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Noodles & Company has seen some construction delays due to supply chain issues.

Noodles & Company’s 16.3% same-store sales surge bolstered by pasta innovation, digital sales mix

The fast-casual noodles chain is initiating its second price increase in three months in response to inflation and supply chain challenges

Noodles & Company continues its pattern of strong operations, with third-quarter same-store sales up 16.3%, driven by menu innovation (particularly the introduction of the new tortelloni pasta in June) and a healthy digital sales mix, the company reported on Wednesday.

“We have seen ongoing success with culinary innovation that’s on trend, resonates with guests and builds loyalty,” Noodles & Company CEO Dave Boennighausen said in an earnings call Wednesday. “[…] Tortelloni has been a great hit and we have a long runway ahead of us. As people get introduced to the brand and the rewards program, the time between visits continues to shrink.”

Digital growth remains one of Noodles’ most robust indicators of success during the third quarter ended Sept. 28, 2021, with its rewards program approaching four million members.  

Despite this forward momentum, the fast-casual noodles chain has experienced some construction challenges and equipment backorders leading to unit growth delays. This industry-wide problem has led to a delay of five scheduled 2021 store openings to 2022, and a backloaded pipeline of unit growth, as the company approaches its goal of 1,500 units portfolio-wide.

With 8% new unit growth predicted for 2022, Noodles & Company expects new stores to perform well, especially since on average, new Noodles restaurants (open in the last three years) have seen sales growth of 10-20% relative to the rest of the portfolio.

“We feel confident that the restaurants that got pushed are all ready to go,” Boennighausen said. “We’re ahead of where we expected to be, and still expect delays [due to construction and equipment backups], but we feel strongly about the quality and quantity of our pipeline from a franchise perspective.”

Noodles & Company has also planned a 2% core menu price increase for the end of the fourth quarter, its second price increase of the year after menu prices ticked up 3% in August, with most of the pricing increase falling on third-party delivery companies.

“Over the years, we’ve been soft in terms of price increases,” Boennighausen said. “As we evolve and improve the concept from a quality of food perspective, we feel value remains very strong. […] we have not seen resistance [to price increases] over the past few months.”

Noodles & Company is not immune to the staffing challenges experienced by the entire restaurant industry, but Boennighausen said he believes “the worst is behind us” as the company continues to offer competitive compensation and company culture benefits. Labor costs could have an effect, however, on store operating hours.

Revenue for Noodles & Company increased 18.1% to $125.1 million from $106.0 million in the third quarter of 2020. Net income was $4.7 million or $0.10 per diluted share, compared to net loss of $0.1 million, or $0.00 per diluted share in the third quarter of 2020. As of  Sept. 28, 2021, the company had 450 restaurants systemwide, with two store openings during the quarter.

Contact Joanna at [email protected]

Find her on Twitter: @JoannaFantozzi

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