RaceTrac Plans to Buy Potbelly Chain

C-store operator RaceTrac Inc. (Atlanta) has reached a definitive agreement to buy Potbelly Corp. (Chicago), a neighborhood sandwich shop concept. The deal calls for privately held RaceTrac to launch a tender offer to acquire all of Potbelly’s outstanding shares for $17.12 per share, in an all-cash transaction worth about $566 million, the sandwich chain said in a news release.

Potbelly currently has 445 company and franchise-owned shops across the U.S., and Potbelly says becoming part of RaceTrac will help it achieve a long-term goal of 2000 locales.

“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,” said Potbelly President and CEO Bob Wright. “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.”

RaceTrac, meantime, operates 800-plus convenience stores across 14 states under the RaceTrac and RaceWay brands, along with 1200 Gulf-branded fuel stations.

“We are proud of Potbelly’s legacy as a beloved neighborhood sandwich shop and are excited to expand our family of convenience-driven brands,” said Natalie Morhous, RaceTrac’s CEO and Board Chairman. “I’m pleased to welcome Potbelly’s more than 5,200 team members and franchise partners to the RaceTrac family. Together, we’ll serve guests in even more meaningful ways.”

The companies have not commented yet on whether that would involve opening Potbelly shops within RaceTrack’s c-stores, C-Store Dive reports. “While c-store retailers often partner with QSRs, buying one outright is an unusual move,” the online news service said. “By acquiring a major restaurant chain with operations in 30 states, RaceTrac is making a big investment in foodservice.”

The deal is expected to close in the fourth quarter of this year, subject to the satisfaction of customary closing conditions and regulatory approvals. Until that happens, both companies will continue to operate independently.