Franchise QB

Episode 75: Bryant and Hampden Keil- Multi-Unit Franchisees w/ Potbelly

• Mike Halpern • Season 1 • Episode 75

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In this episode of the Franchise QB Podcast, host Mike Halpern speaks with Bryant and Hampden Keil, multi-unit franchise owners of Potbelly. They discuss the journey of Potbelly from its founding to its current status as a leading fast-casual sandwich brand. 

The conversation covers the unique aspects of the Potbelly concept, the importance of customer experience, the supportive leadership team, and the benefits of being a franchisee. They also delve into the qualities sought in potential franchise owners and the investment required to open a new location, highlighting the brand's growth and future potential.

Takeaways
-Potbelly has a strong foundation for franchising.
-The brand focuses on great food and customer experience.
-Leadership at Potbelly is supportive and experienced.
-Franchisees benefit from a well-structured support system.
-Diverse backgrounds can lead to successful franchise ownership.
-Potbelly's culture emphasizes treating customers well.
-Expansion plans are robust with many new locations.
-Investment costs vary based on location and build.
-The Potbelly franchise model is designed for profitability and growth.

Chapters

00:00 Introduction
01:40 The Potbelly Journey: From Founding to Franchising
04:32 Understanding the Potbelly Concept and Menu
07:47 The Potbelly Experience: Customer Engagement and Culture
10:11 Leadership and Support in the Potbelly Franchise
12:35 Expansion and Development of Potbelly Stores
15:22 Franchisee Benefits and Support Systems
17:45 Qualities of a Successful Potbelly Franchise Owner
19:11 Investment and Costs of Opening a Potbelly
21:56 Conclusion

https://franchising.potbelly.com/

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Mike Halpern, CAFC
mike@franchiseqb.com

This is the Franchise QB Podcast, where we empower entrepreneurs to win big in franchising. We huddle up weekly to educate our audience about the most successful small business model ever created. Franchising! Welcome to the Franchise QB podcast. I'm your host, Mike Halpern, a 20-year industry veteran and entrepreneur. My mission is for listeners to achieve their American dreams of creating wealth and independence through franchise ownership. Every week we speak with franchisees, franchisors or vendors that support the industry. Thank you for joining us and let's get started. Joining us in the huddle today are father and son team, Bryant and Hampden Keil, multi-unit franchise owners with Potbelly. Welcome to the show, guys. Thanks for having us. Thanks, son. Absolutely. Yeah, it's great to have you here. So, Bryant, you purchased the founding location of Potbelly in Chicago from Potbelly's original owner, Peter Hastings, in 1996 and subsequently made the decision to grow the brand through franchising. Then you became the CEO of Potbelly and helped shape the iconic neighborhood sandwich brand to be a leader in the fast-casual sandwich segment with over 400 shops across 30 states. Very impressive. Fast forward to today and you and your son have 13 locations operating in Maryland and we'll have 22 more locations to bring the total to 35 throughout the DMV in DC, Maryland and Virginia. I happen to live in Northern Virginia and my kids grew up eating Potbelly. in Fairfax Corner before we went to the movie theater. So, big fan of the brand. So, Bryant, let's start with you. Tell us your potbelly story. Well, I appreciate that introduction. Thanks for your time today. The story, I bought the original store and then I was the CEO of Potbelly from store one until store 250. So, we had franchised until maybe store 275 or so. but the company is now franchising. I think the Potbelly has such great authority to franchise now. They have so many company-owned stores. They know how to operate them, and we know what's going to work in different trade areas. The leadership team at Populi, now Bob Wright specifically, and his senior leadership team, very experienced. So it's great to see. really strong leadership like that behind the brand, leading the brand with conviction, know, conviction to core tenants of having great food, great people, great environment, good value to the customer. And they're living up to that every single day. Makes it an awful lot of fun. As the guy who bought the original store and to now look at the brand, be really proud of it. It was in fact, So much so that my pride in the brand and Hamden's pride in the brand that we decided to become franchisees. And so we're excited to be part of this growing brand again. And we think we can contribute from a growth perspective, some historical perspective on the brand. And Potbelly's leadership team has been incredibly receptive to not only receptive, they've really encouraged our feedback. And it's really, it's a brand I can tell you I'm so proud of. it has, in my opinion, my personal opinion as a franchisee, has great legs for the future. That's great. Well, I appreciate that context. And Hampden, let's turn to you. So when did you get involved in the family business? Well, growing up, you know, we were always at Every weekend we'd go in for lunch and make milkshakes and run the cash register and do that. Probably when I was about seven or eight years old. And we decided to do this a couple years ago. I was really excited about the idea. When my dad asked me, like, want to do something together? It's like. Nah, maybe. But nobody said that it was pot belly. I was like, yeah, you know, I think we have to. Right. That's awesome. I appreciate that. So, I mean, I feel like everyone's been to a pot belly because I've been in Northern Virginia for 25 years and it feels like we've always had one in our neighborhood. But for those that are listening that don't know the concept, tell us a little bit about the concept and the menu. Well, Potbelly is meant to be your local neighborhood sandwich shop. It's supposed to have great vibes, great people, and most importantly great sandwiches. So part of what I think makes Potbelly really unique though is that we don't only have great sandwiches, we have great soups, great salads, great milkshakes, and it's really just a great experience. Yeah, I would say as a customer, I'm a little biased, but like the sandwiches are addictive. Like they're really good. I love those hot peppers. I have over the years bought those jars of the peppers and bring them home. It's not the same at home, but it's still pretty darn good. so tell us a little bit about the day parts. Do you guys do breakfast, lunch and dinner at the shop? We do. We don't do breakfast at all of our locations though. But we do have lunch and dinner at all of our locations. And you know the location that does their breakfast we don't do a ton of it But we primarily when we are selling breakfast items. It's for catering Okay, very cool and I guess when you're in a non-traditional space like Airport you guys probably have yeah properly breakfast. It's tasty. It's really good. It works Well, so we can do you know all day parts at an airport as an example. I was just going to use Dulles does quite a bit of breakfast sandwich and breakfast component. Bryant, who are the target customers at Popbelly? So Potbelly's target customers are, it's amazing because it's a really broad base customer because who wouldn't like a place that has a cool environment, nice people working there, great food, like making cookies in the store every day. Who doesn't like that? It's a great value. And think we deliver on our promise of all those things. everybody from the CEO of a company to the person cleaning up the office after work, everybody likes Potbelly. It's broadly appealing. again, I come back to those cookies and the little details like the cookie on the straw. You think they're not important, but they really are. Yeah, those are the things that are memorable that the kids talk about. remember taking my kids to the shop and they had the kids meals, grilled cheese all the way and everybody was happy. Yeah, I can see like when I go in, it's a very diverse mix. You know, you see young and old and families and workers and everything. So it seems to be a concept that's got something for everyone. So tell us a little bit about the potbelly way. Tell us a little bit about your group. Yeah, so the potbelly way is kind of in short, just about And if treating people how you want to be treated and, you know, making every single customer who comes in experience as great as you would want it to be. You know, we talked about the pop belly advantage is what's been the one before is you're going to see smile, smiling people, people who are having fun, people who are energetic, people who love their job and they love interacting with the customers just as much as a customer is going to love the sandwich that you're going to have. I totally see that. when I step in there, you could just tell that people are happy to be there. They're like communicative, they're friendly. And there's only a handful of concepts as a consumer where you feel that, like the ones that people talk about, like your Chick-fil-A's and your Potbelly's. So to be in that category, I think, gives you guys a big edge. When we're looking for people, you know, that's the most important thing. I used to work for a restaurant company called Lettuce Entertain You. We had this thing. where we would say the 49 % to 51%. And I think that Potbelly did a great job with that too. You you're hiring people with the intangibles. We can teach you how to make a great sandwich and make you part of the culture. But you know, you have to have the intangibles to be able to be a great employee and, you know, to work with us. So it seems like you can kind of teach the skills required to... make a sandwich, but you can't teach those behaviors that are kind of inherent in someone in terms of like being outgoing and just being someone that is going to light up the room a little bit. So, so tell us a little bit higher, higher, people quality about everything we do sense quality about the food that we serve sense quality about the people that we hire and employ and continue to employ and about the space that we have. We want everything to be, Yeah, just that much extra and special. I think we've, I Potbelly's achieved that and I think they'll continue to achieve it because of the high standards that they keep every day. Very cool. So let's talk about leadership at the corporate level. You guys are franchise owners. You have kind of an inside scoop because you know, the leadership team being part of the company is CEO. But tell us for people that are considering becoming owners within the Potbelly network, what's the leadership team like? Well, I wouldn't be here right now as a franchisee if I didn't think the leadership team was incredible. you know, as the guy who bought the first store, I'm pretty picky. I was the CEO. I raised $300 million of capital for the business and opened the first 250 stores. I was very picky about the way we did everything. Very picky about the leadership. I have to tell you that Bob Wright and his team, they're second to none. They're high caliber, high quality, thoughtful leaders. Bob's just an incredible, CEO. And it's really great to get behind someone who you're proud of, proud to work with, does what he says he's gonna do, and is fair the way he approaches the business every day. And so as a franchisee, what better testament could you have for a CEO who's leading the company into the next chapters? And Bob exemplifies all the positive traits you could ever want in a leader. I cannot think of a single negative. He's just an honorable, smart, experienced leader that is... rooting that throughout the entire leadership team. And you can see it in the operations people, you can see it in the, even in the franchisees, they're being very cautious about their franchisees, they're being super supportive of their franchisees. And that comes through understanding your business, understanding your customers, understanding your franchisees, and really a lot of thoughtful strategic planning. and Bob and his senior team have done an incredible job and continue to do a great job strategically thinking about the business and where it's going. great. Well, it sounds like you're in highly capable hands and that's probably a reflection of, wow, you guys have gotten to 400 plus units as your nationwide footprint. So let's talk a little bit about that. How many shops give or take? mean, we're between 400 to 500 stores and how many are kind of coming? in development in various phases of kind of signed but not open. What's that look like currently? And that you know the numbers. I don't necessarily know exactly what the numbers are, but I can tell you this much at the the the franchise forum we had a couple of months ago where all the franchisees were there. Wow, was it exciting? It was. It's a really smart group of franchisees who are really psyched about the brand. These are franchisees that are experienced. in multiple brands and they're really embracing what's going on at Potbelly. So I'm not sure the exact number of signed, but you can get from Potbelly directly. But it's a lot and there's a lot of momentum going. Sounds like a lot of sophisticated operators with experience and other concepts are getting into Potbelly, which is great. So what is the timeline? Like you guys just opened a store in Frederick, Maryland. What is, I know it varies based on permits and construction and. everything, but what's the ballpark timeline from when you sign a franchise agreement through the opening of the shop? It's going to be different with permits and how long that takes and finding real estate. That's probably the hardest part at this point is finding great real estate, especially in our market as you know, like there's a lot there. So I think it probably takes between nine and 12 months to get a store open. as far as site selection, going through the LOI process and lease process and getting a store built. We build the stores in about 10 to 12 weeks, which is pretty quick. But it's the other stuff that takes a Sometimes the back and forths with the landlord can be cumbersome. You have a response and then it might take a month to hear back from the REIT. So tell me about the footprint like at the unit level you guys 1500 feet 2500 feet and like how many seats do you put in a typical shop? I Think the coolest thing about Potbelly sorry Hampden for in a in a unique little inline space in a Mall or shopping mall or something like that. It could be a freestanding location. It's 3,000 square feet. So yeah, I think the sweet slots around 1600 but Yeah, it really works in a variety of different formats, which gives us an opportunity from a real estate perspective to squeeze a lot of Potbellys in a lot of different areas. You're from Northern Virginia. Northern Virginia, we're expanding in Northern Virginia, and there's plenty of room for us to put additional locations in Northern Virginia, as well as Maryland. And they still have the store performance, make a lot of sense. Very cool, appreciate that. So let's talk about some of the benefits for Potbelly franchise owners. What do they enjoy being part of the system? Anything specific come to mind? I may let him answer that, but I can tell you the most important thing is having a leadership team that gets the brand, that knows how to operate, knows how to put systems in, has experience doing this before. This is not on-the-job training for Bob Wright and his team. They're experienced total pros, and having a team like that in place for a franchisee, I think is extraordinary. and experienced teams. The idea of doing a franchise, being a franchisee is kind of avoiding a lot of mistakes as you make as an independent. so I think Bob and his team have figured out the challenges to the brand and improved it throughout through its process while still maintaining quality and making it extraordinary. And that's hard to do. And as a franchisee, you want a turnkey system that has been thoroughly thought through and they've definitely done that. Very cool. Hampton, anything to add in terms of supply chain or just anything that's made your life easier as an owner? Yeah, I mean, there's a great support system. You have a franchise business consultant. who can kind of point you in any direction if you need assistance. the whole Potbelly system is really supportive. Supply chain, anytime there's an issue, if something doesn't come looking right. If we get cookie bags that are the wrong color or something, we can always reach out to supply chain and they'll have a solution right away. And we're really lucky to be in the system because they do a great job of supporting franchisees. Yeah, I'm curious. You guys just went to convention. You know, what do you think that Potbelly is looking for in a franchise owner? mean, does it take experience operating multi units? Do you find people that are diversifying from other industry segments, are really good at following a system and they're well capitalized? What do you see that Potbelly seeking in a new owner? Well, I think that it's not rocket science what we're doing. But the difficulty and challenges in all the little details and executing at that high level. I think really, I think Bob Billy is probably looking for really experienced people that have done multi-unit rollouts before. But that doesn't mean you have to be a restaurant person necessarily. You get a smart person who can see the system, see the brand. It can absolutely do it. You can execute it. One of things I noticed at the forum, franchisees are smart. They're not all just from one cookie cutter background. And I love that. That makes me think that there can be a lot of franchisees from a very diverse background, work background, and that they can be successful. At the beginning people were like, okay, well let's franchise, let's franchise. at the beginning I didn't really, I didn't want to do that. didn't want to, I think the model for like Subway was you're kind of buying a job, low unit volume. I didn't want that to be what we were doing. I want to make sure that franchisees could make money and make a lot of money. And so we have opened more company-owned stores and made that investment of hundreds. We know how operate the stores. know that what...Potbelly knows what works. I feel so confident in the franchise model that we have, that it can work. We just opened a very suburban, I don't know what you'd call it, Frederick, Maryland. And it was one of the best openings we've ever had. was amazing to see. Very cool. And the closest store was 30 miles away or 25 miles away or whatever it was. Yeah, very cool. Yeah, because like pot belly has the look and feel and vibe of like an independent, but you could tell it's a polished chain because of the attention to detail with everything from the menu boards to the way the employees are trained to the taste of the product and the recipes. So I like how you kind of have that non-franchise vibe, but clearly there's a blueprint and a playbook that works. How much does it cost to open a Potbelly nowadays? I know there's a variance, you know, and there's probably a big range in your item seven, but like, you know, in Frederick, for example, how much does it cost to do a new build? You know, it varies vastly in what it costs to build a potbelly. I can Fredrick was a was a Moe's Cantina and that impacted our our investment cost it was was also a Frederick frankly was a big store big square footage that You know at him You wouldn't necessarily have to do everywhere so I'm probably not the best person to say that invest investment cost but I know that they're being smart about the the amount of money that it costs to build one. And what's great about Pop-Billy and those different formats is they don't all have to be 3000 square feet or 2000 square feet or 1600 or you you can put a Potbelly in a space that had been a restaurant previously. We're, Hampden and I are building one right now. That was a sandwich restaurant previously and we're going to build that really efficiently. Is that the one that's in PG County? It is. Awesome. Very cool. Well, this has been great guys. I appreciate all the backstory and context and it sounds like you guys are headed in the right direction with a lot of growth and not only at the nationwide level, but also here in the DMV. So I'm excited to see the stores pop up and neighborhoods near me. Anything else you guys want to add to the mix before we wrap up today? I love that you're in Northern Virginia in our market. So make sure you're at... our future openings. that you have your history of knowing the brand and the kind of the cool things that I opened the DC market. It's the first market I opened outside of Chicago. they're expanded and you know, because I was living in Maryland and I love how it's transferred. You seem like it's an original fan. from Chicago and I love that. I've been in the restaurant space. was telling Hamden in the green room, I've been in the space for almost 20 years and now I've kind of pivoted to doing a lot of other concepts with my clients and home services and fitness and personal care, et cetera. But my heart's with restaurants. That's what I've always done. I know how hard it is. I have a tremendous amount of respect for people that can do it well. And I spent a lot of time talking people out of it because I feel like they can't do it well. And sometimes you just have to be honest that some people are just meant to be guests and not owners. But in any way, it was really great having you both on the show. And if anyone listening would like to connect with Bryant and Hampden or Potbelly, contact me at FranchiseQB.com or on X @QBFranchiseQB. I'll get you guys connected. Thank you so much, Bryant and Hamden for taking the time to get in the huddle and discuss Potbelly with us today. Thanks for having us. Appreciate it, Mike. You got it. Thank you for listening to the Franchise QB podcast where you're at the helm of your future as a franchise owner. If you enjoyed the content, please rate the show and recommend it to anyone that might be interested in franchising. Make sure to visit FranchiseQB.com to subscribe to my newsletter and for an actionable playbook to go from walk-on to legend in your new business. Follow us on Twitter @QBFranchiseQB and join us every week for a new episode. See you next time. Visit FranchiseQB.com. take the next step of your journey towards wealth, independence, and franchise ownership. And remember, when working for the man gets old, you must do something bold. Thank you for listening.