Dive Brief:
- In July, Potbelly expanded its $7.99 Everyday Value Combo across most of its system after seeing a strong consumer response without an impact on margins, Potbelly CEO Robert Wright said Thursday during an earnings call. That deal includes a turkey, ham or chicken Skinny Sandwich as well as chips and a drink, he said.
- During the second quarter, Potbelly tested several Everyday Value Combo meals and the most frequently purchased was the $7.99 Skinny Combo, Wright said.
- The chain has seen a seven point lift in value scores and five point increase in intent to return among customers ordering this deal, he said, adding that the $7.99 deal is boosting incremental sales and profitability.
Dive Insight:
Potbelly’s push to increase its overall value proposition could help drive customer frequency. The combo’s price point is competitive with QSRs like McDonald’s and Burger King, which struggled to grow same-store sales last quarter despite their recent value options.
Potbelly’s same-store sales were up 0.4% while average weekly sales increased 0.6% to $26,100 during the second quarter, according to a press release.
“While our growth was less than envisioned, we continue to take traffic share from the broader fast casual industry and grew our top line despite macro pressures,” Wright said.
The chain also has a Pick-Your-Pair combo in which a customer can pick a combination of a half sandwich, soup, half salad or macaroni and cheese. That combo has been on the menu since 2019.
The $7.99 price point has been well-received by consumers, who feel like they are getting a meal for their money’s worth. The initial bump in value scores showed how strong the combo was and “it didn’t take us cutting the price in half to get us there,” Wright said.
“It just really broke through that starting place where someone says, ‘this is something I'll come back for on the day or maybe the day before my payday instead of the day after I got paid,’” Wright said.
The brand is leaning into digital promotions, especially with member-only offers in its loyalty program, that can help drive value, brand awareness and frequency, Wright said. Potbelly’s digital business made up 40% of sales, a 200 basis point increase from last year. The chain updated its Potbelly Perks program in January, allowing customers to redeem points for 12 different menu items.
“As customers progress through our digital funnel, ultimately becoming Perks members, we see increased frequency almost immediately,” Wright said. “Over the past three years, we've been improving and enhancing our digital capabilities and expect digital and Perks to remain a driver of the business going forward.”
