive long-term growth path

double-digit previously and to of same-store double-digit guidance on low level remain we sales range. in provided the margins shop track our Additionally, growth AUVs, deliver XXXX record in

does expecting shop million For XX%. our quarter total of million Note, $XXX XXXX, during of potential account the are not we to the $XXX quarter. could revenues that the into margins opportunities between guidance third and impact of level refranchising take and X% between occur

to end, subsequent XXXX back third Additionally, impact our $XX loan, pass financials. to call With that, over million Bob. for the we quarter PPP quarter which I'll our will received forgiveness

Bob Wright

Thank you, Steve.

remind to you back growth Slide to Turning XX; I'd XXXX of unveiled targets the March. in like we

technology, to performance our First, AUVs in enhancing marketing investment of through rooted we've meaningful our operational which strategic seen our and customer million, differentiated $X.X the improving progress experience, towards commitment in menu. systems integration,

mix enjoy to Additionally, recovery full we business. of our maintaining portfolio strength particularly that shop while across continue CBDs in of our digital

pleased mentioned costs, driving I'm shop the than our Second, I of lower the I'm the can efficiency including and this progress, leverage, we food greater costs, stronger level towards margins sales with heightened of and and careful confident systems call. in-shop supply XX%. goal management of earlier many continue in chain labor with march

space. specifics made Potbelly's franchise organization. our least will of primarily XXXX. shop interested strong over agreements, in deals system, provide our achieve total operator around Thirdly, progress area refranchising least back working believe reach will attraction X,XXX We've and the rate to we questions. in of as company-owned We unit high-quality franchise a turn I casual significant our through Operator? your view address advantage they achieve U.S. of are franchise-oriented With we supporting will units an I are the mentioned through fast signed the to the closed. we to XX% approximately franchisees now to and this shift the finally, of XX% which long-term we at call competitive that, shop end a towards growth to And development at XX% goal. And our by earlier, shops once

Operator

question go Our Blair. is with Please Instructions] ahead. Matt first from Curtis William [Operator

Matt Curtis

results digital I collecting Thanks just tech just Or percentage for new from mean, perhaps extension I the seemed detailed question is? very leveraging the I'm was past much stack your which data first guys. there any the get of can impact you the the fairly what context lift? your to is a offers on go around personalized during guess targeted been share you've offers Perks to wondering, that data I offers talked in the you some more quarter, in members. transaction? what are of the to about check I well. around trying mean sales deliver

Bob Wright

it. We Matt. Thanks, appreciate Yes.

learning targeted a the with promotional our We here. really get in check narrowed quarter we Perks quarter the we've we that. segmentation well all benefit. algorithms have that as of to We X.X consumers the towards levers data works Perks of we we've across app segmented their has is use their the that only, frequency. terms extended of digital that offers sales, that and And Perks of get are and which reasons, Perks exactly and for think mentioned, the them working of that for enjoyed terms population gone check check those members our competitive can for the We're of sales continued We've transactions Perks lot that our some level to our the got both our the these say average would non-Perks all candidly, some us, us. that those to versus frequency members on these occasionally of Perks many to is matter And is targeted about full app. won't segmentation grown great frequency now Perks of world, the over been say a share, what web of offers. success and with members. transactions, environment you everyone results. and I and into we should in of for only. on us. the non-Perks I through powder within of data have out improve mix have is level target ability are But Perks-driven orders outcome, those in based fronts how activity million And And learning a we dry what and the the which compared because still improving offers Perks We're digital

lot So can do the to Perks the there's looking we total just we more contribution members, but growing a think there. business. to We're only forward not

Matt Curtis

often used more guess run thing. got to to be to to premium points a the Glad be kind mean, I mean Cubano your the price to future? LTO it. range. LTO, seems to in I which relatedly, bit I back it you talk little seasonal hear about go past, historically, could well. to then you're I I promotions. be if more in of Great. mid-price seen know you the The priced. I years be wondering how expected you plan was Okay. to these the of in And know what seemed at? Cubano a more price shifting

consider you I'm So the maybe target going more value-oriented Or kind that's wondering if a environment? given LTO doing if the forward? inflationary of

Bob Wright

Yes, great question.

and if an see format. our the you – the sorry, done We've gone what customers doing couple and cookies have though, Potbelly we've have the bringing shakes. products worked you're the slightly well, those, we've some sandwiches all, well think the chips that innovation ago. LTO of And improved years pantry to in of food you is different back. on think offering enjoyed them for And us Even about First right. a menu, across now back We've or done as I ingredients. our

basis. things thing The done behave we're with some that little each more that deals, We learning but of a meal these is subtle differently. have on

tuned with little with and clear higher disparity across price well. LTO. Cubano We some sandwiches with that the year. the growth. we do three-size check the more We priced bit, bit little Cubano because the input we fit did it that laddering see last quality and to it did recently to a value costs. even the menu one menu a And the run some don't that create want provide when of lift we brand, performed up mix, so of that we've We providing tiering but that. an really So those also a has lift

like are with We're whole social customers The differently. them. add-ons, the videos how the much introduced very adding for We're similar as seeing lot differently, much behave are creating of cookies comes are add-on our and LTO cookies that how like exception. we the various about flavors our incidents on a they behavior cookies getting with love really Now media cookies shakes. the people no and and we've

us they what I all you're to across operations to So going the they so the with bring don't is of LTOs see the continued disrupt as and board. advantage financials they long a customer, think positive pulsing the the benefit

Matt Curtis

platform to improve well seem digital Shifting you're to that of would improve I designed testing Great. kitchen the mean, employee be as I experience imagine testing. operations Okay. a to as, variety you technologies as the about more deployed the kinds wondering being be ready might well if when think stores. tested they you be I'm as things well. in little you specific could are be broadly a to as what of

Bob Wright

digital what also investments, Yes, to allow a layers for part little what That's down our I'd shops, successful We better, reason done and metrics whether always customer had a make We've that advantage working front comes already expectations that but and we can the this Potbelly when the it for line. work that specifically software taken to talked an And us with on having enhancements goes tech added about with quality lot business manage they're order the when web tech of quietly, even and stack Perks most integration someone technology of by mentioned, all of we've we the use. lines had the last financial the that and and some like so consumer-facing, that guide talked in couple of there's the is digitizing more is our two know of Digital were the be was throughput the the of more in Kitchen, through year for both A in additional front We app, years operation that labor stack. and we the through remarks. we've even we with the pipeline. door even delivering about better prepared last orders. have, our they the the seen tools that the opportunity digitally with But with that performance lot over what customers' the those I Potbelly be standards delighted. done we evaluation lines. at we've and the

all and that So the gaps our get ability to in orders, to place associates orders. tune those be so systems of that of them our coach receive and can where they the labor present the sure already advantage that to may those coordinate process, – that also They that make troubleshoot orders are to continue we sort can we the itself. our can have so shops guide the We there system the can on to monitoring enhance time. use and data

So we're doing where to some at excited in point we're be that shop. more digitization

point the testing far. be pleased contemplating talk We the a some the But we're to do. results why in what have makes to so going a now sense. we We've investment shops at handful we're would for rollout and broader the in believe about additional that position it be of got a investment and be in future costs more with where to we're than

Matt Curtis

your the balance is, now? price cumulative And more in at now? to pricing of this Okay. you in us remind maybe guess the what the in question, much is benefit the point? And could your expect price part a Do then, year Great. of balance guess, how to over could us I I sorry, year also of maybe is just of locked you that take environment. shifting the commodity right for right as of remind third commodity you basket

Bob Wright

some fourth get because about of if We've discussion in really everybody quarter, space, I'll manage quarter. our let watching look the on at side is it we're locked us XX% like pricing balance when you you and closely. third – of very to commodity basket it Sure. about XX% all this to closely to help about drops with Steve the tried the

we're in and would chain But to supply be You – those moderation that costs. more the I expect those brands, times, expecting lot you'd normal pressures in like of of think, a some case.

advantage to prepared to want that far, we the out taken me when help go we And more. Steve But you have we're flexibility got – this just flexible Steve. raises so pricing So take of year, make in got and for it X ahead, total we've to here. we're two happens. and far sure so

Steve Cirulis

Yes.

it our pricing is we've designed been inflationary our I to similar of to posture And along really think bears at pace. input, right? repeating, that pressures a try specifically moving offset – on at kind

on after folks well. expected. still we're to I to than the Obviously, our But down going but doing more have the certainly side. things our that roughly that little pretty actions high, some we're is going probably think – increase And our other be expect that lower we're feel peak, seen to its we we've hit to is QX. And in with as our contemplated. start of with has a meaningfully And commodity done. margin right? labor that from neutral is but come inflation I mentioned QX we pricing be more as we we Bob side inflation, still on you high, know expectation that labor, heard what

Our tipping took got a we've right. program, think, one in helped those moderate But and that's I particular, increases. PX, that's more action in wage pricing us We expected.

fall we as – off haven't price demand we're result a increases. seen the of So

customer But there's about that really heard for thought way keep careful environment. demand. been we and price softening with the out and us, value probably we've moving others, from about balance the that You've pace there in to some with inflation

work be that we've to to with far, so been pretty able way And happy we the balancing.

Matt Curtis

that else, uncertainty why help I or guidance because was that around just you're was it to the less touch than Okay. it I quarter the Understood. quarter that? X% is if on something from third when us I more it to you is? the mean, last X% a fourth was in XX%. there's that. quarter could guess wondering to for in XX%, is with contracted your inflation half? smidge wider because margin level Or back just restaurant

Steve Cirulis

we're those, the It's margins the – have in really our the look that excited honestly. commodity hopefully down quarter inflation into coming both we about where we're them we quarter, pretty high as of expanding going XX.X%. towards got And to to next There's bit on year-over-year side, QX. later to a I said, still like

us, sure room. them from work change make to to want we we help expect things the in place just on margin. to helps the expenses. that But works strong. system top operating other see where the got to we've terms been able our demand side on we manage that we got that if of will expand in kind right intend be we to the on be ops fully as And team start well continuing in costs us are the to right? and So range continuing that all And of so labor we've with things Certainly, that we've line that see hard other

everyone toward a – to But we'll that we look high always working end work wanted to range, had realistic range it. So – the towards for work the to we the and us sure through. of we and we're will at beat make

Matt Curtis

sales seen from demand impact higher consumer been a up concepts have see guess, this finish can particularly. right guys with broader around I talk seen seems you was prices. I some mean of to your Okay. you if demand and weakening in if Understood. of a lower like then, on the And from about just gas if restaurant care that income comment? And of to question the maybe state just now. consumers, we've it any trends I I curious lot really concentrated has

Bob Wright

I – must under experiencing they're mean, at the The listen, the broad-based the all is directions. Matt, consumer right. that and you're Yes, from inflation customers them pressure. conclude coming are one

advantage. their market advantage. of some question customers though. pressure? have the jobs able they from into been advantages the available those The to And impact said, kind increases experiencing We pricing in getting far is the are And you're of to directly the haven't is we've had for our I credit take is who to had advantage. is inflation two that that increases pricing many pressure our that And at they savings going as The have seen really, this we've reacting been most? so their they how and The demand certainly that think, their to to particular. is

for us fast particular, us, the important when that where better position sits, $XXX,XXX space year fast in $XX,XXX the to earning or in more the Now a casual for it's in to Potbelly withstand a in pressure. consumer they're a just really casual note to you're

home from is have food that another inflation. home away food advantage outpacing We at inflation still

the of all ever something macro in least of So those pressure for it. processing at ready consumer, day, kind to of I the have that that's we At the external be the kind be the for things near end all term. the to we're are think present

installing great and still are had throughout the a turn value that So great subtle And control. and can hard the effect using new see to the internally. our people more but installed menu didn't that then have you we Potbelly, uptake that that's of some but to amounts, maybe that deals. layer that menu means our skinnies see because quality for that, And really is that we adjusting suggest added meal last We exist small menu the is the within menu. we things craveable movement We've very patterns that on menu expansion us. we That working intended we a little that value that on you before. some that that year. very – did into focus happy We're

few can and get you get digitally, but ordering chips the drink you'd fountain in do pennies the when pocket you're in drink you're shop, want extra So that. $X if bottle to a in your rather take have or you you of when an advantage

You if can upgrade also to a to do that. you shake want

in and possible, the as and the So make there's value really meals. put then reflection to like we're in you add those forth we've see value digital a consumers, and activity we've desire just quarter, I giving sure as that emphasized those certainly, promotional this should to our well. Perks I responded they as throughout especially customers that some And flexibility much too, know our that we would has during And comes to brand this because competitors time, got brand we space started sorry, of period to significantly think it working promote marketing without lot when discounting, powder. really learn can of are promotions we've a of doing underspent and typically in ways our that we dry two The have These quarters. we our investments. – have we well. past digital of

Matt Curtis

very improvement. thanks on congratulations Well the Great. Okay. continued much and

Bob Wright

you. Thank

Steve Cirulis

Matt. Thanks

Operator

Thank you.

from Lisa We now to Fortuna will Relations. Investor the call pass over

Lisa Fortuna

Thank you, operator.

to collect team investors. Blair from out great about approach several taking top holders by testing our and the this of are pulled complement the that we questions new questions questions, these William reached quarter, week offers a questions. our four To This IR together

submit Moving encouraged forward, our calls investors in prior future. any to the to our are questions of

to the XXD. Our recent related first question is

the So filed recent you do have DX comment any by funds? being, XXD on question the

Bob Wright

Yes. Thank you, Lisa.

significant won't are They've it. we we support all, really say would DX of in the in their a here while. very their And But to not comment they and from the the included been they've been communications of to insights. like great very their a First appreciate time long a on holder but and time, since the again, stock and them now time what is for we've respect for bit stock. I of buyers investor quite for appreciate much our stock a period support, of for entered stock, with

our that's can get just SEC, website As ago, of through everyone their weeks if the filed or XXD a on too. mentioned, fine, directly you couple it you they find and

something way well the is you focus the view of I If long-term personally it. Because to and as and that's the near-term strategy. you haven't a their value at they're company. looking appreciate in encourage really team, management's read with read aligned our we, stated And current the we focus it, I

with them. relationship And them we positive look with time. working our to forward So communications, over open like of an maintaining investors, all and

to So us what about sure. writing yes, see for they're happy

Lisa Fortuna

even you you franchising. partner are franchise can't question to time where yet, where names name to the the regard strategy? next like? Thank with pipeline are does deal, the you one if you. so is The We've long-term related execute line, look seen beginning in on to the And What process?

Bob Wright

this appreciate question. Yes. We

long-term insight coming level – I terms teams deal. that? we recognize – sales and remarks, I to I the a a hasn't have, say are reasons going quite when meet accelerate signed it These the that amount there will far the the franchising in about that all beyond of in internal Ultimately, deals our that's closed we and the initial activity that that in is to number a as our numbers. they're reasons, from of brand, like through there's able question you're franchise are decisions. to comes a some them are mentioned I how say able reiterate franchise of – to because be franchising stage with detailed to internal going all with on ultimately tell communications significant number for I near-term active is can franchise working frankly, and on. talk until candidly tremendous are prepared notion And of a number with really that the we something case. our that every really what process are said proof that, this in investors, understand way very with deals of we get What of be from of and we for too. specific and healthy for looking are those we growth? – and growth those of feel and e-mail yet So goals of I to deals of remarks down and trying we and I would at been that pace can prepared a a to can't and to deal really confident you, There candidates is we're the discussions in finality consummate quite brand lead the various very I to definity is just the more a

that. potential in anything until all maintain could it and the negotiating people know We that them make need some right be of we the want we we way refranchised we that course, working in and we sure right around And got confidentiality because have we to cases, don't to want want in of us these to order refranchise the for bids, position. and closed competitive a some take transition. be care we've to markets. In weakened publish deals of signed And wouldn't

confidence. breathing deals refranchising deal well effort franchise the of as of It these all just includes already of dispersed. add geographically of activity work. to development in some deals. this sizes all I'll So The this, candidates as I as sizes process too, of terms sort various said, new includes franchising deals. of as is at It potential well of franchise variations various in is stages And as it

too, announce course And I'll deals that much next for in when I'll and this we save will signed all we the due very that up to cycle. those clear; So are them look announcements. Lisa, crystal earnings forward our closed, have make we

Lisa Fortuna

you. Thank

the on partnership? REEF you more how unit X,XXX question, goal? color Next provide can into And it fits the

Bob Wright

too. Yes, happy,

operating fan most the food a think brand. ghost a of truck kitchen was And REEF investors model. I know of of As as I'm a our essentially franchisee their

when does be the And grow able – have. – that reason it's you a think also X,XXX part unit vessels, the have of that there's those the space running at locations. they've couple Once take there's proof way can that and to I'm white optimistic concept at get equipment I we them Potbelly, getting to address that to a at that they up menu all. them to a prove for of could the we And been customers. they brand, look reason that too. great they and call out can in now though. because we we're first us couple grow very first those success, not see the long of is the they allows test of are quickly like finalizing hope can are partner of the specifically those steps successful the that package to a some goal I'd complete, we we with unserved believe Where when

like Potbelly traditional was an for really X,XXX we think be, volumes development what the country. market model. capacity units customers non-traditional about everybody fill franchise development And that's us other holding expected X,XXX serve that from to really contribution wanted in the and investors are of specifically a units And goal, are X,XXX the great I units across important developed that So you our to and the going with this to goal expected built think be? gaps understanding our is for regards help as traditional I what's also. solutions, REEF royalties a of But unit what to with on that to the be understand to for

Lisa Fortuna

our the consumers in casual segment wallets? their final in yourself consumer? are operating noticing fast to watch you is; favorable then see start Or pressure position as do some the from you question And a

Bob Wright

off manage Yes, I good we're question, wallet. our question. Matt's just in we're have to certainly in It not I kind sales it decline. And seeing not their some we sales, and try seeing seeing of builds But like said, consumers that the think. reaction are seen

here of which at is income helps the space, consumer momentum The really where the in as the We're in the business restaurant sit. able the outpace we mentioned, to well been And food we've home inflation pleased the fast strong. with pleased us. we're I So as as casual with consumer. average typical Potbelly rates

the averages, And we've casual is about The that casual. casual and all much dining actually to I to ability business. fast large business makes to check would data something a to to casual casual strong. specifically, fast to which for gap want they compared want I categorically, as larger operate to check. all when And competitive to QSR. special but the fast grow in think only suggests experience, casual but where especially as about like not compare you dining when average question, casual is that's you nicer is Our QSR the your asked to there's for The seen a casual QSR step gap you average way those experiences QSR than that well. average us below dining fast more of not in check really have terms The we don't nearly the compared in

value on and trading us, think catch out a it's the can we casual, are upgrade competitive sits and we we we great business people from really business believe The offer the we believe for So in way an of incredible place QSR. a down advantage. when

Operator

I'll to At now for queue. the questions turn any no there back in Bob this other remarks. call time, are Wright closing

Bob Wright

fullest uncertain for thank notably we you, quarter, you as today's and to pleased times. continue momentum performance highly a today. your navigate this business we confident all We're again remain strong is and unlocking Potbelly and appreciate of in phase the midst in we're continue the progressing And potential. Potbelly. Thank to your night. towards for its brand's interest growth to great time have our just delivered and in support. We growth, next of Have thank excited a your you all

Operator

The conference has now presentation. today's concluded. Thank attending for you

now disconnect. You may

Potbelly (PBPB) 7 Aug 222022 Q2 Earnings call transcript