SAN DIEGO (TheStreet) -- Potbelly (PBPB) - Get Report was one of those disasters you could see coming from a long distance. Ever since its IPO, its stock has done little more than head lower, and for good reason: It was a better story than its substance.

As I wrote at the time, in a piece headlined "Potbelly IPO Appetizing, but Watch for Indigestion," it was filled with red flags from the get-go.

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For example, while same-store sales were up 12 of the prior 13 quarters, a closer read of the prospectus shows that the pre-IPO quarter's 3% gain was a slip from the year-ago 3.3% gain. And in the first six months of this year, same-store sales were up only 1.5% vs. the year-earlier 4.8%.

But investors shrugged it off because with restaurants and retail, at least in the early going, it's all about the number of stores they can put up. More stores equal sales growth, equal higher stock price. At least that's how it's supposed to work on paper!

Reality and repeat what I wrote at the time: Just because restaurants put up more new stores doesn't mean they'll be good stores. The restaurant space is a highly (and seemingly increasingly) competitive space to begin with. And once restaurants (and retailers) go public, the pressure is on to expand. And that's where the trouble often comes in. (See The Container Store.)

-- Written by Herb Greenberg in San Diego

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Herb Greenberg, editor of Herb Greenberg's Reality Check, is a contributor to CNBC. He does not own shares, short or trade shares in an individual corporate security. He can be reached at