January 30, 2023

Potbelly Corp. (Nasdaq: PBPB), the Chicago-based company that owns and operates Potbelly Sandwich Shop locations around Phoenix and the rest of the country, has set its sights on growing its presence in the Valley significantly.
The fast-casual dining chain currently has nine locations in the Phoenix metro, but the company wants to grow that to at least 18 during the next several years.
“We have barely scratched the service of our potential in the Phoenix DMA,” Larry Strain, the chief development officer at Potbelly, told the Business Journal. “We could easily double the store presence we have there in the market — plus some — over the next eight to 10 years.”
Potbelly, which was founded in Chicago in 1977 and started expanding in 1997, is in the middle of a major push to get franchisees to expand the company. Of the 443 Potbelly locations open at the end 2021, only 46 were owned by franchisees. Strain said he is confident there are more potential franchisees in Phoenix and that additional stores could do well here.
“We have great brand loyalty, but we don’t have enough shops and enough shop density,” Strain said.
Potbelly has initiated conversations with experienced franchise groups who are already working the Phoenix area with different brands, but Strain said the company is still working the phones.
The ideal future real estate for a Potbelly location is in an end-cap space in a well-trafficked center with a drive-thru. The drive-thru model is somewhat new to the Potbelly concept, and Strain said it isn’t mandatory, but said it has proven to be very successful as of late. A recent Business Journal analysis showed how successful the drive-thru concept has become since the advent of the pandemic and continues to drive retail real estate growth.
Potbelly stores range from 1,600 square feet to 2,000 square feet and can fit into a variety of retail spaces, Strain said.
Potbelly estimates that the initial investment from a franchisee would be around $560,000 and $785,000, but Strain said the goal is to work with operators who would be opening multiple locations. Deals like this can take time and with the current commercial retail real estate market, Strain said there isn’t a hard deadline to get stores open in Phoenix, but he is hopeful to see some new ones in the next year.
“We are very optimistic for 2023 for getting some traction in the Phoenix market,” Strain said.
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