Potbelly Corporation (PBPB): Business Model Canvas [Dec-2025 Updated]

You're looking to cut through the noise and see exactly how Potbelly Corporation is structuring its growth as we head into late 2025. Honestly, the story here isn't just about warm sandwiches; it's a calculated pivot. They are aggressively leaning into a franchise-led acceleration, aiming for that 2,000-unit goal, while digital sales already account for over 41% of their business. With a pipeline of 816 shops committed and an Adjusted EBITDA projected between $34.0 million and $35.0 million, the blueprint is clear, but the execution risk is defintely real. Dive into this Business Model Canvas to see the nine blocks that define their current strategy and where the next dollar is coming from.

Potbelly Corporation (PBPB) - Canvas Business Model: Key Partnerships

You're looking at the core relationships Potbelly Corporation relies on to scale its sandwich concept, especially as it navigates the late 2025 environment where franchise growth is the main engine. Here are the hard numbers defining those key partnerships.

Multi-unit franchisees driving unit growth acceleration are central to Potbelly Corporation's strategy to reach its long-term goal of at least 2,000 shops in the U.S.. The company is actively incentivizing these partners.

• Full Year 2025 Unit Growth Target: at least 38 new shops.
• Q2 2025 Unit Openings: 8 new shops, exceeding the expectation of 6.
• Q3 2025 Unit Opening Expectation: at least 8 new shops.
• Q1 2025 Franchise Commitments: 40 new shop commitments signed.
• Total Open and Committed Shop Count (as of March 30, 2025): 766.
• Q2 2025 Franchise Commitments: 54 new shop commitments locked in.
• The Potbelly 50/50 Large Area Developer Incentive Program rewards development areas including Atlanta, GA, Phoenix, Denver, Ohio, Virginia, Pennsylvania, parts of Florida and Tennessee, Dallas, Houston and other Texas markets.
• The incentive program targets franchisees opening at least 15 Potbelly shops in eight years or less.

The focus on digital channels, which includes third-party delivery providers, shows a significant shift in fulfillment strategy.

• Digital sales penetration reached over 42% of total shop sales in Q1 2025.
• This represented a 200 basis point increase year-over-year from Q4 2024's 40% penetration.

Partnerships with food and commodity suppliers are managed to maintain margin performance, even with external pressures like tariffs.

Metric Q1 2025 Value Q2 2025 Value Shop-Level Margin 13.7% 16.7% Commodity Cost Lock-in (Yearly) N/A About 85% for the year

Commodity cost deflation supported the Q1 2025 shop-level margin expansion. For Q2 2025, food costs were reported as being locked in on baskets 99% for that quarter.

Real estate developers for new shop locations and flexible formats are essential for executing the unit growth plan. The company is focused on accelerating unit openings to hit its 2025 target.

• Full Year 2025 Guidance for Unit Growth: at least 38 openings.
• Total open and committed shop count as of March 30, 2025: 766.
• The long-term potential target is at least 2,000 shops.

Finance: draft 13-week cash view by Friday.

Potbelly Corporation (PBPB) - Canvas Business Model: Key Activities

Executing the franchise-led growth acceleration initiative

Potbelly Corporation is actively driving expansion through its franchise partners. The focus is on converting high-quality candidates into franchisees to grow the total system footprint. The company is working to expand its committed shop pipeline, which serves as the forward-looking indicator for future revenue streams from franchise royalties and initial fees.

Metric	Q1 2025 End	Q2 2025 End	FY 2025 Target (Full Year)
Total Open and Committed Shops	766	816	N/A
New Franchise Commitments Signed (Quarterly)	40	54	N/A
New Shop Openings (Quarterly)	4	8	At least 38 total openings
Company-Operated Shops Open (Approximate)	N/A	340 (as of Q2 2025 end)	N/A

The company also signaled a shift in its company-owned strategy, with management aiming to open 20 company-owned restaurants annually starting in late FY 2025, complementing the franchise expansion. As of December 29, 2024, the base was 346 company-operated shops and 96 franchise-operated locations.

Managing and enhancing the Potbelly Perks loyalty program and digital assets

Digital engagement is a core activity, with the company-owned digital business representing over 41% of total shop sales in the second quarter of 2025. The Potbelly Perks loyalty program is central to this, using a tiered coin system to drive frequency and capture more direct-channel sales away from third-party platforms. The program saw membership acquisition grow 87% during the fourth quarter of 2024.

• Rookie Level: Earns 10 Coins per $1 spent.
• Pro Level: Earns 11 Coins per $1 spent (achieved after $200 annual spend).
• Boss Level: Earns 12 Coins per $1 spent (achieved after $473 annual spend).

The lowest redemption threshold is 200 coins for menu items. The relaunch of the website and app in June 2025 is intended to further grow these digital channels.

Developing new menu items, like the Prime Rib Steak Sandwich

Menu innovation is a key lever for driving top-line performance and traffic. The introduction of the Prime Rib Steak Sandwich in mid-April 2025, the first-ever steak sandwich on the permanent menu, supported same-store sales growth in the second quarter. This innovation, along with everyday value offerings like the $7.99 Skinny Value combo meals, helped drive traffic despite consumer pressure.

Operating and managing the company-owned shop base

Operational excellence focuses on driving sales leverage and margin expansion across the company-owned fleet. Average Weekly Sales (AWS) for company-operated shops reached $27,040 in the second quarter of 2025, a 3.6% year-over-year increase. Company-operated same-store sales grew 3.2% in the second quarter of 2025, following a 0.9% increase in the first quarter of 2025. Restaurant-level margins improved to 16.7% in Q2 2025, up from 15.7% the prior year, reflecting disciplined cost controls on food, labor, and occupancy.

Potbelly Corporation (PBPB) - Canvas Business Model: Key Resources

You're looking at the hard assets and intangible advantages that make Potbelly Corporation run. These aren't just line items on a balance sheet; they are the foundation of their competitive edge right now, late in 2025.

Established brand equity and neighborhood shop concept (since 1977)

The brand's history is a tangible resource. Potbelly Corporation started its first shop in Chicago in 1977. This longevity builds trust, which is hard to replicate.

Proprietary digital platform and customer data from the Perks program

The digital ecosystem is a growing resource. For the first quarter of 2025, digital sales accounted for over 42% of total shop sales. The loyalty engine, the Potbelly Perks program, has a clear structure: members earn 10 Coins for every $1 spent, with higher tiers earning more. This generates valuable customer data for targeted marketing and menu planning.

Strong pipeline of committed franchise agreements, totaling 816 shops (open and committed) as of Q2 2025

The franchise pipeline represents future growth capacity secured by contract. As of June 29, 2025, the total number of open and committed shop count reached 816. This pipeline supports the long-term goal of reaching 2,000 shops, with at least 85% of those locations being franchised. The current physical footprint includes more than 90 franchised shops in the United States as of Q2 2025.

Here's a quick breakdown of the unit count as of mid-2025:

Resource Metric	Value as of Q2 2025 (or latest data)
Total Open and Committed Shops	816
Total Shops in the United States (System-wide)	More than 440
Franchised Shops in the United States	More than 90
Digital Sales Penetration (Q1 2025)	Over 42%

Company-owned real estate and shop assets (e.g., 440 locations at Q2 2025)

The physical locations are the core operating assets. Potbelly Corporation has more than 440 shops in the United States as of Q2 2025. These company-operated locations, which are the difference between the total shops and the franchised shops, represent significant fixed assets on the balance sheet. The total assets for Potbelly Corporation were reported at $265,241 thousand as of June 29, 2025. The company is actively managing this asset base while prioritizing franchise growth.

You'll want to track the pace of new openings against the committed pipeline-that's where the near-term execution risk lies. Finance: draft 13-week cash view by Friday.

Potbelly Corporation (PBPB) - Canvas Business Model: Value Propositions

You're looking at how Potbelly Corporation (PBPB) is delivering on its core promise to customers as of late 2025. It's all about the food experience, convenience, and value, which you can see reflected in their latest operational metrics.

The foundation is the warm, toasty sandwich and signature menu items, which they continue to innovate. For example, the introduction of the Prime Rib Steak Sandwich has been a positive driver for top-line performance, showing they listen to customer requests for craveable options. They focus on made-to-order quality, which is key in the fast-casual space.

Here's a quick look at how some of those product and service execution metrics stacked up in the second quarter of 2025:

Metric	Value (Q2 2025)	Context/Comparison
Company-Operated Same-Store Sales Growth	3.2%	Year-over-year increase
Average Weekly Sales (AWS)	$27,040	Increased 3.6% year-over-year
Total Revenues	$123.7 million	3.4% increase year-over-year
Adjusted EBITDA	$9.6 million	Increased 13.0% year-over-year

The service model centers on delivering Fresh, Fast & Friendly service within a local neighborhood environment. This cultural execution is what they believe drives the customer experience, which is the margin in this business. They are executing this in a growing footprint, having opened eight new shops and secured 54 additional franchise shop commitments in the second quarter of 2025 alone, bringing the total open and committed shop count to 816 locations as of June 29, 2025.

Digital convenience is a massive layer of their current sales, removing friction for you as a customer. In the second quarter of 2025, the digital business represented over 41% of total shop sales. This growth is supported by investments in digital advertising and the Potbelly Perks loyalty program, which is effectively moving customers up the frequency curve.

Potbelly Corporation is also layering in everyday value and targeted digital promotions to keep things accessible for price-sensitive customers. They are balancing premium items, like the Prime Rib Steak Sandwich priced between $14 and $18, with value options. For instance, they offer guests a pick-your-pair and skinny combos for $8. Management is planning for modest price increases in the mid-1% range across Q2, summer, and fall, targeting a full-year gross price increase of just over 3% to keep pace with input costs.

You can see the overall expectation for this value and convenience strategy reflected in the revised full-year 2025 guidance:

• - Full Year 2025 Guidance for Same-Store Sales Growth: Range of 2.0% to 3.0%.
• - Full Year 2025 Guidance for Adjusted EBITDA: Raised to approximately $34.0 million to $35.0 million.

Finance: draft 13-week cash view by Friday.

Potbelly Corporation (PBPB) - Canvas Business Model: Customer Relationships

You're looking at how Potbelly Corporation (PBPB) connects with the people buying their sandwiches and shakes as of late 2025. It's a mix of digital automation, transactional convenience, and that old-school, friendly vibe they aim for in the shop.

Automated engagement through the Potbelly Perks loyalty program

The Potbelly Perks loyalty program is central to driving repeat business through automated engagement. Potbelly Corporation is actively making incremental investments in consumer-facing digital assets and data capabilities to make marketing more effective. They are working to unlock new capabilities within Perks to offer enhanced personalization, which is expected to drive additional visits by making it easier for customers to engage with and redeem rewards. The relaunched program rewards members faster, using a coin system where members earn 10 Coins for every $1 spent, with higher tiers earning more. Redemption is flexible, starting at just 200 Coins for items like Sides, Cookies, Shakes, and Fountain Drinks, in addition to entrées.

The success of this digital push is clear in the sales mix:

Metric	Period	Value
Digital Business as % of Total Shop Sales	Q2 2025	41%
Digital Business as % of Total Shop Sales	Q1 2025	Over 42%
Digital Sales YoY Increase (Q1 2025 vs Q1 2024)	Q1 2025	200 basis points
Digital Sales YoY Increase (Q2 2025 vs Q2 2024)	Q2 2025	Approximately 140 basis points

Transactional relationships via third-party delivery apps

Transactional relationships are heavily supported by third-party delivery apps, which provide necessary convenience for off-premise orders. This channel is part of the larger digital business that accounted for over 41% of total shop sales in the second quarter of 2025. However, you have to remember the inherent risk here; the reliance on these external services introduces potential issues related to maintaining food quality and overall customer satisfaction outside of direct Potbelly Corporation control. The company is focused on streamlining digital orders through initiatives like the Potbelly Digital Kitchen to manage this better.

Personal, in-shop service emphasizing a friendly, neighborhood feel

Despite the digital growth, the core relationship remains rooted in the in-shop experience. Potbelly Corporation emphasizes a welcoming environment and personalized customer service, aiming to be the most loved sandwich brand in every neighborhood. This personal touch is what they believe differentiates them in the competitive fast-casual sector. The performance of these physical locations shows customers are still coming in:

• Company-operated same-store sales grew 3.2% in Q2 2025.
• Q2 2025 same-store sales growth was driven by a 1.1% increase in transactions.
• Company-operated same-store sales increased 0.9% in Q1 2025.
• Average Weekly Sales (AWS) for company-operated shops in Q1 2025 reached $24,550.

As of the end of Q2 2025, Potbelly operated 447 shops total, with 340 being company-owned, meaning a significant portion of these personal interactions happen under direct corporate management. That's a lot of sandwiches being made with a smile.

Finance: draft 13-week cash view by Friday.

Potbelly Corporation (PBPB) - Canvas Business Model: Channels

You're looking at how Potbelly Corporation moves its toasted sandwiches and shakes to the customer as of late 2025. The channel strategy is clearly bifurcated: physical locations drive the core experience, while digital channels are rapidly becoming the primary engine for transaction volume.

Company-operated shops remain the backbone of the brand, serving as the primary sales channel and often the testing ground for new operational efficiencies. As of the end of the second quarter of fiscal year 2025, Potbelly Corporation had 340 company-operated shops open. Management has signaled a return to corporate development, aiming to open 20 company-owned restaurants annually starting in late fiscal year 2025, which complements the franchise expansion efforts. These corporate stores are strategically placed, often leveraging high-volume markets like Texas and the Midwest.

Franchised shops are the key channel for achieving the ambitious long-term expansion target. Potbelly Corporation has a stated goal of reaching 2,000 total shops, with at least 85% of those locations being franchised. This franchise-led approach is designed to be asset-light, allowing for faster market penetration by leveraging franchisee capital. By the close of the second quarter of 2025, the company reported 107 franchised shops open. The pipeline for this growth is robust; for instance, the second quarter of 2025 alone saw the signing of 54 new franchise shop commitments. The total open and committed shop count stood at 816 as of June 29, 2025.

The shift toward digital channels is significant, driven by the Potbelly app and website for pickup and delivery orders. This focus is paying dividends, with digital sales penetration reaching over 42% of total shop sales in the first quarter of 2025, and settling slightly lower but still strong at 41% in the second quarter of 2025. These digital investments include a redesigned website and mobile app rolled out in June 2025. The company is actively working to convert demand through these digital assets, supported by the Potbelly Perks loyalty program.

Regarding third-party delivery platforms, while specific revenue splits aren't always itemized separately from the overall digital sales figure, their use is implicitly captured within the high digital penetration numbers, alongside direct-to-consumer app/web orders. The overall digital sales figure of 41% to 42% demonstrates that off-premise consumption, facilitated by both proprietary and external platforms, is now a critical component of the sales mix.

Here's a quick look at the channel mix and growth metrics as of the latest reported quarter:

Channel Metric	Value as of Q2 2025 (or latest)	Context/Target
Total Open & Committed Shops	816	Long-term goal is 2,000 units
Company-Operated Shops (Open)	340	Plan to open 20 corporate units annually starting late FY 2025
Franchised Shops (Open)	107	Target is at least 85% franchised of the 2,000 unit goal
Total Open Shops	447	Represents about three-quarters of the current open base
New Franchise Commitments Signed (Q2 2025)	54	Part of the Franchise Growth Acceleration Initiative
Digital Sales Penetration	41%	Up from 40% in Q4 2024; Q1 2025 was over 42%
FY 2025 Total New Shop Openings Guidance	At least 38	Includes both company-operated and franchise openings

The strategy clearly leans on franchising for scale, using smaller, flexible prototypes to lower franchisee build costs below the historical average of $650,000 per unit. Meanwhile, the direct-to-consumer digital experience, which accounts for a massive portion of sales, is being optimized with new technology like the Digital Kitchen platform, which is standard in new locations. Finance: draft the Q3 2025 cash flow projection incorporating the expected capital expenditure for the 20 planned corporate openings by year-end.

Potbelly Corporation (PBPB) - Canvas Business Model: Customer Segments

You're looking at the core groups Potbelly Corporation (PBPB) is serving and partnering with as of late 2025. This isn't just about who buys a sandwich; it's about who drives the digital ecosystem and who funds the physical expansion.

Office workers and lunch-time commuters seeking quick, quality meals remain a foundational segment, especially given the chain's urban presence. These patrons are responding to menu innovation, like the Prime Rib Steak Sandwich, which supports top-line performance. Company-operated same-store sales showed growth of 3.2% in the second quarter ending June 29, 2025. The Average Weekly Sales (AWS) for company-operated shops was reported at $27,040 in that same quarter. This group values speed and consistency, which the company supports with its focus on operational efficiency.

Digital-first consumers utilizing the app and loyalty program represent a rapidly growing and highly engaged part of the customer base. Digital channels accounted for over 41% of total shop sales in Q2 2025, up from over 42% in Q1 2025. The Potbelly Perks loyalty program is a key tool used to enhance customer engagement and drive frequency. These consumers are responding to investments in consumer-facing digital assets and data analytics.

Families and local neighborhood patrons seeking a casual dining experience are targeted by the brand's core identity as an 'iconic neighborhood sandwich shop concept'. The company emphasizes a 'warm, neighborhood vibe' and offers value-added options, such as the pick-your-pair or skinny combos starting around $8 in some areas. This segment is crucial for driving consistent, non-peak traffic.

Multi-unit franchisees (as partners for the growth model) are essential customer segments because they fund and execute the capital-light expansion strategy. Potbelly is aggressively pursuing franchise development to meet its goal of reaching 2,000 locations. As of the second quarter of 2025, the total open and committed shop count stood at 816 units, a 23% year-over-year increase from 663 shops in Q2 2024. Franchise revenue growth was strong, increasing 30.8% in Q1 2025, supported by a 26% increase in franchise units. Notably, 70% of the company's growth is driven by current franchisees expanding their portfolios. The estimated Item 7 Cost Guidance for a new location is between $654K and $1.274M per unit.

Here's a quick look at the unit growth focus:

• Full-year 2025 unit growth guidance: At least 38 new shop openings expected.
• Q1 2025 new franchise shop commitments: 40.
• Franchisee development agreement size: Typically 4-6 trade areas.
• System-wide locations (Open & Committed) as of Q2 2025: 816.

The focus on smaller, flexible prototypes is designed to bring development costs below the historical average of $650,000 per unit for these partners.

Potbelly Corporation (PBPB) - Canvas Business Model: Cost Structure

Cost of Goods Sold (COGS), including food and commodity costs (inflation expected 2% to 3% in 2025)

For the year to date ended June 29, 2025, Food, Beverage, and Packaging Costs were reported at 26.3% of shop sales. This figure benefited from a 40-basis point commodity deflation during the second quarter. Potbelly Corporation maintained its full-year inflation forecast of 2% to 3% for food and paper inputs. The trailing twelve months COGS % AVG 10YRS as of June 30, 2025, stood at 27.61%.

Shop-level labor and operating expenses (a major component of company-owned shops)

Shop-level costs for the second quarter of 2025 showed the following breakdown as a percentage of net company-operated sandwich shop sales:

Expense Component	Percentage of Shop Sales (Q2 2025)
Labor Expenses	28%
Occupancy Costs	10.6%
Other Operating Expenses	18.4%

The shop-level profit (loss) margin is a non-GAAP measure.

General and Administrative (G&A) expenses for corporate support and digital investments

For the year to date ended June 29, 2025, Total Revenues were $237,390 thousand, and GAAP net income attributable to Potbelly Corporation was $2,426 thousand. This GAAP net income represented 1.1% of Year to Date Revenues. Capital Expenditures (CapEx) anticipated for the full year 2025 were approximately $30 million, allocated to technology, restaurant technology replatforming, remodels, and densification.

Franchise incentives and development costs for the 38+ new units planned for 2025

Potbelly Corporation expected at least 38 new unit openings for the full year 2025.

• Average new shop investment: approximately $750,000.
• Initial Franchise Fee range: $20,000 - $40,000.
• Ongoing Royalty Fee: 6% of gross sales.
• National Marketing Contribution: 3% to 4% of gross sales.
• Total committed shop count as of June 29, 2025: 816.

The company earns an initial franchise fee and a franchise development agreement fee, with unearned portions recorded as a contract liability.

Potbelly Corporation (PBPB) - Canvas Business Model: Revenue Streams

You're looking at the core ways Potbelly Corporation brings in money as of late 2025. It's a dual-stream model, mixing direct sales from their own stores with income from their growing franchise network. Honestly, the split between these two is key to understanding their financial health right now.

The biggest chunk comes from the food and drinks sold directly to customers in their company-owned locations. For the second quarter of 2025, this segment delivered approximately $118.4 million in revenue, reflecting a year-over-year increase of about 2.5%. This revenue stream also includes the growing digital business, which is a significant driver; for instance, digital sales accounted for over 41% of total shop sales in one report covering that period.

The second main stream is the franchise side, which provides more predictable, high-margin revenue. Franchise royalties and fees for the second quarter of 2025 were reported at $5.3 million, showing strong year-over-year growth of approximately 27.7%. This growth is directly tied to their successful unit expansion strategy.

To give you a clearer picture of the scale, here's how the Q2 2025 revenue components stack up against the total reported revenue for the period:

Revenue Component	Q2 2025 Amount	Notes
Company-Operated Shop Sales	$118.4 million	Reflects food and beverage sales, net of allowances.
Franchise Royalties and Fees	$5.3 million	Franchise revenue, including fees and rent income.
Total GAAP Revenue	$123.7 million	Sum of company-operated sales and franchise revenue.
System-wide Sales	$154.2 million	Includes revenue from both company and franchised shops.

While catering and large-order sales aren't broken out separately in the primary reporting, they are definitely baked into that overall company-operated shop sales number. The focus on digital channels, which includes many larger or pre-ordered items, is a key part of driving that top-line shop revenue.

Looking at the full-year outlook, Potbelly Corporation projects profitability based on these revenue streams:

• Full-year 2025 Adjusted EBITDA is projected to be between $34.0 million and $35.0 million.
• The Q2 2025 Adjusted EBITDA achieved was $9.6 million, representing 7.8% of total revenue for that quarter.
• Company-operated same-store sales growth for Q2 2025 was 3.2%.
• The company reiterated its plan for unit growth of at least 38 new shops for the full year 2025.

The current guidance suggests they expect the momentum seen in Q2 to carry through the rest of the year to hit that EBITDA target. Finance: draft 13-week cash view by Friday.