Potbelly Corp., the sandwich shop, is testing a low-priced $7.99 everyday combo meal amid consumer unrest and opening a smaller prototype store, executives said Thursday
The Chicago-based fast-casual brand, which reported its results for the second quarter ended June 30, “tested low-cost combo meals every day to give our more price-conscious, casual customers the opportunity to continue to come to our stores frequently,” said Robert Wright, CEO and president of Potbelly.
“The test produced a clear winner,” Wright said. “Not only is the $7.99 skinny meal combo an answer to our customers’ craving for Potbelly, but we’ve also given our less frequent, price-conscious guests a good reason to keep us on their menu while protecting our profit margin.”
“Starting in late July, we expanded the $7.99 daily combo offer, which includes a thin turkey, ham or chicken sandwich with fries and a drink, to almost the entire system,” Wright said.
Sales trends at the start of the third quarter suggest that consumers are still under pressure and are “carefully managing their restaurant spending, primarily by limiting their restaurant visits in favor of grocery shopping,” Wright noted.
In the second quarter, Potbelly introduced a new prototype store that is smaller than usual.
“To be clear, 1,800 square feet is a target space,” Wright said. “We know that the brand can deliver everything we want to deliver in 1,800 square feet.”
““To be honest, we have some 150-square-foot franchise locations throughout the year,” he said. “So we can go smaller. In some cases, franchising can go a little bigger.”
For the second quarter ended June 30, Potbelly’s net income was $34.7 million, or $1.13 per share, compared with $2.2 million, or seven cents per share, in the same period a year ago. Revenue was $119.7 million, compared with $126.6 million in the same quarter a year ago.
In the second quarter, sales in stores increased by 0.4%.
Potbelly Corp. was founded in 1977 and has more than 425 stores in the United States, more than 80 of which are franchises.
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