Potbelly (PBPB) to Expand in Maryland With New Agreement
Potbelly Corporation PBPB recently announced an agreement with Bryant Keil (the company’s former CEO) and his son Hampden to open and operate new stores in Maryland.
In accordance with the 27-shop deal, 15 additional Potbelly eateries will be constructed over the course of eight years in the Maryland counties of Washington, Frederick, Montgomery, Prince George, Charles, Calvert and St. Mary's. The agreement also covers the refranchising of 12 current restaurant sites. The initiative paves the path for Potbelly to eventually expand its footprint throughout the state's central and southern areas.
Emphasis on Franchise & Expansion
The company emphasizes on the Franchise Growth Acceleration Initiative to drive growth. The emphasis on franchise expansion supports the brand's 'Traffic Driven' Profitability Strategic Plan, including the creation of a new menu and the Tech Stack rollouts (comprising the app, website and the Perks Loyalty Programme).
The company's U.S. franchising expansion plans call for dramatically expanding its national reach in addition to refranchising. Recently, the company finalized a 16-unit shop development agreement in Florida markets, including Broward County (14 shops) and Gainesville (two shops). The transaction boosts market penetration through franchising in Florida and demonstrates strong momentum for the company's Franchise Growth Acceleration Initiative.
Considering its franchising efforts and strength in development pipeline, the company anticipates expanding to 2,000 total units (with at least 85% of them being franchised) in the next 10 years. By 2024, Potbelly anticipates its new unit to grow 10% year over year.
Price performance
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Shares of the company gained 20% in the past six months compared with the industry’s 6.5% growth. The company has been benefitting from continued strength in digital engagement, strong traffic and marketing initiatives. Also, solid recoveries of CBD locations bode well. Going forward, the company emphasizes on strengthening digital engagement via targeted digital advertising, special offerings and a perks loyalty program to drive growth. Also focus on franchise-focused development goals bode well. Earnings estimates for fiscal 2023 have increased in the past 60 days, depicting analysts’ optimism regarding the stock’s growth potential.
Zacks Rank & Other Key Picks
Potbelly currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the Retail-Wholesale sector include:
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The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 9.9% and 27.7%, respectively, from the year-ago period’s levels.
BJ's Restaurants, Inc. BJRI sports a Zacks Rank #1. BJRI has a long-term earnings growth rate of 15%. The stock has rallied 52.7% in the past year.
The Zacks Consensus Estimate for BJ's Restaurants’ 2023 sales and EPS suggests growth of 5.5% and 317.7%, respectively, from the year-ago period’s levels.
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