Net income fell 28 percent at Potbelly Corp. as higher labor costs offset rising revenue and sales in the third quarter ended Sept. 27, the company said Tuesday.
Revenue at the Chicago-based sandwich chain rose 13.4 percent, to $96 million, from $84.7 million a year ago. Same-store sales at company-operated units rose 3.7 percent. The company operates 358 of the chain’s 389 locations.
Net income fell despite higher sales, to $1.46 million, or 5 cents per share, from $1.95 million, or 7 cents per share a year ago.
Labor and other related expenses as a percent of sales rose to 28.8 percent, from 28.1 percent in the quarter a year ago.
“We made solid progress executing our priorities during the third quarter, and this is reflected in our top-line performance,” Potbelly CEO Aylwin Lewis said in a statement.
“This was our fourth consecutive quarter of solid sales growth. We are pleased with our strong revenue and same-store sales growth trends, and are focused on driving flow-through of our positive top-line growth to the bottom line.”
Lewis said that the company is planning to bring the chain’s restaurants to new neighborhoods. The company owned 11 new corporate shops, and franchisees opened two units. He also said the company plans to start developing California as a “franchise-only” state.
Potbelly stock fell more than 3 percent in after-hours trading Tuesday.
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