Potbelly Franchise Cost, Owner Salary & Profit 2024

Are you looking to own a franchise store in the sandwich industry? If that’s the case, you’ve probably heard of Potbelly, which is one of the oldest sandwich stores in the United States, operating since 1977.

The company is open to franchising, and you can apply to be a part of their franchise network. This article will cover the details of Potbelly’s franchise system and how it works.

Potbelly Franchise Cost

About Potbelly History

Potbelly started in 1977 in an antique shop when Peter Hastings and his wife decided to sell sandwiches to their customers.

A regular customer bought the name from Peter and opened the first actual location in 1996. They are now at over 2,000 stores as a public company.

Potbelly is famous for its toasted sandwiches with many varieties. They offer both cold and hot sandwiches, salads, and soups, focusing on those looking for a quick meal.

They started franchising in 2009 to increase brand awareness and expand quickly.


Potbelly Franchise Model

Cost Or FeesAmount
Initial Investment       $564,050-$782,700
FranchiseYES
Franchising Since2009
Franchise-Fee$40,000
Royalty-Fee6%
Liquidity$200,000
Estimated Outlets2,000

How Much Does It Cost To Open A Potbelly Franchise?

The average initial investment is between $564,050 and $782,700, including the $40,000 franchise fee. 

This expected investment is for all the related costs of opening the franchise store. It could change a lot depending on several factors like the location and size of the store.


Potbelly Franchise Requirements

Potbelly Franchise Requirements

As a potential franchisee, you must have solid business experience. They don’t look for a specific industry in your experience.

If the experience is managerial experience, this is a big plus. On the financial side, you need liquidity of at least $200,000 and a minimum net worth of $500,000.


Potbelly’s Overall Profit & Revenue

Potbelly made a revenue of $450 million in 2022, increasing from $380 million in 2021. Their 2022 net profit was $13.33 million, more than double the increase of $6.38 million in 2021.


How much does Potbelly Franchise Owner Make?

According to Potbelly’s 2021 Franchise Disclosure Document, the average weekly gross sales for franchised shops was $15,058, with some shops exceeding this average.

The median weekly gross sales were $14,504, and the highest reported weekly sales reached $25,532. Additionally, Potbelly’s average unit volume (AUV) for 2022 was $1.16 million.

As per the AUV of $1.16 million and profit margin of 10%, we can calculate that a Potbelly franchise owner makes $116,000 in net profit annually on average.

This is how we calculated this amount:

Financial OverviewPercentage of RevenueAmount ($)
Individual Franchise Annual Revenue100%1160000.00
Rent11.25%(130500.00)
Insurance5.63%(65250.00)
Salaries22.50%(261000.00)
Franchise Royalty Fees5.63%(65250.00)
Utilities2.25%(26100.00)
Cost of Goods Sold (COGS)28.13%(326250.00)
Labor (Variable)14.63%(169650.00)
Total (Expenses)90.00%(1044000.00)
Net Profit10.00%116000.00

Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.


How much does a Potbelly Franchise Owner make in salary?

The annual salary of a Potbelly franchise owner is estimated to be around $116,000.

However, it’s important to note that these figures provide an overview of sales and do not directly indicate the profit a franchise owner would make. Individual circumstances and expenses should be considered to determine the potential earnings of a franchise owner.


Payback Period Of Potbelly

Using the investment of $782,700, and the yearly profit of $116,000, we can find out how long it will take to earn back the initial investment:

Payback Period = Investment / Yearly Profit = $782,700/ $116,000= 6.74 years

Based on these figures, it will take approximately 7 years to pay back the initial investment for Potbelly. This time period could be longer or shorter depending on your sales, revenue, and profit figures.


Potbelly’s Failure Rate

Franchised Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
20194146+5
202046460
202146460

For the Franchised outlets:

  • In 2019, the growth rate was (5)/41×100≈12.19%
  • In 2020, the failure rate was (0)/46×100≈0.00%
  • In 2021, the failure rate was (0)/46×100≈0.00%

Company-Owned Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
2019437428-9
2020428400-28
2021400397-3 

For the Company-Owned outlets:

  • In 2019, the failure rate was (9)/437×100≈2.05%
  • In 2020, the failure rate was (28)/428×100≈6.54%
  • In 2021, the failure rate was (3)/400×100≈0.75%

Total Outlets:

YearOutlets at the Start of the YearOutlets at the End of the YearNet Change
2019478474-4
2020474446-28
2021446443-3

For Total outlets:

  • In 2019, the failure rate was (4)/478×100≈0.83%
  • In 2020, the failure rate was (28)/474×100≈5.90%
  • In 2021, the failure rate was (3)/446×100≈0.67%

According to the above-mentioned data, we can see that the franchised outlets for Potbelly initially started with a positive net change, showing a growth rate of 12.19%. But later, the number of outlets started declining, showing a failure rate of 0%.

On the other hand, for company-owned outlets, the failure rate of Potbelly was lying in the range between 2.05% and 0.75% for the same period of time.

Overall, when we combine the data of franchise and company-owned outlets, we can see that the Potbelly franchise has declined in the years 2019-2021, showing a total failure rate between 0.83% and 0.67%.


Potbelly Training and Support

Potbelly offers a training program that lasts 10 to 12 weeks for all new franchisees.

One part of the training takes place in one of their company-owned training shops to show real-life experience.

There is also a classroom training of up to 80 hours, teaching the basics of store management. Potbelly also trains your employees for up to 6 weeks.

The offered support consists of newsletters, meetings, help with your opening, selecting your site, and the necessary software to manage the store.

They also have ongoing marketing support from SEO to the loyalty program.


Potbelly Terms of Agreement and Renewal

Potbelly Terms of Agreement and Renewal

The initial term of the agreement is for 10 years. This agreement gives you the right to hold the brand name and work as a franchisee for ten years unless you breach the contract.

After the first ten years, you have the option to renew if you comply with the agreement fully and the franchisor is satisfied with you.

You have to pay a successor franchise fee when you want to renew your agreement. The new agreement and its terms might be different than the old one.


Potbelly Obligations and Restrictions

Franchisee is obligated to attend the necessary training provided by the company and pass it successfully.

They are also not allowed to sell any kind of product or service not approved by Potbelly beforehand.

In addition, the franchisee has to sell everything in their store that is laid out in the franchise agreement.

The franchisee also has to comply with warranty and customer service requirements and provide the same quality of service as every other Potbelly location.

They are also restricted to using advertising material that Potbelly provides.


Potbelly Financial Assistance

Potbelly does not offer direct or indirect financial assistance to its franchisees. They do not guarantee any kind of note, lease, or financial obligation when you are opening your store.

This means any kind of financial obligation falls on you, and Potbelly will not help you to find the necessary financing during the process.


Potbelly Comparison

NameFranchise FeeRoyalty FeeInitial Investment
Jimmy John’s$30,000-$35,0006%$356,200-$674,200
Firehouse Subs$20,0006%$200,132-$993,297
Potbelly$40,0006%$564,050-$782,700

Conclusion

Potbelly is a famous old sandwich shop that has been offering franchising since 2009.

You need somewhere between $564,050 and $782,700 on average as an initial investment to open a Potbelly franchised store. They offer practical and classroom training and continuous support.

Overall, they are a great business to be a part of. That is because they help their franchisees as much as possible, and there is a huge potential to make good money off of it.


FAQs

How much is the franchise fee for Potbelly?

The franchise fee is $40,000. You pay this fee in lump-sum at the beginning to buy the trademark right of the brand.

Can I fail with a Potbelly franchise?

Potbelly is a business that requires great execution, customer service, and management.

Even though you use an already existing brand and its systems, you still need to manage it well, and if you can’t, there is a chance that you might fail.

How much is the total cost of opening a Potbelly?

The total average cost is $564,050 and $782,700. This is just average, and there might be cases where this total cost is way higher than the average numbers.

The expected average investment includes all of the startup costs of the franchise.

Who owns Potbelly?

Potbelly Corporation owns and operates the Potbelly Sandwich Shops in the United States. The company also has domestic franchise operations for the Potbelly Sandwich Concept.

Who founded Potbelly?

Peter Hastings and his wife decided to sell sandwiches in their antique shop in Lincoln Park. Soon, one of Potbelly’s regular customers, Bryant Keil, bought the shop from the owner.

Where is the headquarters of Potbelly?

The headquarters of Potbelly is located in The Gogo Building, 111 N. Canal Street, Chicago, Illinois, U.S.

How many locations does Potbelly has?

There are currently 443 locations of Potbelly.

Sources

https://www.potbelly.com/franchising-investment

https://www.firehousesubsfranchising.com/faqs/

https://www.potbelly.com/about-us-our-story

Leave a Comment