❧

06/24/2015 Potbelly Sandwich Shop

By implementing a management initiative to attract highly qualified franchisees to expand revenue rapidly and solidifying the Potbelly brand as the neighborhood sandwich shop, Potbelly’s profitability

will increase dramatically.

Group 1-9: Stephanie Castillo, Mac Dobbins, Wendy Qi, Charles Snipes, Jason Warren

❧❧ The Two Pronged Approach to Creating Value for Potbelly

❧ Creation of a New Mission

❧ Potbelly is your Neighborhood Shop

❧ An Integrated Frame Campaign to Create Value

❧ Use Cash to Expand Franchise Operations

Agenda

❧An Integrated Marketing Campaign with a Focus on Neighborhood

An Integrated Marketing Campaign With A Focus On Neighborhood

❧An Integrated Marketing Campaign with a Focus on Neighborhood

An Integrated Marketing Campaign With A Focus On Neighborhood

A taste of home away from

home.

An Integrated Marketing Campaign With A Focus On Neighborhood

❧A Neighborhood Marketing Campaign That Goes Back To Its Roots

❧Potbelly = A Taste Of Home Away From Home

❧A Picture Frame That Promotes Neighborhood, Closeness, And Togetherness

❧

#PotbellyRichmond

#PotbellyNewYork

#PotbellyChicago

#Potbelly@Chicago

A Picture Frame That Promotes Neighborhood, Closeness, And Togetherness

❧145,438 likes 500,000 likes

Social Media Campaign Will Be Created From The Picture Frames

13,200 followers 50,000 followers

1678 followers 10,000 followers

❧The Frame Campaign Will Lead To 4 Million Impressions

4 million + 1% customer increase

❧The Future Is An Integrated Ad Campaign

❧Open Franchises In These Locations With Cash

Opening franchises

❧Potbelly Should Carefully Open 50 New Franchises Over the Next Year

❧ The Current Franchise Model of Potbelly Should Be Adjusted to Maintain Strict Brand Discipline

$19 Million 50 New Shops22.4% Return and $2.7 Million NPV

❧Liquidity Ratios 2012 2013 2014 Avg

Industry Average

Post 19 Million Cash Expansion

Current Ratio 1.88 4.37 3.84 3.01 2.48 2.93

Quick Ratio 1.77 4.25 3.71 2.88 2.36 2.80

2012 2013 2014 Cash and Cash Equivalent 22,595 69,579 63,005

Liabilities 45,084 32,807 35,888

Use Potbelly’s Cash to Expand Franchise Operations

❧Debt Management 2011 2012 2013 2014 Avg

Industry Average

Times Interest Earned 16.6 x 16.9 x 3.5 x 40.62 19.39 104.3x

Debt/Assets Ratio 15.4% 12.0% 0.6% 0.5% 9.3% 0.90%

Long-term Debt/Equity 27.8% 18.5% 0.7% 0.0% 15.7% 0.01

❧ No long-term debt in 2014❧ Doesn’t need debt

Potbelly is Unlevered...And It Doesn’t Need Debt To Expand

❧Same Store Sales (Q1,2015)

Fast Casual %Change

Chipotle 10.4

Cosi 1.2

Noodles 0.8

Panera 1.5

Potbelly 5.4

Existing Stores Are Doing Well

❧❧ Reduce Franchisee Investment $40,000 $15,000

❧ Potbelly Finances: Setup and Operating Expenses

❧ ~$180,000/Shop Setup+$766,000/Shop Operating Expenses Annually

❧ 50% of Profit from Franchisees Potbelly

❧ $10 Million Training and Management Program

Change Existing Franchise Model

❧❧ $1.87 Million Additional Profit for Potbelly

❧ Close Corporate Management of Franchise Operations

❧ + $300 Million in Annual Revenue

❧ More Potbellys Can Help Existing Potbellys

❧ Establishes Infrastructure for Disciplined Franchise Growth

After the First Year...

Balance Sheets

❧

Conclusion

Thanks & Questions?Charles Snipes, Wendy Qi, Stephanie Castillo, Mac Dobbins, Jason Warren