There are over 13,916 sandwich stores in the United States and among those numbers is the infamous Potbelly. Known for their delicious toasted sandwiches, Potbelly has been around since 1977. This chain offers a variety of hot and cold sandwiches, salads, and soups and with an appealing “to-go” business for those looking for a quick and filling meal.
If you’re thinking of opening a Potbelly franchise, you’re in luck because the chain is open for franchising. In fact, the companies management is aiming for 2,000 locations with 85% of these being operated by franchisees.
How much does it cost to open a Potbelly Franchise? To start operating this sandwich chain, you’ll need a liquid capital of $200,000 and a net worth of $500,000. The average investment range for Potbelly is $534,950 to $874,000 with a franchise fee of $40,000.
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- Financial Requirements and Fees
- Average Sales / Revenue per Year
- Potbelly Franchise Facts
- How Much Does a Potbelly Franchise Make in Profit?
- Advantages of a Potbelly Franchise
- Challenges of a Potbelly Franchise
- Is the Potbelly Franchise Right For You?
Financial Requirements and Fees
Here are the financial requirements Potbelly requires for franchise applicants:
|Fees / Expenses||Financial Amount|
|Total Investment||$534,950 to $874,000|
In addition to all these fees listed above, Potbelly Sandwiches has a royalty fee of 6% and ad royalty fee of up to 4%. This means 10% of revenue will be taken off the top. The term of the franchise agreement is 10 years and renewable.
Average Sales / Revenue per Year
According to Potbelly’s annual report for 2021, the total revenue for the sandwich chain was $380.1 million. This is a 30% increase from their 2020 revenue that was also driven by a 30% increase in Potbelly’s same-store sales.
Potbelly Franchise Facts
|Incorporated Name||Potbelly Sandwich Shop|
Potbelly was founded back in 1977 by Peter Hastings. Hastings and his wife opened an antique store in Chicago where the main items sold were more on vintage goods. One antique item placed in the shop was a potbelly stove. This prompted Hastings to create sandwiches, specifically sub sandwiches on Italian bread, and toast them on the potbelly stove to sell them to customers. The sandwiches became so popular they renamed the store to Potbelly and focused on selling sandwiches instead.
In 1996, a customer named Bryant Keil fell in love with Potbelly’s sandwiches and bought the shop from Hastings. From one store, Keil grew the Potbelly concept to over 250 stores in 12 years.
At present, Potbelly has more than a dozen choices of toasted sandwiches on the menu. The menu includes grilled chicken, turkey breast, roast beef, salami, meat balls, and more. For vegetarians, they also have a veggie melt, peanut butter and jelly sandwich, and a classic grilled cheese.
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Sandwiches aren’t the only thing Potbelly is known for. As the store grew through the years, they added more items to their menu. Potbelly also serves soups to pair with their sandwiches such as broccoli cheddar, chicken pot pie, and chili. They also serve a variety of green salads, freshly baked cookies, and milkshakes.
Potbelly’s growth through the years has been noticed by several companies. Inc. Magazine awarded Potbelly as one of “America’s 500 Fastest Growing Private Companies”. Crain’s Business also featured Potbelly in their “50 Fastest Growing Companies” list.
To franchise Potbelly, complete the application form available on their website and submit it. Once received and the application qualifies, you’ll receive a call from the Potbelly Franchise Team. To better get to know Potbelly before signing anything final, Potbelly encourages you attend a “Discovery Day” at their Potbelly Support Center located in Chicago. You’ll also get to experience a “day in the life” of a Potbelly franchisee.
Once you get a full understanding of what it’s like being a Potbelly franchisee and you’re ready to push through with the franchise, you will then get to sign the business’s Franchise Agreement. You’ll also start looking for your Potbelly location. You will also be attending a design and construction workshop as well as receive all the trainings that Potbelly needs for you to undergo before becoming a franchisee.
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The types of stores Potbelly offers for franchisees are old school Potbelly shops that have dine-in capabilities, mall shops which are small and occupies a corner of a mall or establishment that’s perfect for take-outs, drive-thru shops which offer both dine-in capabilities and drive-thru windows, and strip mall shops which can be a small version of old school shops.
The available areas that Potbelly is open to franchising are:
- New Mexico
- South Carolina
- West Virginia
- New Jersey
- Rhode Island
- New Hampshire
Potbelly’s target market consists of people who enjoy sub sandwiches especially ones that are toasted. The restaurant appeals to all socio-economic levels. Their meals are ideal on the go so if anyone is looking for a quick meal or something to eat while they’re out and about, Potbelly is a great meal choice.
As of July 2020, Potbelly’s CEO and president is Robert D. Wright. Potbelly is headquartered at Chicago, Illinois.
How Much Does a Potbelly Franchise Make in Profit?
According to Macro Trends, Potbelly has earned $275 million in gross profit for the year 2020. The company has set revenue expectations of $1.3 million in sales per unit by 2023.
Advantages of a Potbelly Franchise
Looking for more reasons to franchise Potbelly? Here are a few advantages you can expect when you sign up.
As mentioned above, Potbelly has a lot of sandwich options that customers can come back daily and find something new to eat. The sandwiches can either be for meat lovers or vegetarians so even those looking for a healthy option can enjoy Potbelly.
And if sandwiches aren’t something your customers are craving for the day, they can opt to have sides and soups which consist of mac and cheese, chili, broccoli cheddar, and more. They also have salads if they want to try something low carb.
The bottom line is that Potbelly may cater specially to sandwich lovers but there are other items on the menu that can be enjoyed by others opting to choose something different than a sandwich.
One of the things that franchisees can get to enjoy when they franchise Potbelly is the store type options they can choose from. Franchisees can choose from a full dining set up, a drive-thru set up, or even just a mall shop. These options mean a lot to those looking for a store set up that they can handle.
But of course store types also depend on the location you chose. Working closely with the Potbelly Franchise Team will help you understand more which store type to choose from.
As mentioned earlier, Potbelly is in a period of expansion with the company hoping to reach 2,000 units in the next few years. The numbers back up these ambitions with new store openings up 14.1% in Q4 of 2021 when matched up against pre-pandemic numbers. If the company is able to hit their average unit volumes of $1.3 million per store, you can rest assured they’ll have franchisees knocking on their door to jump onboard.
Over the past 24 months, Potbelly has put a lot of effort into improving online ordering and their app. These efforts have paid off with 36% of all sales being placed using digital orders. Over the past two years, we’ve all come to recognize the value of being able to operate with takeout and accept online orders. The tech stack adds another layer of protection to the business.
Challenges of a Potbelly Franchise
Nothing is a breeze when it comes to running a business even if it is an established one like Potbelly. There will be challenges along the way and here’s what you can expect.
Potbelly isn’t the only sub sandwich place in the United States. There are also other well-known sandwich chains like Jimmy John’s with over 2,700 locations and Subway with over 43,000 locations around the globe. Potbelly only has 400 locations so you can understand why the others are more well-known.
Potbelly will need to have an aggressive expansion and national marketing campaign in order to catch up to the competition. Still, the competition proves there’s runway to grow the sandwich shop further.
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Limited Areas of Availability
Potbelly isn’t available to franchise anywhere in the United States. There are only limited areas where you can open a Potbelly. We’re not sure what the reason is for this but we hope that the company can open more areas so it’s more accessible to customers around America. This could happen soon given the companies ambitious unit goals. They’ve got to open the locations somewhere.
Is the Potbelly Franchise Right For You?
Potbelly may not be a household name when it comes to sub sandwiches but it has the potential to become one even after decades in business. They have also published strong financial reports and but if you’re really interested in franchising them, it’s also best to consult with a professional to go over their terms and financial analysis and read the most up-to-date franchise disclosure document.
What is an alternative Potbelly franchise?
If you’re looking for more sub sandwich options, you can check out Subway. Subway is known around the world and has been operating since 1965. They have over 43,000 locations and a customizable menu which allows customers to choose items to put in their sandwiches.
To franchise Subway, expect investments to be around $150,050 to $328,700. Check out our full guide in franchising Subway here.
Are you ready to open your very own Potbelly? May this guide help you in your decision to bring a Potbelly near you.