Forget Twitter, Potbelly's IPO Is the Place To Be

NEW YORK (TheStreet) - Forget Twitter. Potbelly (PBPB) is the IPO of the day.

The Chicago-based sandwich chain raised $105 million by selling a portion of its shares to the public on Friday. The stock listed on the Nasdaq on Friday morning. Shares were soaring 137% to $33.15, at last check, above its offering price of $14 a share. Shares opened at $28.66, a gain of 119% above the offering price.

Potbelly said late Thursday it would price 7.5 million shares of common stock at a price of $14 a share, above the expected range of $12 to $13 a share (which was raised this week from the original estimate range of $9 to $11).

The company is selling 7.35 million shares of common stock, with outside shareholders selling 150,131 shares as part of the offering. Potbelly has granted its underwriters a 30-day option to purchase up to 1.12 million additional shares at the IPO price less the underwriting discount.

Bank of America Merrill Lynch and Goldman Sachs are acting as joint book-running managers for the offering. Robert Baird, William Blair and Piper Jaffray are acting as co-managers.

Investors have been eager to grab shares of the growing chain. Potbelly sits in the fast-casual dining category, a strong sub-sector performer in the overall restaurant market. Potbelly has 295 stores, most of which are company owned.

Also see: Investors Hungry for Potbelly IPO

Despite the demand, Potbelly said in its S-1 filings with the Securities and Exchange Commission that it plans to pay out $49.9 million in the form of a cash dividend to selling stockholders.

It will then use proceeds to repay borrowings under the company's credit facility as well as for working capital and other general purposes, it said.

The company said it had positive comparable store sales growth in twelve of the last thirteen quarters through our fiscal quarter ended June 30.

Revenue rose 15.5% to $274.9 million in 2012, with an adjusted EBITDA up 17.6% to $31.5 million. Net income for the 2012 was $7.1 million, excluding a $16.9 million non-cash tax benefit.

It also said that from 2008 to 2012, shop-level profit margin rose by 520 basis points to 20.7%.

Potbelly plans to continue opening corporate-owned stores, with 32 to 35 new stores by the end of 2013. It plans to grow stores by roughly 10% on an annual basis, maintain margins above 20% as the company grows and maintain "general and administrative expenses under 10% of revenue," the filing said.

Potbelly said that preliminary comparable store sales for company-owned stores rose 2.3%, reflecting the first 11 weeks of the quarter to September 15.

The last restaurant stock to come to the public markets was fast-casual restaurant Noodles (NDLS ). Noodles' stock is up 17% since its first day of trading on June 28.

Shares of Noodles were up 1.2% to $43.53 in Friday trading.

-- Written by Laurie Kulikowski in New York.

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