Potbelly Sandwich Works has recently launched an all-out franchising blitz in the Midwest, and Springfield is on the Chicago-based chain's map of target markets.
The original Potbelly sandwich shop opened in 1977 inside an antiques store near Chicago's Lincoln Park, on the Windy City's north side. Since that time, the company has grown to more than 200 corporate-owned and operated stores in the upper Midwest, mid-Atlantic and Texas. Metro areas served by Potbelly include Minneapolis, Houston, Cincinnati and Philadelphia, but the company has yet to enter Missouri.
After years of fielding thousands of inquiries about franchising opportunities, Potbelly officials recently relented, said John Morlock, senior vice president of operations. The company is now actively recruiting franchisees in specific markets in 15 states, including Springfield; Tulsa, Okla.; Lawrence, Kan.; and Memphis, Tenn.
"We picked states and cities that are in close proximity to the current company operations, so we could support both marketing opportunities and purchasing," Morlock said, noting that Potbelly stores have performed well in smaller suburban markets. "We know the concept works in those type markets."
In Missouri, Potbelly - named after a potbelly stove that greeted customers at the antiques store in Chicago - also has pinpointed Columbia and St. Joseph as suitable markets. Potbelly is willing to consider franchisees on a case-by-case basis in markets that aren't on its preferred cities list. Location isn't as important as a prospective franchisee's commitment and community-mindedness, Morlock said.
"We're really kind of striving for that entrepreneur who wants to be part of the city or the area they live in," he said. "We're looking for the right people in the right place. We're not a public company. We don't have targets we have to hit. We want to make sure we match up people's views of what they want to do with our standards and go from there."
Startup costs for a Potbelly franchisee range from about $450,000 to $750,000, according to www.potbelly.com. The bulk of the outlay stems from construction and leasehold improvements - estimated at $200,000 to $350,000 - and equipment purchases, which vary between $70,000 and $125,000. Potbelly's franchise fee is $40,000, and required training for owners and managers runs between $40,000 and $45,000, according to the company's site.
The costs associated with a Potbelly store in Springfield would likely skew toward the lower end, said Morlock, who noted that the company is selling single stores rather than franchise territories. Each store employs between 20 and 25 people.
Royalty fees are 6 percent of gross sales up to the first $1 million per fiscal year and 7 percent of gross sales beyond $1 million. Marketing fees are charged up to 4 percent of gross sales.
The company's in-house design team assists franchisees with furniture and décor, which can cost anywhere from $36,000 to $75,000.
While the stores have a neighborhood feel attractive to customers, it's Potbelly's sandwiches, which range in price from $4 to $5.50, and hand-dipped shakes that keep them coming back, Morlock said.
"Our sandwich is the hook," he said, pointing to the A Wreck - a favorite that includes roast beef, salami, turkey and ham topped with Swiss cheese. "We serve very simple, high-quality sandwiches."
Morlock said Potbelly doesn't pay much attention to competing sandwich shops in target markets.
"Competition is everywhere. ... If we only chose to go to places (where) there was no competition, then we wouldn't have any stores," he said. "The way we run our stores and the product is the differentiation. We feel we can be successful next door to anybody."
One of Potbelly's local competitors would be Which Wich? Superior Sandwiches, a build-your-own sandwich chain out of Dallas, operated in Springfield by franchisees Lyle and Natalie Armstrong. The couple opened Springfield's first Which Wich? at 3405 E. Battlefield Road, Ste. 124, in February.
Lyle Armstrong said he'd heard rumors that Potbelly might be scouting Springfield for franchisees. Startup costs for a Which Wich? store range from $300,000 to $500,000, including a $30,000 franchise fee.
Armstrong said competition shouldn't be an issue as long as he continues to deliver a quality product and memorable customer service. He said revenues in the first nine months of operation have exceeded projections, but he declined to disclose specifics. He did, however, warn would-be franchisees that sandwich shops aren't known for their profit margins.
"It's a tougher business than a lot of people think it is from the outside if you're not willing to get in there and work it," Armstrong said. "Expect extremely low returns, if any."[[In-content Ad]]
