Potbelly is being acquired by gas station and convenience chain RaceTrac for $566 million

Sandwich maker Potbelly is being acquired by the gas station and convenience store chain RaceTrac for $566 million.

Potbelly, which was founded in Chicago in 1977, has 445 restaurants across the U.S. The company said the deal with RaceTrac will help it reach its goal of quadrupling in size to 2,000 locations. Potbelly stores are both company- and franchise-owned.

“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,” Potbelly CEO Bob Wright said in a statement Wednesday.

Potbelly shares jumped more than 31% to $16.99 in early afternoon trading.

Sandwich chains have struggled in recent years, starting with the pandemic that had millions eating at home when they would usually have dined out. That made them ripe for takeovers.

In 2021, Restaurant Brands International — which also owns Burger King, Popeye’s and Tim Hortons — bought Firehouse Subs for $1 billion. Two years later, the private equity firm Roark Capital snapped up Subway for nearly $10 billion.

Roark specializes in franchised businesses and backs two holding companies that own multiple chains, including several sandwich shops. Inspire Brands owns Jimmy John’s, while GoTo Foods owns Schlotzsky’s and McAlister’s Deli.

Potbelly focused on a multi-year transformation plan coming out of the pandemic. The chain introduced new menu items, including a steak sandwich. It also increased its digital and delivery sales, redesigned stores and grew by attracting new franchisees.

In the company’s second quarter, which ended June 29, same-store sales — or sales at locations open at least a year — were up 3%. U.S. fast food traffic fell 1% industry-wide during the quarter, according to Revenue Management Solutions Co., a consulting company for restaurants.

Still, the future is cloudy for many restaurant chains. Inflation has hit restaurants hard as they pay more for ingredients and customers tighten their belts.

National chains are also being pressured to lower prices with lower-income customers pulling back on spending. McDonald’s said this month that it is cutting prices on some combo meals to woo back customers who’ve been turned off by the rising cost of grabbing a fast food meal.

Some investors had been pushing Potbelly to consider a sale, saying the company’s stock was undervalued compared to competitors. Immersion Investments, one of Potbelly’s top shareholders, urged a sale in an open letter last fall and called on the company to slow its investments in technology and hiring.

RaceTrac was founded in 1934 and is family owned. The Atlanta company operates more than 800 locations in 14 states. RaceTrac Chairman and CEO Natalie Morhous said the company is eager to expand its stable of brands.

RaceTrac said it will acquire all of Potbelly’s shares for $17.12 each in cash.

The acquisition is expected to close in the fourth quarter.