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| Statement |
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| We've laid the foundation for success as a growth company and with our five-pillar strategic plan, we are on the right track to capitalize on the opportunities ahead and maximize long-term shareholder value |
| And we just think that as the sales pipeline has strengthened, franchise candidate interest has strengthened certainly the business, the underpinning business has strengthened that |
| We strengthened the Potbelly brand with increased system wide sales driven by 12% same-store sales growth, while simultaneously improving profitability with a 370 basis point improvement to shop margins, achieving 14.2% for the year |
| So I'm very proud of what our team accomplished in 2023 |
| For the quarter, our Digital business represented approximately 40% of our total shop sales, an increase of approximately 150 basis points versus last year, driven by continued progress in our Perks loyalty program |
| The improvement was driven by top-line leverage and the refranchising of our New York City market earlier in the year, which carried higher than average occupancy costs |
| We're excited about the pipeline at all levels |
| We think that's part of our competitive advantage in our digital space |
| So it's exciting for us, because that's the business model that we're building |
| So the nurturing flows that come in on the back end is one of the best advantages of this |
| With the strength of our operational model and management team, we expect to be able to achieve high single to low double-digit adjusted EBITDA growth despite these headwinds |
| But we also continue to benefit from efficiencies on the labor side, the ops team does a nice job continuing to optimize our space labor guide |
| Turning back to the fourth quarter now, we delivered strong quarterly results with solid top-line performance and 6.3% same-store sales growth |
| I feel like a broken record at this point, but again this quarter, I'm proud to say that our strong sales results were driven primarily through traffic growth, demonstrating our ability to grow our traffic share within the fast casual category |
| In terms of profitability, our team successfully leveraged our food and labor costs, against a strong sales trend resulting in a 150 basis point improvement, in shop level margins year over year at 15.7% for the quarter |
| I think we will certainly benefit from sales leverage in achieving that 16% margin |
| And so far we're very, very pleased with that |
| We're very pleased with the balance across those categories and across those menu items |
| We have expanding aspirations for our catering business which will also help those margins |
| We are very pleased with the year and the quarter as you can tell from our comments and delighted that you joined us for the call today |
| To that end, we will continue to strategically invest our brand marketing fund, which is expected to be over 20% larger versus 2023, benefiting from a full year of 3% contributions from company and franchise shops, as well as ongoing system-wide sales growth |
| As we look ahead, we are excited with what we can accomplish over the long-term |
| Now, delighting our customers with Great Food and Good Vibes is always the foundation for sales growth |
| I continue to be so proud of our company and franchise operators focus on customer experiences and throughput, to drive top line |
| Traffic continues to be a strong contributor to that same-store sales growth, as we drive demand with our compelling value proposition and impactful marketing through our digital channels |
| I look forward to another great year of carrying out our mission to delight customers with great food and good vibes into achieving our vision to be the most loved sandwich brand in every neighborhood |
| We're excited by the reception thus far, and have already seen substantial redemptions for the new menu options |
| We believe this full-court press on marketing will help us further drive growth of our Potbelly Perks loyalty program and Digital channels; all designed to drive traffic, value and excitement for our customers |
| Congrats on a really strong year and significant progress |
| It's what drove our success in 2023, paving the way for us to meet our 2024 growth targets |
| Statement |
|---|
| And so I think the other element to reverse of that confidence is our concern that we might see along the way |
| Adjusted net income was $0.7 million, a $1.9 million decrease versus the prior year period |
| Todd Brooks And is that something with the shop margin impact, because we already exit at such a robust rate with the impact that we've given there, and if there's a little bit of a drag period, not much closer to the 16% hurdle? Steven Cirulis It was just a slight headwind on shop margin, not much but it did have a bit of a drag because we do have some good flow through there |
| Sometimes it's a below average week from a sales standpoint |
| So, it had and related, right, when you're getting lower volume and you're going to see some shop margins impact from that as well |
| This decrease was primarily due to similar drivers affecting adjusted EBITDA, as well as higher stock compensation, interest and depreciation compared to 2022 |
| And then there's margin repercussions of that |
| The forward-looking statements involve significant risks and uncertainties and events or results could differ materially from those presented due to a number of risks and uncertainties |
| Previously perks could only be redeemed after 1,000 points were earned, which we believe could take too long and too many visits |
| I think, first of all first of all, we sold four shops in Columbus that hit that quarter |
| Notably, we continue to see a shift in our Digital business away from third-party channels and towards Potbelly owned app, web and Perks originated orders |
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