What was the income tax (benefit) expense for Potbelly Sandwich Works in 2024?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
xes as a result of the following:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| U.S. federal statutory tax | 21.0% | 21.0% | 21.0% |
| Computed "expected" tax expense | $ 1,635 | $ 1,266 | $ 981 |
| Increase (reduction) resulting from: | |||
| Change in valuation allowance | (35,269) | (1,526) | 2,280 |
| Minority interest | (218) | 96 | 77 |
| Permanent differences | 1,477 | 805 | (1,755) |
| State and local income taxes, net of federal income tax effect | 295 | 793 | (287) |
| FICA and other tax credits | (487) | (297) | (559) |
| Equity compensation | (815) | 159 | (43) |
| Tax rate changes and other | (163) | (387) | (367) |
| Income tax (benefit) expe |
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 37–49)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, the company experienced an income tax benefit of $33,545,000 in 2024. This figure is a significant item in Potbelly Sandwich Works' consolidated statement of operations, reflecting the difference between the income before income taxes ($7,787,000) and the net income ($41,332,000).
The large income tax benefit in 2024 significantly impacted Potbelly Sandwich Works' net income, turning a relatively modest income before taxes into a substantial net income. This benefit could be due to various factors, such as changes in tax laws, utilization of previously disallowed tax credits, or other specific accounting adjustments. For comparison, in 2023, Potbelly Sandwich Works had an income tax expense of $909,000, which demonstrates a considerable shift in the company's tax situation year-over-year.
Prospective franchisees should be aware that such tax benefits are not necessarily recurring and can be influenced by a variety of factors. Understanding the drivers behind these figures is crucial for assessing the financial health and stability of Potbelly Sandwich Works. Reviewing the notes to the consolidated financial statements, as suggested in the FDD, would provide additional context and explanations for these income tax dynamics.