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Buyers gobble up Potbelly's IPO

Potbelly Sandwich Shop is showing investors have not lost their appetite for quick casual restaurant stocks. Shares spiked more than 130 percent, to just under $33, when they began trading Friday morning.

They closed at $30.77, up 120 percent for the day.

This comes after Potbelly priced its initial public offering at $14 a share, up from the forecast range of $12 to $13. The company will raise $105 million from the IPO of 7.5 million shares. The Chicago-based chain plans to use the proceeds to fund its expansion to more markets.

Potbelly, which started in 1977, has 295 stores, most of them in the Midwest and on the East Coast. They sell sandwiches and salads priced at between $6 and $8.

Source: Potbelly | Facebook

"The price of a meal at Potbelly is competitive," said Joe Pawlak, vice president of Technomic, a restaurant industry consulting firm. "Since Potbelly does not have table service, customers can save a few dollars not having to tip while also enjoying a sit-down experience. Potbelly is in the sweet spot of quick casual restaurants."

Potbelly is successful because it combines higher-quality food and a better atmosphere than similar businesses, he said.

"You don't mind staying and eating at Potbelly, unlike other sandwich shops," Pawlak said. "Also, the quality is as good or better than other casual restaurants."

Pawlak estimated that 70 percent of Potbelly's sales are at lunch, when it's not uncommon to see a steady flow of customers moving through the order line.

Over the past five years, the chain's revenue has grown 14 percent a year—a pace that trounces the restaurant industry's annual growth rate of 2 percent to 3 percent.

Potbelly trades under the ticker symbol PBPB on the Nasdaq.

—By CNBC's Phil LeBeau . Follow him on Twitter @LeBeauCarNews.

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