In Q3 2018, Potbelly invested in advertising and increased promotional intensity, and its traffic beat Black Box averages by 170 basis points—a significant improvement from the negative spread throughout the first half of the year, Johnson said. So when 2019 approached, Potbelly planned to pull back on promotions and aggressively hike advertising to drive traffic. The P&L struggles if you try to do both at the same time, Johnson said. And recent history led Potbelly to pick this particular fork in the path.
In Q1, Potbelly’s traffic trends trailed that same Black Box benchmark by 110 basis points. Johnson said this, at least partly, was due to the company’s pullback on spending and promoting in Q4 2018, as well as this past period, compared to the previously noted level in Q3 of 2018. “So we may have lost some momentum,” Johnson said. The decision to delay advertising spend thanks to weather didn’t help, either.
Then, in April, Potbelly launched its first new brand campaign, “Love Lunch Again,” across three core markets. Potbelly turned the dial up on digital marketing, which Johnson said provided a cost-effective and targeted channel to “tell the Potbelly story in a way that really differentiates the brand.” It also tested some spot traditional avenues, like billboards, TV, and radio, to really measure the impact of these mediums on Potbelly’s business.
And here’s what resulted: the campaign accelerated traffic but the results were not enough relative to the size of the investments Potbelly was making, Johnson said.
“The key to success is finding the right message, media, and creative to attract customers and build our brand awareness,” Johnson said.
Potbelly realized it was missing at least one of these elements. Either the message, media or creative missed the mark.
“As a result, we are taking a step back to assess our efforts and to gain a better understanding of what brand messages resonate when combined with a call to action and promotional hook,” Johnson said. “We then plan to take our learnings and apply them with a fresh approach on how to talk to our customers to drive a more productive outcome.”