The fast-casual restaurant landscape is a fiercely competitive arena where brands must continuously innovate to capture market share, yet Potbelly Sandwich Works has managed to orchestrate a remarkable period of growth that sets it apart from the pack. The company’s performance throughout 2025 has created a powerful tailwind, propelling it toward an ambitious expansion phase with a development pipeline that is stronger than at any point in its history. This is not the result of a single initiative but a comprehensive strategy that harmonizes aggressive development goals, outstanding shop-level economics, and astute corporate partnerships, culminating in a brand that is rapidly expanding its national footprint.
Fueling Growth Through Performance and Pipeline
A Blueprint for Aggressive Expansion
Potbelly has laid out a clear and ambitious roadmap for its nationwide growth, moving with a speed and scale that signals a new era for the brand. With plans to conclude 2025 by opening 30 new shops, the company has already laid the groundwork for an even more accelerated future by securing a staggering 387 new shop commitments. This robust and secured development pipeline provides a tangible foundation for its long-term vision, offering a high degree of predictability in a volatile market. Looking ahead to 2026, the company intends to significantly increase its pace of openings, targeting 50 new locations. This represents a formidable systemwide growth rate of over 10 percent, a figure that is particularly noteworthy in the saturated restaurant industry. This expansion is not merely about adding locations but about strategically building toward major brand milestones that capture public and investor attention.
The celebration of its 500th shop opening, anticipated to occur in 2026, will serve as a powerful symbol of this new chapter. However, this milestone is just one step in a much larger strategic vision. The company’s leadership has set a long-term goal of exceeding 2,000 locations across the United States, a target that would transform Potbelly from a significant regional player into a true national competitor. Achieving such scale requires meticulous planning, from sophisticated market analysis and demographic targeting to streamlined construction and supply chain logistics. The strength of its current development pipeline demonstrates that the foundational work for this long-term journey is not only underway but is already yielding concrete results, de-risking the path to future growth and solidifying its position as a brand on an upward trajectory.
The Allure of Strong Unit Economics
The engine driving Potbelly’s rapid franchise development is the exceptional financial performance at the shop level, which makes it a highly attractive proposition for potential investors. The brand has achieved record average unit volumes (AUV), with a strong AUV of $1.3 million serving as a compelling headline figure for prospective franchisees. This metric, which represents the average annual sales for a single location, is a critical indicator of a brand’s health and earning potential. For multi-unit operators looking to diversify their portfolios, a high and consistent AUV signals a proven concept with a clear path to profitability. This financial strength is not an anomaly confined to a few top-performing stores but is supported by consistent year-over-year sales growth across its diverse markets, assuring investors of the model’s reliability and scalability.
This impressive performance creates a virtuous cycle that fuels further expansion. The strong unit economics attract a higher caliber of experienced, well-capitalized franchise partners who are capable of developing multiple locations. As these skilled operators open new shops and successfully replicate the brand’s operational model, the system’s overall AUV is reinforced, which in turn attracts even more interest from the franchise community. The brand’s ability to consistently deliver strong returns on investment is the cornerstone of its growth strategy. It validates the business model, builds confidence among existing franchisees, and creates a powerful narrative that resonates with entrepreneurs seeking a dependable and profitable venture in the competitive fast-casual sector.
Strategic Pillars of Profitability
Harnessing Technology for a Modern Edge
A critical driver of Potbelly’s enhanced profitability and operational efficiency has been its strategic and successful integration of digital technology into the core customer experience. A testament to this digital transformation is the fact that over 40% of all orders are now placed through digital channels, with the Potbelly Perks loyalty application serving as the primary gateway. This significant shift toward digital ordering does more than just offer convenience; it fundamentally streamlines operations within the kitchen. Digital orders are clearer, reduce the potential for human error, and allow staff to prepare items more efficiently, which increases customer throughput, particularly during peak hours. Furthermore, the data collected through the app provides invaluable insights into customer preferences and ordering habits, enabling more effective, data-driven marketing campaigns that foster repeat business and increase the lifetime value of each customer.
The brand demonstrated the power of its digital ecosystem during its National Sandwich Day promotion, which became a record-breaking sales event. The promotion resulted in a 50% increase in sales processed through the Perks program and, equally importantly, doubled the number of new loyalty member sign-ups compared to the previous year. This event showcased the app’s dual function as both a sales driver and a powerful customer acquisition tool. By building a large and engaged user base within its loyalty program, Potbelly is creating a direct line of communication with its most dedicated customers. This allows the brand to nurture loyalty through exclusive offers and personalized experiences, building a strong community around the brand that is less susceptible to competitor promotions and more likely to maintain long-term patronage.
Menu Innovation and Diverse Revenue Streams
While operational efficiency is crucial, Potbelly has also demonstrated a keen understanding that sustained growth requires a menu that remains fresh, relevant, and appealing to a broad audience. The successful introduction of new menu items, specifically wraps, has proven to be a significant revenue driver and a testament to the brand’s ability to innovate effectively. These wraps are now averaging 100 units sold per shop per week across the system, a strong indicator of widespread customer adoption. In high-traffic locations, such as the Portland Airport, sales figures are even more impressive, with more than 560 wraps sold weekly. This success illustrates how a single well-executed product launch can capture new customer segments, increase the frequency of visits from existing patrons, and ultimately add a substantial, incremental layer of sales to the top line.
Concurrently, the brand’s catering business continues to expand and outperform expectations, solidifying its position as a leading source of revenue that complements its traditional in-store sales. Catering represents a vital and distinct revenue stream that allows Potbelly to serve a different occasion and customer base, from corporate lunches to private events. This diversification helps insulate the business from fluctuations in daily foot traffic and expands its reach into the lucrative business-to-business market. By establishing a strong presence in catering, Potbelly not only increases its overall sales volume but also enhances its brand visibility within the professional community, often leading to new individual customers who first experience the brand in a group setting. This multi-pronged approach to revenue generation creates a more resilient and dynamic business model poised for long-term success.
Corporate Strategy and Market Validation
A Franchise-First Approach
The primary engine of Potbelly’s ambitious nationwide expansion is its increasingly popular and well-structured franchise program. The brand has cultivated a development model that is centered on attracting and supporting multi-unit operators, and the demand from this segment is accelerating rapidly. In 2025 alone, the company executed 12 Shop Development Area Agreements (SDAAs), which collectively represent 125 new shop commitments. This level of activity in a single year underscores the high level of confidence that sophisticated investors have in the brand’s direction and its potential for profitable growth. By focusing on multi-unit agreements, Potbelly ensures that it partners with experienced operators who have the capital and infrastructure to open multiple locations efficiently, enabling faster and more strategic market penetration.
Perhaps the most powerful indicator of the franchise model’s health and the satisfaction of its partners is the fact that approximately 70% of this new growth is being driven by existing franchise owners choosing to reinvest and expand their portfolios. This high rate of internal expansion is a resounding endorsement of the brand’s leadership, support systems, and, most importantly, its profitability. When current operators decide to double down on their investment, it sends a clear signal to the broader market that the model works. To further fuel this interest from top-tier operators, Potbelly is actively promoting its Large Area Developer (LAD) incentives. These programs are designed to attract highly qualified groups by offering them exclusive development rights to entire trade areas, providing them with the scale and security needed to make a substantial, long-term commitment to the brand.
Strategic Partnerships and Industry Acclaim
A pivotal event in 2025 that significantly strengthened Potbelly’s strategic position was its acquisition by RaceTrac, Inc., a family-owned leader in the convenience store and retail fuel industry. This move, finalized in October, is far more than a simple change in ownership; it represents a synergistic partnership that fortifies both entities. The acquisition combines Potbelly’s deep expertise in food innovation, restaurant operations, and franchise management with RaceTrac’s extensive capabilities in real estate acquisition, site development, and retail logistics. This strategic alignment is expected to unlock new growth opportunities, particularly in identifying and securing prime real estate for new shops, while creating operational efficiencies. Importantly, the brand has emphasized that its core priorities remain unchanged and are closely aligned with the interests of its franchise owners: driving profitable nationwide growth and delivering strong, sustainable returns on investment.
The success of Potbelly’s strategy throughout the year was further validated by widespread recognition from its industry peers. The brand earned multiple accolades and secured high rankings on several prestigious lists, which serve as credible, third-party endorsements of its performance and reputation. These honors included being ranked on Entrepreneur’s Franchise 500, the Franchise Times Top 400, and Nation’s Restaurant News Top 500. Additionally, it was named one of the Top 100 Fast Casual Movers & Shakers and recognized as one of QSR’s Best Brands to Work For. Such recognition not only boosts morale within the company but also enhances its brand equity in the eyes of consumers, potential employees, and, crucially, prospective franchisees who see these awards as confirmation of a best-in-class opportunity.
