Market Overview

Some Highlights from Potbelly's Q4 Earnings Conference Call


Below are some highlights from Potbelly's (NASDAQ: PBPB) Q4 earnings conference call:

  • An estimate for the impact of more severe weather this year versus a year ago in Q4 is roughly 120 basis points for the quarter and 310 basis points for the month of December.
    • Knowing this, the 7.7% comp growth was driven primarily by check growth from our price increase in Q1.
  • For the year, the company-operated comparable same-store sales were up 1.5%.
  • The ROI (Return on Investment) for our 2011 class shops is well above the 25% target.
  • In Q4 of 2013, we determined our deferred tax assets should be measured based on a federal tax rate of 35% .
  • Long-term growth targets
    • Total new shop growth of at least 10%
    • Low single-digit comparable shop sales growth
    • Annual adjusted EBITDA growth of 20%
    • Annual adjusted net income growth of 20% or more
    • Return on capital investments of at least 25%.
  • Q1 model is generally uncertain, but management is optimistic in hitting long term targets (partially offset by weather, but don't let that fact cloud the effects of other factors)
  • Upcoming expenses originate from moving Potbelly nation folks from the core business to a hub city. It's the training and hiring of folks in those new cities.
    • General support: real-estate folks, construction folks.
    • Expenses of being a public company
  • Growth could be driven by building our backline business. We think it's a opportunity that is in early stages, looking forward to 2014.
  • Looking at potential inflation around dairy, pork and beef, and to some extent, beverages. Per policy, we only increase pricing to cover inflation.
    • Modest pricing changes expected
  • So we were at mid 60% for the managers who live in their neighborhood, its long-term goal is 80% and we're trending towards that.
    • Helps with mobilization
    • Many can't afford to live near stores (Washington, New York, etc.)

Posted-In: Earnings News


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