Potbelly, the Chicago-based chain of sandwich shops, said Tuesday it is considering whether to close 100 locations, or about 23% of its total, as it scrambles to cut costs because of the pandemic.
CEO Alan Johnson discussed the potential closings in his report of the company’s first-quarter earnings. Potbelly said it saw a dramatic downturn in its results once the coronavirus, which has forced closure of restaurant dining rooms, spread widely in the U.S. during March.
Johnson said its same-stores sales for January and February were up from the year before but then took a 68% dive during March. The company quickly furloughed a third of its corporate staff and cut corporate salaries, including those of top executives, by 25%.
“We understand challenges will persist over the next several months and are taking the necessary steps to support and fortify our business,” Johnson said. “We are operating with a cash-preservation mindset. In March, we drew down our $40 million of available capacity under our revolving credit facility and enacted significant capital and expense reductions.”
He said Potbelly is discussing rent concessions with landlords but is keeping open the option of closing up to 100 of its 440 locations. “We have a firm grasp on what we can control within our business,” Johnson said.
The publicly traded company had gotten $10 million under the federal Paycheck Protection Program for small business, but then returned the money amid protests. The company’s shares, which have surrendered 29% of their value this year, lost 4 cents in Tuesday’s trading to close at $2.95 each.
For its first quarter, Potbelly reported a loss of $13.3 million, or 56 cents a share, compared with a loss of $18.4 million, 76 cents a share, a year ago. Revenue declined 11% to $87.6 million.