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Potbelly Corporation PBPB shares have risen 13.8% in the past three months against the industry’s decline of 1%. The stock has also outpaced the S&P 500’s growth of 5.8%. The company has been benefiting from its 5-pillar strategic plan, robust digitalization and expansion initiatives.
On Tuesday, the stock closed at $9.40, 34.5% below its 52-week high but 49.7% above its 52-week low. In the past three months, PBPB outperformed industry players like Chipotle Mexican Grill, Inc.’s CMG 5.6% rise, Restaurant Brands International Inc.’s QSR 6% dip and El Pollo Loco Holdings, Inc.’s LOCO 12.9% decline.
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Decoding Tailwinds Behind PBPB’s Rally
Potbelly is benefiting from the five-pillar strategy. PBPB's five-pillar strategy focuses on driving same-store sales growth, expanding its footprint through franchising, enhancing digital capabilities, optimizing operations for efficiency and strengthening brand loyalty. By prioritizing menu innovation, leveraging technology for convenience and fostering franchise partnerships, Potbelly aims to boost profitability while scaling its presence across key markets.
The introduction of popular menu items like the farmhouse chicken sandwich, blueberry muffin cookie and other innovative offerings continues to bolster customer satisfaction and brand perception. Enhancements to the core menu, such as new sauces and toppings, along with innovative beverage offerings, are broadening customer appeal.
In third-quarter fiscal 2024, digital sales accounted for more than 38% of shop sales, with increased customer engagement through the Perks loyalty program, which saw frequency growth across all customer cohorts. Potbelly has been consistently shifting its digital mix toward company-owned channels, a trend that continued in the fiscal third quarter, contributing 100 basis points to the year-over-year improvement in its digital mix.
Expansion efforts are also aiding the company. The company opened eight shops in third-quarter fiscal 2024, leading to 15 for the year. The development pipeline remains strong, with expectations of 24-26 openings for 2024.
The Potbelly Perks loyalty program is a key growth driver and central element of the company’s digital strategy. In the quarter, all customer frequency cohorts within the Perks program showed increased engagement, highlighting the effectiveness of the company’s digital initiatives and promotional efforts. By enabling members to redeem coins for rewards, the program continues to deliver value and strengthen customer loyalty. Overall, Potbelly’s focus on executing its digital strategy is a critical pillar of its growth.