Potbelly Corp. — a growing chain of sandwich shops — recently filed paperwork with the Securities and Exchange Commission that showed it was raising its public offering price from a range between $9 and $11 per share to a range between $12 and $13 per share. All told, the company is planning on selling about 7.5 million shares of common stock (about 7.35 million in the offering plus 146,442 from current stockholders). The offering is expected top raise $75 million.
For the uninitiated, Potbelly actually began as an antique shop that began serving food to customers who came during lunchtime to peruse the shop. But, as is often the case with stories like this, the food turned out to be a hit and soon became the main attraction. After about 20 years of operating independently in Chicago, the store was bought by founding Chairman and former CEO Bryant Keil, who began aggressively expanding the business.
Come the end of 2012 and the operation claimed close to 300 stores, $274 million in revenue, $8 million in income from operations, and pro forma basic earnings per share of $1.03.
To date, Potbelly has been a fairly classic story of successful growth in a highly competitive industry. At its helm now is Aylwin Lewis, former CEO of Sears Holdings (NASDAQ:SHLD) and previously a senior executive at Yum! Brands (NYSE:YUM), the company that owns Pizza Hut, Taco Bell, and KFC.
Keil, the founding chairman, and Lewis managed to grow Potbelly aggressively even in the wake of the late-2000s financial crisis and despite competitive pressure from other popular quick-service restaurant chains like Chipotle Mexican Grill (NYSE:CMG) and Panera Bread (NASDAQ:PNRA).
Chipotle and Panera have each had enormous long-run success on the public markets, although Panera has had a pretty rough year. Both stocks are up more than 40 percent over the past two-year period, but where Chipotle has climbed 40 percent over the past one-year period, Panera has declined just over 6 percent.
The Potbelly IPO — the company will trade under the ticker PBPB — follows in the footsteps of the Noodles & Company (NASDAQ:NDLS) IPO, which took place earlier this year. The stock’s debut was an enormous success — shares double out of the gate and are up 16 percent this year to date after that — and has helped pave the way for positive investor sentiment.
Noodles & Co., which (as the name suggests) operates a chain of noodle and pasta restaurants, alongside Potbelly are looking to succeed in a highly competitive industry dominated not just by players like Panera and Chipotle, but by companies like McDonald’s (NYSE:MCD) and Subway, all of which will fight tooth and nail for every customer.
For its part, Noodles & Co. has attracted Howard Schultz of Starbucks (NASDAQ:SBUX) as an investor (another company participating in the sector). Schultz’s involvement is a vote of confidence for the restaurant chain, but really only time will tell which brands will live to join the pantheon of American quick-serve restaurants.
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