Dive Brief:
- RaceTrac has agreed to buy Potbelly Corporation for $17.12 per share, or about $566 million, Potbelly announced on its website Wednesday.
- The all-cash deal for the sandwich shop, which has about 445 locations across the U.S., is expected to close in the fourth quarter.
- This news comes a little more than two years after RaceTrac agreed to buy energy company Gulf Oil. The retailer completed that acquisition in December 2023.
Dive Insight:
While c-store retailers often partner with QSRs, buying one outright is an unusual move. By acquiring a major restaurant chain with operations in 30 states, Racetrac is making a big investment in foodservice.
RaceTrac has over 800 RaceTrac and RaceWay convenience stores across 14 states in its network. The retailer did not respond by press time to questions about if it plans to open Potbelly locations inside some of those c-stores, but Potbelly President and CEO Bob Wright told The Wall Street Journal, which first broke the story, that “their strategy isn’t necessarily to put a Potbelly in every RaceTrac.”
Between the Gulf and Potbelly acquisitions, RaceTrac is moving away from a pure-play c-store operation and becoming more of a conglomerate. RaceTrac has an extensive in-house foodservice program that includes breakfast food, pizza, roller grill hot dogs and a Swirl World ice cream and frozen yogurt program.
The deal also comes as RaceTrac continues to improve the technology at its sites. The company is also looking for its first chief information officer and expects to debut in North Carolina later this month.
Potbelly’s leaders see the acquisition as a way to reach its target of 2,000 units. The company has around 445 locations and enough franchise commitments already signed to eventually bring its total to 816 units.
“We have positioned Potbelly for accelerated franchise-led growth in recent years, and this transaction fortifies our path while delivering certain and immediate value to our shareholders,” Wright said in the announcement.
Potbelly’s board of directors unanimously recommended that shareholders approve the deal, which values shares at 47% higher than Potbelly’s 90-trading-day volume-weighted average price as of Sept. 9. Potbelly’s directors and executive officers have already pledged about 11% of the restaurant’s shares in support of the sale.
