Potbelly is considering permanently closing 100 stores after sales tanked as stay-at-home orders took hold – but that doesn’t seem to include those in East Peoria and Peoria.
The Chicago-based sandwich chain has franchise-owned locations locally, whose owners say that they have no plans to close. The chain had been in the midst of a turnaround when the coronavirus pandemic struck, seeing sales at stores open at least 15 months drop 68% in March, the company said Tuesday in releasing its first quarter earnings.
The quarter had been looking good before that, with sales up 2.5% for the first 10 weeks of the year, and the company had hoped to report its first positive sales at comparable stores in more than three years. Instead, it ended the quarter down 10%.
Revenues overall fell 11% to $87.6 million and the company reported an adjusted net loss of $7.7 million for the quarter.
Potbelly came under fire when it was approved for $10 million in funding from the federal Paycheck Protection Program meant for small business. Under public pressure, it returned the money.
The company, which has about 470 restaurants, has slashed costs to try to weather the sales hit. It furloughed a third of its corporate employees, cut salaries for executives and corporate employees by 25% and temporarily closed 36 company-operated restaurants.
"Currently, we are having proactive conversations with our landlords, are considering closing up to 100 shops, and are continuously working to implement ways to work more effectively and efficiently," CEO Alan Johnson said in the company’s earnings news release. "We have a firm grasp on what we can control within our business."
Potbelly has been serving customers with curbside pickup and delivery and is selling pantry items and family meals. Investments in digital ordering that were part of its turnaround plan have helped drive an improvement in sales as the pandemic has worn on, the company said, helping it shrink losses in comparable store sales to 45 percent in May.
In March the company drew down $40 million of financing available under its revolving credit facility.
Potbelly, founded in 1977, has struggled in recent years as it fell behind the growing fast casual competition. Last year it announced a new franchise program and new store designs as part of a turnaround plan.