On the topic of growth, Potbelly headed into 2023 with signed development area agreements for 51 new shop commitments over the next seven to eight years. In Q1, there were 30, with plans to refranchise eight.
The genesis, Wright says, dials back to the same DNA that hooked him as a customer. If Potbelly couldn’t replicate craveable, high-quality food at a great value, it was going to drown in a beehive of sandwich chains. All of that equity curated over 46 years would become more nostalgia than reality.
“We had to focus on those experiences that would bring people back,” Wright says. “And frankly, our operations needed some attention, and we weren’t necessarily giving people the best reasons to come back. That’s where traffic growth comes from—your own experiences.”
Just like the entire restaurant field, Potbelly had to make the brand digitally available to do so.
The 12 months leading up to the end of fiscal 2021 were a turning point. Potbelly launched a simplified, value-enhancing menu (more on this later), upgraded its tech stack with a revamped app, website, digital ordering integration, and Perks loyalty program, as well as filling out its leadership team with a crop of new hires. In a perhaps less sexy, yet no less vital move, the chain fortified its payment solution as well.
“But it was all in recognition of where the customer was going,” Wright says. “We wanted to make sure we were more accessible to them, that they could use our digital assets.”
Potbelly’s previous app was a white-label version of somebody else’s—not an uncommon move for restaurant brands. The chain skinned an existing model and branded it. But it wasn’t designed for Potbelly. That flip can’t be understated, Wright says.
The new app and web experience mimics how customers progress when they order in-store. It flows through the same steps, which include picking a sandwich, choosing a size, and selecting the bread. “We’re having this dialogue with you when you come through the shops,” Wright says. “We needed to build a way that could happen in the digital environment and be smooth, with a lot less clicks, but still reflect the way that you would step through if you came inside the restaurant.”
Potbelly’s Perks loyalty program was rebuilt to unlock better data. The ability to earn points and redeem them isn’t where the flip happened for Potbelly; rather it was the ability to foster connection. There are tiers now that offer different experiences. Potbelly can pulse incentives to diners based on how they behave. There’s Perks-only promotion activity, like digital-exclusive deals—such as you see on National Cookie Day—that nurture a VIP-like experience over a straight discount. “And what we found is the brand love that we always knew was there, really comes to life with our Perks consumers,” Wright says. “And so, when you give them special treatment, they turn around and give us additional traffic.”
Digital represented 38 percent of revenue in Q4. Prior to the pandemic, it was single digits. Headed into the final stretch of 2022, Perks boasted north of 2.2 million members and added 115,000 users in just Q3. “It’s digitally targeted in ways that fit [customers’] usage of the brand. That’s when it feels like the customer has that experience and they start to feel like the brand really understands me and how I’m using their brand, and therefore it has a lot more upside in terms of frequency,” Wright says.
It’s a formula unfolding across the sector. Use digital promotions to spike acquisition and then follow through with a nurturing campaign that treats consumers differently as they start to develop a frequency pattern. To put in plainly, for Potbelly and countless others, it’s a capability that just wasn’t in the playbook a couple of years ago.