– Owner and franchisor of Potbelly Sandwich Shop undergoing business transformation to a more franchised model (currently 90% owned).
– Has been COVID recovery laggard due to heavy presence in the Chicago Business District.
– The base case rests on the new CEO (former COO at $WEN) delivering on the strategic plan of refranchising 25% units in 3 years, reaching $1.3m AUV (vs $1m now) with 16% margins (vs 15% for 2021) and growing units 10% annually.
Valuation: Projected $60m contributions from owned units, $13m from franchised units, $7m from newly opened units, less $30m SG&A – results in $40m FCF or $55m EBITDA by 2025.
Exp. gain: 300% to $20/share assuming 11x $55m 2025 EBITDA. (vs. $17m EBITDA today)
Full PBPB write-up (free guest account required): https://valueinvestorsclub.com/idea/POTBELLY_CORP/8969881281