Easier-to-navigate menu boards and combo meals helped drive traffic at Potbelly, which experienced the best traffic trends since the fourth quarter of 2015, the company said Friday.
Total revenue for the third quarter ended Sept. 30 edged up 0.9 percent to $107 million, compared to $106.1 million for the same quarter last year. Same-store sales at company stores decreased 0.2 percent.
While same-store sales were negative, CEO Alan Johnson said he was pleased at the progress the Chicago-based fast-casual chain has made since the company launched its recovery plan earlier this year.
“We proved for the first time in a long time that we could drive comp through improving traffic trends,” said Johnson, who was named CEO last December.
“But we still recognize there’s much work to be done to drive the business.”
During the third quarter, Johnson said the company focused on various digital marketing and menu experiments to attract new customers and earn repeat visits.
Among the tests included adding easier-to-navigate menu boards in 58 locations. The new boards were aimed at maximizing the guest check with a “more shoppable menu,” Johnson said.
Johnson said the new menu boards will likely rollout to the rest of the chain in the first half of 2019.
Potbelly also tested a half sandwich/half salad bundled meal, and a build-your-own combo meal featuring a sandwich, chips and a fountain drink.
“We believe this to be an impactful way to bring value to customers while driving spend,” Johnson said.
The company’s loyalty program also ramped up daily promotions to drive traffic. During the quarter, the company added 1.1 million loyalty members.
Johnson said repeat visits and attracting new customers are crucial to driving sustainable same-store sales.
Still headwinds in the industry, which is seeing overall traffic declines, forced Potbelly to downgrade its same-stores sales guidance for the year from flat for company-operated stores to a range of -1.5 percent to -2 percent.
The Chicago-based chain reported a net loss of $1.9 million, or a loss of 8 cents per share, compared to $240,000 loss, or 1 cent per share decline, for the same quarter a year earlier.
Restaurant analyst Stephen Anderson of Maxim Group said in a post-earnings report that he’s encouraged by the promotional activity in the Potbelly Perks loyalty program and the menu simplification test.
“We argue this strategy will help generate repeat traffic, as well as interest in premium, non-promotional limited-time offers,” Anderson wrote.
Potbelly closed the quarter with 435 company stores and 53 franchise units.
Contact Nancy Luna at [email protected]
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