Potbelly Corp. (NASDAQ: PBPB), parent of the Chicago, Illinois–based restaurant chain Potbelly Sandwich Shop, plans to enter the Syracuse market this year and is currently reviewing franchisee inquiries. 

 

The company announced its plan in a March 19 email message to CNYBJ and in a news release dated March 30. 

 

Potbelly is targeting Central New York for expansion because of its mix of attractive residential and “growing” business communities, according to the company release.

 

The chain, which offers made-to-order sandwiches, salads, soups, chili, and breakfast, is also targeting other upstate markets, such as Rochester, Albany, and Buffalo.

 

Potbelly Sandwich Shop currently operates more than 15 eateries across the New York City metro area.

 

Potbelly, founded in 1977, currently owns and operates more than 300 shops across the U.S. and has more than 20 franchise shops domestically and internationally. It generated $327 million in revenue in its 2014 fiscal year, up 9 percent from $300 million in the prior year, according to the company’s Form 10-K filing with the U.S. Securities & Exchange Commission, dated Feb. 25.

 

Aylwin B. Lewis is the company’s chairman, president, and CEO.

 

The company started as a “quiet antique store” that turned into a “happening sandwich shop,” according to its website. 

 

The antique store sold potbelly stoves.

 

In 1996, Bryant Kiel bought the original store on Lincoln Avenue in Chicago. Kiel is now the company’s founding chairman. 

 

Franchising

For its franchise business, Potbelly is looking at smaller to medium-sized markets, says Rick Fossali, senior director of domestic franchising for Potbelly Franchising, LLC, the franchising arm of Potbelly Corp.

 

“There’s a lot of those types … of cities and towns in upstate New York,” he adds.

 

Fossali spoke with CNYBJ by phone from Chicago on March 31.

 

The company also likes the presence of schools like Syracuse University, he says.

 

“The college towns tend to be areas that really support Pot Belly as the neighborhood sandwich shop, the type of environment that we have, the live music,” says Fossali.

 

When asked about the size of the local territory for a franchise agreement, he notes the company is still “putting that together.”

 

Potbelly hopes to find an ownership group that would want to open “multiple units,” he adds.

 

“That would be the best thing we believe for our business … people that have [an] understanding of operating in this type of environment,” says Fossali. 

 

Potbelly currently has single-unit franchisees and others who operate multiple stores and want more.

 

Fossali just wants to find the “right” franchisee who understands what it means to be “part of the neighborhood,” he says.

 

When asked if anyone from Central or upstate New York has inquired about a franchise agreement, Fossali says, “We have received other inquiries, some that 

included discussions about Syracuse.”

 

He declined to disclose the specific number of inquiries Potbelly has had about a local or regional franchise agreement.

 

Once chosen, the franchisee is responsible for providing Potbelly suggestions on the best sites for opening a location, says Fossali.

 

A new Potbelly Sandwich Shop location typically creates more than 40 jobs, the company said. 

 

Costs

A Potbelly franchisee can expect to make a total estimated initial investment of between $469,000 and $794,000, according to its website.

 

The company’s franchise fee is $40,000.

 

Potbelly also has an ongoing royalty fee, but Fossali declined to share the figure. The franchise agreement continues for 10 years, and a franchisee is able to 

renew the agreement, he adds.

 

When asked about a franchisee’s required net worth, Fossali said, “It varies based upon the individual.”

 

Potbelly provides a training program for a prospective franchisee or someone that the franchisee designates, says Fossali.

 

“They can send up to four people through that training program,” he adds.

 

The company also provides marketing support for franchisees, includes details for a formal opening once the store begins operations.         

 

Contact Reinhardt at ereinhardt@cnybj.com