Sandwich Chain Potbelly Files for $82.5 Million IPO

Sandwich Chain Potbelly Files for $82.5 Million IPO
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Potbelly Corp., the Chicago-based sandwich franchise, plans to raise up to $82.5 million in an initial public offering.

The sandwich chain plans to sell 7.5 million shares in the IPO, with an initial price range of between $9 and $11 a share. Of those shares, the company is selling about 7.4 million shares and selling stockholders are selling 138,000.

Bank of America Merrill Lynch and Goldman Sachs are the lead underwriters of the offering.

Potbelly, known for its toasted sandwiches and ubiquitous cookies, reported total revenue in 2012 of more than $274 million, a 15% increase from 2011. It has been expanding rapidly: The chain opened its 300th shop in 2013, with a domestic base of 295. Total shop growth was 16% in the last year. The company reports that it plans to grow the number of Potbelly shops at least 10% annually over the long term.

The vast majority of its restaurants are company-owned. Potbelly started offering franchise opportunities in 2010. Today, franchisees operate six shops in the United States and 12 shops in the Middle East. The company says in its offering documents that it doesn't expect franchise revenue to be significant in the near term – right now franchise royalties and fees represent less than 1 percent of total revenue -- but Potbelly says it plans to grow that in the future.

The sandwich chain began in a small antique store in Chicago in 1977, and did not open its second store until 1997, a year after Bryant Keil bought the shop from its original owner. By 2005, the chain comprised 100 shops, reaching 200 in 2008. Keil now serves a director, with former Sears Holdings chief executive Aylwin Lewis running the company as CEO. 

Related: Hilton Going Public: Good or Bad for Franchisees?

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