Potbelly Corp. reported a .2 percent decrease in same-store sales at company operated stores for the second quarter ended July 1.
The nearly flat comps improved on the chain’s last quarterly report, where same-store sales dropped 3.6 percent at company stores. It was the Chicago-based chain’s best quarterly results since the fourth quarter of 2016. The turnaround was driven on stronger foot traffic, and higher check averages.
“We are delighted in the improvement,” Johnson told investors during a Tuesday afternoon conference call.
Total revenues increased 2 percent to $110.3 million, up from $108.1 million for the same period last year. The company widened its net loss at $0.4 million, compared to $0.1 million in the same quarter, previous year.
Johnson said Potbelly is still in the early stages of its turnaround effort. Many initiatives have been put in place this year to improve sales under a strategy of “failing fast” especially when it comes to LTOs, Johnson said.
If one promotion doesn’t work, they have a pipeline of others waiting in the wings.
“Eventually we will run out of things that don’t work,” he said. “We’re not betting the farm with any single promotion.”
Another improvement is a better focus on upsells.
When he first started at the company last year, he said employees would upsell about 6 percent of the time. That has grown to 40 percent, according to in-house surveys done with customers.
The sales-focused effort is driving higher check averages as diners are adding on premium ingredients such as avocado and bacon. Even better: Potbelly is seeing more diners add beverages, normally a bleak category for the brand.
“We are intensely focused on suggestive selling,” Johnson said.
The sandwich chain, founded inside an antique store in 1977, is also rolling out a series of menu changes that should hit 60 stores in the coming weeks. Johnson said one of the “menu optimization” strategies is a test of a bundled meal deal, a common trend found at rival fast-food restaurants.
Under the direction of newly named CMO Brandon Rhoten, Johnson said Potbelly is going to become a more relevant social media brand.
He said new marketing initiatives will capture Potbelly’s “quirky voice” and make it part of the social conversation.
This week, for example, Potbelly is going after loyalty members through its app.
Potbelly Perks members can receive deals such as a free shake with purchase or a buy-one-get-one free sandwich. The promotion runs through Aug. 12.
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