Shares of sandwich chain Potbelly Corp. (PBPB) exploded in their debut Friday, soaring more than 130% as investors warmly greeted the casual-dining company in its initial public offering.
Potbelly priced 7.5 million shares at $14 each on Thursday night, raising $105 million. The stock rose $18.21 to $32.21 in early trading Friday.
The jump in the stock price valued the company at more than $860 million.
Given the struggling U.S. economy and sluggish job market, analysts said many diners have turned to lower-priced restaurants such as Potbelly as opposed to more expensive chain restaurants such as Ruby Tuesday (RT) or Red Lobster.
Early demand for the shares ahead of the IPO allowed Potbelly and its underwriters, led by Bank of America’s (BAC) Merrill Lynch unit and Goldman Sachs (GS) to price the shares above the initial expected range of $12 to $13 each.
In its regulatory filing with the Securities and Exchange Commission, Chicago-based Potbelly describes itself as “an emerging growth company” with 288 shops in 18 states and Washington, D.C., and 12 more located in the Middle East.
The company, which was founded in 1977 and started with one store in Chicago, said its revenue increased by 16% in 2012 to $274.9 million. Its largest shareholder is Starbucks Corp. (SBUX) Chief Executive Howard Schultz.
Potbelly’s menu offers sandwiches, most served toasted, at about $5 or $6, and salads priced at around $6 or $7.
Potbelly is following in the successful IPO footsteps of Noodles & Co. (NDLS) whose shares debuted in June and also doubled on their first day of trading.