Q2 2021 Potbelly Corp Earnings Call
Okay.
Good morning, everyone and welcome to Potbelly Corporation's second quarter 2021 earnings Conference call.
During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question answer session at that time. If you have a question. Please press the 1 followed by the 4 on your telephone.
If at any time during the conference you need to reach an operator that store.
Our end zero as a reminder, at this conference is being recorded.
I'd now like to turn the call over to Mr. Dixon Potbelly Chief Legal Officer. Please go ahead.
Good morning, everyone and welcome to our second quarter 2021earnings calls our presenters today are Bob Wright, our President and Chief Executive Officer, and Steve Seville at our senior Vice President and Chief Financial Officer.
Please note that we have provided a set of Powerpoint slides that will accompany our prepared remarks you.
You may access these slides on the Investor Relations section of our website.
After our prepared remarks, well open the call for your questions.
I'd like to call your attention to our cautionary statements on slide 2.
Note that certain comments made on this call will contain forward looking statements regarding future events or the future financial performance of the company.
Any such statements, including our outlook for 'twenty, 'twenty, 1 or any other future period could be considered forward looking statements.
Within the meaning of the private Securities Litigation Reform Act of 1995.
These forward looking statements are not guarantees of future performance, nor should they be relied upon as representing management's views as of any subsequent date.
Forward looking statements involve significant risks and uncertainties and events of results could differ materially from those presented due to a number of risks and uncertainties.
Additional detailed information concerning these risks regarding our business and the factors that could cause actual results to differ materially from the forward looking statements and other information that will be giving today can.
Can be found in our most recent annual report on form 10-K on.
Under the headings risk factors.
And managements discussion and analysis of financial condition and results of operations at.
And in our subsequent filings with the Securities and Exchange Commission, which are available at SEC Dot Gov.
During the call. There will also be a discussion of financial metrics that do not conform to U S generally accepted accounting principles or GAAP.
Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the appendix to the Investor presentation and press release issued this morning.
Both of which are available at the investors tab of our website.
I'll now turn the call over to Bob.
Thank you Lydia good morning, everyone and thank you for joining US today I Hope you and your families have remained safe and healthy since our last update.
First and foremost I want to thank our dedicated associates for their ongoing hard work team spirit and flexibility throughout this ever changing environment.
Our teams have continued to provide our customers with a great safe experience as we further execute our growth plan.
So far 2021 has exceeded our expectations on a number of levels and we expect this positive momentum to continue as we go through the second half of the year.
Beginning on slide 3 I'll walk you through the second quarter 2021 key highlights store.
With the topline revenues totaled $97.5 million, an increase of 24, 9% compared to the first quarter 2021.
With same store sales, increasing by 70% as compared to the pandemic impacted Q2.2020.
Same store sales on a 2 year comparison basis gained momentum through the quarter as well and the negative only 0.7% with June same store sales turning positive versus 2019.
All of our shop types gained sales growth momentum through the quarter suburban and drive through locations continued to exhibit significant and increasing strength, while CBD in airport locations have not yet fully recovered.
That said, though these currently lagging shop types are trending in the right direction and offer an opportunity for further overall growth moving forward.
We experienced improved volume across all sales channels with a notable positive shift in our on premise or dine in business during the quarter with sales up 5% sequentially due to lifting of dine in restrictions and pent up demand.
Our digital business remained very strong again this quarter, even as the other on premise channels continued to recover.
The acceleration of sales momentum during the quarter was driven by the ongoing recovery in the operating environment combined with the impact from our strategic initiatives.
We're very excited to report that at critical operational metric average unit volume or a U V is also rebounding nicely.
Up 23, 8% compared to the first quarter 'twenty 'twenty 1.
Our top line strength led us to significant positive momentum in shop profitability for the second consecutive quarter. Importantly, we also achieved positive EBITDA and adjusted EBITDA. These enterprise profit achievements are well ahead of previous expectations, where we hadn't expected profitability until the second.
Half of 2021.
Our balance sheet continues to strengthen as well.
We expanded our net cash position by $2 million. This strengthening of our balance sheet supports our remaining deferred cash expenses and also allows us to continue to invest in the business.
We added another key leadership position with the appointment of Larry strain as our Chief Development Officer in May.
He brings over 25 years of experience in real estate and franchise development to potbelly.
Which is critical as we pivot to our next phase of growth.
We're very excited that Larry is now a part of the team.
Of only 1 outstanding leadership role to fill a chief marketing officer, and I expect to have some good news to share on that front in the near future.
I want to be clear of that Werent simply riding the wave of recovery in our business, though rather where you're taking very calculated and proactive actions to accelerate our near and long term growth.
Through our traffic driven profitability strategy.
We made significant progress on these initiatives throughout the first half of the year, but I'd like to highlight 2 of the more substantial ones that we completed over the last few months.
First we've completed the testing phase of the new simplified menu with very successful results.
We're happy to report that we will be rolling out the new menu to the rest of our company owned and franchise locations in the coming weeks.
Second turning to slide 4 subsequent to the end of Q2.
We launched a refresh tech stack, which includes a new mobile App website digital ordering integration and perks loyalty program integration.
The pictures on the slide provides a visual of the new web site App and perks program and importantly, the platforms New design is better aligned to our branding more authentic as well as more user friendly for our loyal customers.
We'll get into a little more detail on the tech stack later in the presentation. When we discuss our strategic pillars now I'll turn the call over to Steve to provide more details on the financials and the sales trends.
Steve.
Thanks, Bob and good morning, everyone.
Please turn to slide 5 of the presentation, where you can see the progression of our AAV at.
Same store sales for the second quarter 2021 and the month of July.
Looking at the trends in <unk> over the last few quarters, we see that it has rebounded nicely in 2021 end during the second quarter as well into July surpassing the 2019 average.
I've already mentioned company operated same store sales increased by 70% for the quarter, which was a dramatic improvement compared to the first quarter 2021 decline of 3.1%.
It is important to note that the strong rebound early in the quarter significantly impacted the overall Q2 average due to a boost in sales when COVID-19 restrictions were lifted which drastically increased dine in in total average unit volume.
July same store sales continued to trend positively at positive 34, 4% and although we expect positive comps as we go through the balance of 2021, they won't likely be at the high levels. We experienced in the early months of of second quarter.
Breaking down same store sales our average check grew by 6.0%.
While traffic grew by 63%.
Which was of 65.4 percentage point improvement over the first quarter of 2021.
Turning to slide 6 I'll walk you through our income statement.
Specific financial performance for quarter 2.
Like we have done in the past 2 quarters, we're going to highlight our performance this quarter against the sequential quarter or Q1 of 'twenty 'twenty..1 does that provides a more consistent view of our recovery momentum.
During the second quarter total revenues increased 24, 9% sequentially to $97.5 million due to improvement in volumes at the same store traffic.
Our general and administrative expenses were $9.2 million in the second quarter 2021, or 9.5% of total revenue compared to $7.4 million or at 9.5% of total revenue in the first quarter 2021.
The increase in G&A in absolute terms was primarily due to higher bonus accrual stock compensation accrual end marketing expenses.
G&A as a percentage of revenue was stable due to volume leverage.
EBITDA improved significantly to positive $1.0 million from an EBITDA loss of negative $10.0 million in the first quarter and adjusted EBITDA was $1.9 million for the second quarter, a substantial improvement compared to the negative $6.6 million for the first quarter.
<unk> driven primarily by increased sales in shop level of cost controls.
Cost of goods store expenses were $26.3 million or 27, 2% of shop sales compared to $21.5 million or 27, 7% of shop sales in the first quarter 2021.
The increase in Cogs on an absolute basis was due to higher sales.
The decrease in Cogs as a percentage of shop sales was primarily the result of cost efficiencies vendor rebates and Mark up on third party delivery.
Labor expenses were $32.0 million or 33.0% of shop sales compared to $28.6 million or 36, 9% of shop sales in the first quarter.
This increased dollar costs was primarily driven by higher costs associated with increased volume and higher staffing levels.
The decrease in labor as a percentage of sales is the result of efficiencies created by our improved labor scheduling at allocation model.
Occupancy expenses were at $13.6 million in the second quarter or 14.0% of shop sales compared to $13.6 million or 17, 5% of shop sales in the first quarter the.
The decrease in occupancy expenses as a percentage of revenue was primarily attributable to increased sales leverage.
It is also worth noting that occupancy expenses are down $1 million compared to Q2 of 2020, reflecting the real estate optimization work, we did last year.
Other expenses were $14.7 million or 15, 2% of shop sales comp.
Compared to $13.3 million or 17, 2% of shop sales in the first quarter.
The increase in other expenses on an absolute basis was driven by fees associated with the continued strength in third party delivery sales.
The decrease as a percentage of shop sales was due primarily to sales leverage.
Turning to our balance sheet.
We ended the quarter with $11.8 million of cash on hand, and $23.5 million available on our credit facility.
Net cash increased roughly $2 million on a sequential basis due to positive cash flow.
Our strengthening balance sheet sales leverage and continued margin expansion affords us the flexibility to not only continue to work through our onetime deferred payments, but all sorts of fund our ongoing operations and strategic growth initiatives.
Turning to slide 7 we show same store net sales by shop type and are pleased to report that we are seeing continued recovery across all shop pipes.
Our drive throughs of suburban urban and University of locations are leading the recovery and are trending above 2019 as pre pandemic levels I'll.
I'll remind you that our suburban shops makeup of about 60% of our company units.
Again CBD in airport locations are lagging, but are making notable improvement on a sequential basis.
Slide 8 shows how our revenue by channel mix has evolved so far over the course of 2021.
In the second quarter, we saw meaningful pick up and in shop sales concurrent with lifting of dine in restrictions in our core markets and pent up demand from consumers returning to dining rooms.
Also worth noting is the rebound in our catering business accounted at the digital channel here catering sales nearly doubled in the quarter.
As we have previously discussed over the long term, we believe we will see a blend of digital and in shop service mode at the overall environment normalizes.
All of these digital investments and flexible shaft design that includes 2 production lines enables us to successfully serve as both of these sales channels.
I'll now turn the call back over to Bob.
Thanks, Steve moving to slide 9 at the start of the year. We said 2021 would be a story of 2 distinct taps.
So far in the first half of our expectations have been exceeded on numerous fronts.
We've achieved sequential revenue growth for 4 consecutive quarters with momentum building for the balance of 2021.
We had shop level of profitability for the past 2 quarters ahead of our initial forecast. We also achieved positive EBITDA and adjusted EBITDA much earlier than we originally projected.
This was driven primarily by strong topline growth and expanding margins in our suburban and drive through shops.
Finally, we made tangible progress in advancing our traffic driven profitability strategy.
Typically the new menu with nationwide rollout expected in coming weeks and the new Tech stack, which launched last month.
The priorities for the second half of this year are outlined on the right side of the slide starting with strengthening our unit level economics across our portfolio mix 1 of the final stages of fine tuning our unit growth strategy and I can't emphasize enough. How important this is and will be to drive potbelly sustainable growth in the future.
We aim to accelerate shop level profitability throughout the second half of the year and anticipate continued strength in comparable sales growth for the next 2 quarters.
While we're pleased to have exceeded our expectations in the first half we still expect the majority of our adjusted EBITDA to be generated in the second half and we expect enterprise level of profitability as well.
Importantly, we expect continued positive cash flow from operations through the second half of the year, which supports paying the $5.3 million in remaining cash expenses in the second half of 2021 as well as continued investments in the business. Finally, the 3 to 5 new franchise shops, we set out to open in 2021 are on.
Track with new locations already opened in Tampa, Florida in Cary North Carolina.
On slide 10, as always we'll briefly remind you of our brand position the sandwich shop with the craveable quality and good vibes of of first class dive, we're continually energized by our brand position and believe it resonates with both of our loyal and prospective customers and physicians potbelly well for growth.
On Slide 11, we'll briefly discuss our strategic focus which has at its foundation in our brand position.
Our strategy quite simply is to bring to life at the very best attributes of the Potbelly brand represented by our 5 pillars.
With a unifying objective of traffic driven profitability.
Implementation is well underway for most of the initiatives with acceleration across the course of the year.
There are 5 core pillars to our strategy and on Slide 12, We'll review the progress we've made on several of the initiatives to drive traffic reward loyal customers and prepare for future growth.
Starting with the menu.
The ultimate objective of the new simplified menu is to improve traffic and enhance the customer experience where it matters. The most our food.
All of the while driving customers' perceptions of value and simplifying our operations on.
All of these objectives were validated in the testing phases. In addition to increasing sales driven by both check and transaction growth.
As I mentioned at the start of the call will be rolling out the new menu to the rest of our company owned and franchise shops in the coming weeks.
As a reminder, menu simplification includes consolidating the menu boards and a wider price later as well as other product enhancements like making every sandwich on the menu available and our skinny variety and half size salads outside of our popular pick your pair offering.
We also have large sized options with more meat cheese and topics and we're very excited about some of the new variety on our menu, including a new AVO, Turkey sandwich, and our new Steakhouse beef sandwich among others.
As I noted earlier in the call we launched our tech stack in early July the Tech stack upgrade has been focused on elevating our brand position in digital experience, bringing the good vibes of visiting our shops to the digital space, improving the customer experience and deepening our 1 to 1 relationship with our customers.
App and web interface allows for easier reordering.
And provides us with better leverage from our perks loyalty program with greater control over our data and more flexibility for future enhancements. So.
So far we've received rave reviews from our customers about the new experience and believe that at further leverages, our upgraded perks loyalty program.
We also saw positive impact from differential pricing with third party delivery, which was initially implemented last quarter.
On the marketing side, we've continued to execute on scaled media campaigns, our new digital brand creative directions celebrates our food and drives awareness and drives traffic.
Importantly, we continue to be very pleased by the customer response to our advertising and sales lifts, we're seeing from our new media investments.
Additionally, we continue to make progress with our perks loyalty program during the quarter by adding 142000 members an increase of 4% year over year.
And PERC sales increased by 35% year over year.
Some of the loyalty promotions. We ran include of promotions around mother's day and father's day as well as 1 from national Chocolate Chip Cookie day and of customer favorite at Potbelly double points Thursday.
As we've already noted the upgraded purchase program was part of the Tech stack launch in July and we're eager to leverage new technology to really customized 1 to 1 of the relationship building and segmented campaigns well beyond our previous capability.
Lastly franchise focused development.
Which is the pillar that we know you all are anxiously awaiting to hear more about.
In May we appointed Larry strained as our Chief Development Officer, we continue to have a healthy pipeline of inquiries for potential franchisees given the brand recognition of potbelly. The fact that we are significantly underpenetrated across much of the United States.
And the various industry connections given our leadership teams combined at depth of restaurant experience.
We still expect to open a total of 3 to 5 new franchise shops in 2021, and we will be communicating our franchise plans in more detail for 2022 and beyond in the near future.
I can assure you of the team continues to place a premium on execution of our traffic driven profitability strategic plan and we look forward to providing you with regular updates in the future with that I will now turn the call back over to the operator, So we can address your questions operator.
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1 moment please for the first question.
Yeah.
And our first question comes from Joshua long with Piper Sandler. Please proceed with your question.
Yes.
Great. Thank you for taking my question wanted to see if we might be able to dig into some of the human capital initiatives.
The other supporting your simplified menu of the tech stacks of the marketing initiatives as well.
In prior quarters.
Talked extensively about just the importance of your.
Human let human capital people led strategy, that's really executing this at the store level and so hopefully you can might be able to provide an update there.
Yes, Joshua Thank you for the question and certainly.
We have a lot going on and we wanted to focus on some of the bigger news items from our strategy and how that's developed but I can assure you of that the initiatives that support our our people, creating good vibes pillar of our strategy and have seen a lot of activity as well.
You know the the labor.
The crisis that you hear about across the country is certainly affecting us in some ways. Although we we continue to have a great deal of success in staffing our locations. In fact last month, we hired more associates than we'd been able to hire in several months at.
And that's that's terrific news given our sales patterns.
We've continued to invest in the training materials are we completely redeveloped the training materials in support of the new menu.
The implementation support that we provide for initiatives like the tech stack as well as the new menu have have really caused us to step up our game in how we're communicating and training our people in our shops.
And I think we've shared in the past that we implemented that new bonus program aligning our managers and our shift leaders.
Personal financial outcomes with the outcomes of the business and we're very excited that we're 2 quarters into that with a very high degree of engagement with our managers are there they're loving the notion that they're working off of a scorecard. They understand what of wind looks like and it's aligned to the business goals and we've paid out some of the most handsome bonuses in the field.
But the company has been able to pay at a long time, so tremendous amount of engagement there.
Well there there's always work to do with people and we mentioned last quarter, bringing Scott Swain on board as our Chief people Officer, and you know I think that especially as we turn towards more franchise and you'll see us continue to focus on the infrastructure type of items that can create scalability of of many of those systems.
We have those in place, but we want to make sure that there there is ready to go for our franchise growth as many of our other items are too and Scotts, leading the way on that as we finish out the rest of our strategic planning for next year.
That's very exciting day for that update and thinking about the appointment of Larry strain on the chief development side on the franchising business exciting to see the executive team continues to be built out of I realize that you said you had 1 more spot to fill but just curious on how you think.
Hum.
Larry on to the team and then.
You know what the next steps are obviously the numbers are speaking for themselves in terms of driving sales improving profitability and I'm sure that attract a lot of.
New potential franchisees to the system, but just curious if you could talk through kind of what that process is like and how you think bringing Larry on really helps to accelerate your long term goals of franchising.
Well I can tell you we were excited about bringing Larry on and he's been with US on my first few weeks and we're more excited than ever.
He's very talented franchising and real estate development expert at 25 years in the business He's got experience in.
And too rapid growing brands as well as other fast food brands and.
We're going to share of framework with you at probably as we get things settle maybe in the fourth quarter. When we have our conversation about Q3, well, we won't be giving guidance on growth on anything until the beginning of next year, but.
What we'd like to do is share how we're thinking about that growth and you know we've we've begun to look at all of the elements that are going to drive exciting gross growth.
For us with franchising.
Number 1 thing, though at a always stay focused on if Larry was on the call he'd say the same thing of the unit level economics are the secret to success. It's the you know.
It's the ultimate unlock for for growth and.
With our strengthening unit level economics that we're seeing already and we're still in that recovery mode. We've got the top line the margins and the investment economics are going to be very very attractive. We believe that we can be selective with the people that we bring on.
And again with his experience of the rest of the team I think we can be a very intentional and planned for as we think about how to develop.
Key to I think of brand like ours with as much white space as we have.
It is a.
Market planning and real estate planning and targeting of those trade areas that give us the predictability for success and taken advantage of this this really once in a lifetime opportunity we have with <unk>.
With the market share of gap that exists so that we grow quickly, but smartly and put locations, where we know we're going to be successful.
Great.
Looking forward to tracking that on a go forward basis.
A couple of questions on cost if I could in terms of the underlying cost inflation for the basket at was wonder at its Steve you might be able to walk through that at a realized that you've got some other strategic initiatives that are kind of moving some of those maybe margins as we look at them around but inflation is another topic that is yeah.
Really being discussed here on the industry as well so curious if you could provide some.
Context around how your baskets shaped up on underlying inflation trends and your sort of contracting or visibility you have into the back half of the year.
Sure sure I think we are.
We're facing a lot of the same pressures that you hear other restaurant companies facing I think we have.
We have the benefit of having.
90% of our basket sort of locked already so.
So some of the massive swings that you see no net.
Daily impact us as much although we were.
We're not immune to we're not immune to some of the chicken.
Prices and so forth. We just don't have a lot of chicken on our menu. So if it doesn't it doesn't impact us as much as it might impact of others.
And you know the.
There's also some some movement that we see.
On the labor side like like Bob suggested.
But we've got you know.
A lot of thought in place as we've discussed in prior calls around managing our labor.
Better with with our labor allocation models and so forth.
So we feel pretty we feel pretty good about our ability to cut to to make sure that we don't have any massive volatility in terms of being caught out on on inflation. We think about it in terms of of how we might manage it with with pricing and this new menu of gives us the ability to not just provide.
For.
Some management that way, but also provide the right kind of value for our customers. So we.
We feel we feel like we've got at the right kind of mechanisms in place to keep ourselves on the right side of the inflation equation.
Okay. Thanks for that and just to clarify that 90% of the basket. That's locked is that through the into the fiscal year.
That's into next year as well.
Okay.
Thank you for that and then last 1 for me when we think about the real estate optimization plan that you had talked about and I imagine a lot of that work is already done maybe it's largely entirely complete but wanted to see if you might be able to provide a little bit more context, there or do we still have any temporarily closed stores do we have any more.
Stores that might be on that lift of to be reviewed I know you had already.
1 of rate Oh at what run rate, we can expect for G&A on the second half given the recent launch of the tech stack as well as of the upcoming menu rollout.
Sure.
Yes, Youre correct and of the reasoning for the step up in and the dollars are we we we expressed in the past that our goal is to manage G&A are 2 of 2 of sub 9% of sales level of right near the at 9% of sales level and you know there is there are certain costs that have come in.
As the business has expanded in gross growth has come back in right.
Some of that results in in things.
Things that are related to R. R.
Our menu optimization work.
Hiring new SL team members those kinds of things, but we're still dedicated to that G&A discipline that we discussed in the past.
And we're you know we're expecting to hold true through the rest of the year on that on that G&A rate. The dollars. The dollars will will kind of move with the business a bit.
But we're well beyond the days I think of of.
Of the past, where we were.
Far north of of the double digits in G&A as a percent of sales.
Okay Fair enough and then perhaps Relatedly I wanted to ask you is about your expectations for.
Enterprise level of profitability in the second half excluding deferred expenses now based on the presentation of it seems like the deferred expenses might be.
At the $5.3 million dollar figures I saw on there somewhere but can you describe or otherwise dimensionalize. What these deferred expenses are.
Yeah sure look the deferred expenses are a combination of of things that range from severance.
Making some of the management changes that we made last year to a deferred rents mainly.
From the from some of the partnership that we got from our landlord base last year.
And as well some some payroll taxes.
That debt or deferred from from 2020 and end of the.
The.
Sort of a profile of when those hit its fairly well blended across the year I think we are well beyond half of those right now, but but but not too far beyond half of those as we hit the at that hit the mid year Mark and.
I think the good news with with those deferred cost is.
Our our balance sheet strength of and are the underpinning of.
Of our of our operating strength helps us handle that as well as give us the ability to kind of invest in some of these growth.
Gross initiatives that Bob mentioned earlier in the prepared remarks.
Okay got it thanks for that and then I guess my next question.
Piggybacking on 1 of Joshua's question.
You know, having followed you guys for a while it seems like you haven't taken price in quite a while.
That's for obvious reasons on the left.
Ah you're on a half or so but.
But I mean, many of your competitors have recently started to take price to offset things like wage inflation. So I'm curious on your thoughts around menu price heading into the second half.
Against the backdrop of your upcoming new menu rollout.
Yeah, Matt I think you know when you when.
When you think about the history of the brand there were significant price takes for years and.
Number is that we're in the low single digits to mid single digits with.
For whatever reason and expectation that we could capture all of that and not give up the traffic well, we know that doesn't work and you look at our history and you see the traffic losses that went with those those price increases. So we have been very diligent end.
Quite at quite careful in the last 12 months of especially because of the pandemic, but we have taken some subtle price increases during that period of time.
Frankly, the the work that we've done on the menu as we've indicated our testing has proven that we get on a nice balance of check and traffic lift that goes with that new menu. So.
To me that is a far more healthy relationship with a customer then simply taking price on the on the food that we're already selling we've we've reengineered that so that we're getting additional check.
We really like the margins on that new menu of we're very pleased with how that blends out.
That's where a lot of other testing came in is where people would shop on this new menu. So that so that our margins can be maintained and yet we get the check that gives us the same leverages price without the customer just taking pain on price increases.
We think going forward. It's also a structure that allows us to be very smart with with how we can surgically take price when we need to and do so in a way that's in alignment with our customers' expectations for our brand.
So we've thought very carefully about the exact pricing that we're taking to market with with this national rollout as well and.
Looking at it every every nickel on every dime that makes sense for the menu, but at the same time understands the pressures, we're getting particularly on labor.
With some of the legislated wage increases so.
All of that to say not more traditional price, but certainly some check growth that's given us at the same leverage that we love.
Okay that makes sense.
Last 1 for me is I guess on marketing it looks like you've had a lot of success with your digital marketing initiatives over the last few months certainly.
Could you describe how you are planning to use your various media channel media channels to promote the upcoming menu launch.
Yes.
That's 1 of the exciting things about having the tech stack in first so we have been we've been very pleased with our of digital advertising end are still at a very low spend level. So as we've been quite open about we think that proving that success has been a part of our plan. This year certainly taken advantage of the sales lift has been part of our.
Our plan and I think I shared last quarter that we've been very focused on traditional measurement of sales lift with pre post net of control type measurements not just tracking the digital activity itself looking for the top line lift.
That's all been done with paid social media. That's a you know at our spend level in our size end and our geographic footprint. There is no question Thats the best place to do that.
So now that we have the tech stack and we own some of our connection with our new web at our App, we have multiple platforms to celebrate this new menu and draw customers into it.
And we will do that you'll see the menu celebrate at on the web and on the App as we do that we'll also continue to do what we did in our test markets with our paid social media to bring that to life.
There will be some more traditional L. S M elements to create some local excitement and enthusiasm for that and then the last lever of course is our perks program, which customer facing perks program kind of continues to work the way that it did before.
Tech stack launch, but as we've shared the engine that runs that perks program is is what sort of completely different partner with a lot more capabilities for us to dig into that day to increase those 1 to 1 relationship. So we're going to lean on that very heavily in the early stages of the menu rollout, we're going to create quite a bit of of traction for our.
Our users both our active current and lapsed users with a layered approach to give them reasons to come try this great food and find the great value that we've implemented.
And so yeah, I'd say, it's a rather integrated plan.
We can if we can fill this last year with our CMO I know, we can make that plan a lot better, but I'm very very proud of the team on the work that they've done to get us to this point with the rollout as well as the the proof on the digital.
Great. Thanks, very much and good luck going forward, but at the menu launch.
Thank you.
Yeah.
Mr. <unk> there are no further questions at this time I'll turn the call back to you for closing remarks.
Well. Thank you everyone for your time again today.
We're just over halfway through 2021, which has far outperformed our expectations hopefully you see that in today's discussion we fully expect this momentum to continue throughout the second half.
Wants you to know our confidence in potbelly future is resolute with significant growth potential in front of US. We thank you for your interest and support end Potbelly certainly hope you have a great day.
Okay.
That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.
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