Sandwich maker Potbelly is being acquired by the gas station and convenience store chain RaceTrac for $566 million.
Potbelly, which was founded in Chicago in 1977, has 445 restaurants across the U.S. The company said the deal with RaceTrac will help it reach its goal of quadrupling in size to 2,000 locations. Potbelly stores are both company- and franchise-owned.
“With RaceTrac’s resources, we will unlock new opportunity for this incredible brand while staying true to the neighborhood sandwich shop experience that makes Potbelly special,” Potbelly CEO Bob Wright said in a statement Wednesday.
Potbelly shares jumped more than 31% to $17.
Sandwich chains and restaurants have struggled in recent years, starting with the pandemic that had millions eating at home when they would usually have dined out.
Yet Potbelly’s profits have been rising and growth in its franchised businesses has been strong.
Now it is inflation that is hitting restaurants hard as they pay more for ingredients and customers tighten their belts. At the same time, national chains are being pressured to lower prices with lower-income customers pulling back on spending and sticking to essentials.
McDonald’s said this month that it is cutting prices on some combo meals to woo back customers who’ve been turned off by the rising costs of grabbing a fast food meal.
Some chains have become takeover targets.
Dave’s Hot Chicken was acquired over the summer for $1 billion by a private equity firm. The same firm, Roark Capital, snapped up Subway in 2023 for nearly $10 billion.
Roark specializes in franchised businesses and backs two holding companies that own multiple restaurant chains: Inspire Brands, the parent of Arby’s, Dunkin’, Jimmy John’s and Buffalo Wild Wings; and Focus Brands, which owns Auntie Anne’s, Carvel, Cinnabon and Jamba.
RaceTrac was founded in 1934 and is family owned. The Atlanta company operates more than 800 locations in 14 states. RaceTrac Chairman and CEO Natalie Morhous said the company is eager to expand its stable of brands.
RaceTrac said it will acquire all of Potbelly’s shares for $17.12 per share in an all-cash deal.
The acquisition is expected to close in the fourth quarter.
