Potbelly Corporation reported its financial results for the quarter and year-to-date periods ending September 29, 2024, revealing a mixed performance in revenue and profitability compared to the previous fiscal period. Total revenues for the third quarter amounted to $115.1 million, a decrease of 4.7% from $120.8 million in the same quarter of 2023. Year-to-date revenues also fell by 5.4%, totaling $346.0 million compared to $365.7 million in the prior year.

The decline in revenue was primarily driven by a 6.4% drop in sandwich shop sales, which totaled $110.8 million for the quarter, down from $118.3 million in the previous year. However, franchise royalties, fees, and rent income saw a significant increase of 79.2%, reaching $4.4 million in Q3 2024, up from $2.4 million in Q3 2023. This growth in franchise-related income reflects the company's strategic focus on franchise development.

Despite the revenue decline, Potbelly reported a substantial increase in net income for the quarter, which rose to $4.1 million, a 147.4% increase from $1.6 million in Q3 2023. Net income attributable to Potbelly Corporation for the year-to-date period was $35.7 million, a remarkable increase of 1397.3% compared to $2.4 million in the same period last year. The increase in profitability was attributed to a reduction in total operating expenses, which decreased by 6.2% year-to-date.

The company also reported improvements in its balance sheet, with total assets increasing to $258.6 million as of September 29, 2024, compared to $252.5 million at the end of 2023. Notably, long-term debt decreased significantly to $3.0 million from $19.2 million, contributing to a reduction in total liabilities to $206.1 million from $238.4 million. Total stockholders’ equity increased to $52.9 million, up from $14.7 million at the end of 2023.

Operationally, Potbelly maintained 345 company-operated shops and 90 franchise-operated shops as of September 29, 2024. The company’s strategic plan emphasizes "Traffic-Driven Profitability," focusing on enhancing customer experiences and franchise development. The enhanced Potbelly Perks loyalty program, launched in January 2024, aims to drive customer engagement and sales.

In terms of cash flow, Potbelly reported a cash balance of $11.9 million at the end of the quarter, down from $31.7 million a year earlier. The company entered into a new credit agreement in February 2024, providing a revolving loan facility of $30 million, which is expected to support its operational and capital needs moving forward.