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Noodles & Co bets on off-premise, mac & cheese as sales woes continue

Noodles & Co bets on off-premise, mac & cheese as sales woes continue

But investors drive up shares as new CEO focuses on positives

Noodles & Co. has made strides in its journey toward financial health, but the fast-casual chain isn’t quite there yet.

The company last week posted negative sales figures in the third quarter ended Oct. 3, despite growth in off-premise performance and an investment in its mac & cheese line.

The Broomfield, Colo.-based brand reduced the bleeding from a year ago, suffering a net loss of $8.3 million, or 20 cents per diluted share, compared with a net loss of $9.8 million, or 35 cents per diluted share a year earlier.

However, the company saw revenue fall to $114.2 million from $122.7 million the year prior, coupled with a 3.5% same-store sales decrease.

The fast-casual chain also saw a 6.9% drop in total revenue for the quarter, CEO Dave Boennighausen’s first segment at the helm.

During Thursday’s earnings call, Boennighausen pointed to the closure of 55 underperforming locations earlier in the year — and the resulting hangover — as a cause of down-trending sales figures.

He also credited off-premise performance as a bright spot.

“We’re almost 50% of sales right now from off-premise and that is without really having a very concerted effort towards it,” Boennighausen said.

He said that focus on the company’s digital rewards program and an investment in in-house shelving units for quick pick-up, as well as testing improved communication and signage, could help build off-premise strength.

The brand also added a permanent mac & cheese menu in October.

When asked by an analyst on the call if comparable year-over-year struggles that month shook his faith in the mac & cheese refresh, Boennighausen said, “It doesn’t concern me at all,” and he cited a limited-time offer last autumn that may have skewed numbers this year.

Despite the volatility, the company’s stock has been on the rise, up nearly 5 percent in Monday trading and about 8 percent since Thursday’s earnings release.

Executive Vice President Paul Strasen said on the call that the company was also exploring a potential second-quarter launch of a signature zucchini noddle dish in 2018. This menu addition would allow guests to substitute the vegetable-based option into any of the traditional entrees.

Preliminary tests on a line of cold noodle offerings are also underway.

Noodles & Co. has more than 400 locations across the U.S.

Contact: [email protected]

Follow him on Twitter: @DanAMX

TAGS: Fast Casual
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