Noodles & Company adds a $1 surcharge to chicken dishes as costs riseNoodles & Company adds a $1 surcharge to chicken dishes as costs rise

Noodles & Company has added a $1 surcharge to all chicken dishes to battle the increased cost of the meat, chief financial officer Carl Lukach said in a conference call announcing the fast-casual chain’s earnings Wednesday.

Lukach said the cost of chicken breast, which is ordered by more than half of Noodles’ guests, was up by around 70% compared to a year ago and he expected that cost increase to approach 80% during the second quarter. For that reason, the chain this week temporarily raised its prices.

He said he expected “meaningful relief” in chicken prices in the second half of the year as non-breast chicken prices are already starting to decline.

Meanwhile, CEO Dave Boennighausen said the chain will launch its low-carbohydrate pasta, which it has been testing since January, next week.

The new pasta, LEANguini, developed by Noodles’ culinary team, has 56% fewer net carbs and 44% more protein than traditional pasta. It will be available to members of the chain’s Noodles Rewards loyalty program starting next week and to everyone else on May 18, he said.

He added that as of the quarter ended March 29, 2022, healthier menu items, such as zucchini noodles and pasta made with a blend of cauliflower and wheat, are now 13% of guest mix, up from just over 10% a few years ago. He said the higher-calorie tortelloni, introduced in the middle of last year, is performing well and accounts for 7% of guest mix.

The LEANguini will be offered in the chain’s new light lemon and Parmesan cheese sauce, but will also be available at “a modest premium” in other pasta dishes.

He said that in test, with minimal marketing, “we are seeing an increase in frequency as people try [LEANguini] that's very meaningful.”

Boennighausen said guests’ overall satisfaction with the dish has outperformed other menu items.

“We think it's something that, once people try it, it’s really going to make them rethink how they view the carbohydrate and protein aspect of noodles and pasta.”

Boennighausen also said the chain would launch its new brand positioning next week under the theme of “Uncommon Goodness.”

“Through ‘Uncommon Goodness,’ Noodles is bringing its purpose to life by elevating the uncommon goodness that has been core to the brand for more than 25 years. From how we treat our team members and create a unique guest experience to how we carefully select ingredients and positively impact the communities we serve, Noodles infuses uncommon goodness into everything we do,” Boennighausen said, without providing further details.

The chain performed well during the quarter on the unit-level, particularly as the surge of COVID cases caused by the Omicron variant subsided, allowing most of the chain’s 453 units to operate fully staffed and at full operating hours.

Same-store sales were up by 6.4% compared to the first quarter of 2021, and average unit volumes hit the $1.35 million mark, with 40% of restaurants expected to reach the chain’s long-term AUV goal of $1.5 million in the second quarter of this year.

Revenue for the company increased by 2.7% to $112.6 million for the quarter, up from $109.6 million in the first quarter of 2021.

However the company reported a net loss of $6.4 million, or 14 cents per share, compared to a net loss of $2 million, or 4 cents per share, a year ago.

Lukach said that for the 2^nd quarter he expected total revenue of $130 to $133 million and same-store sales increases “in the mid-single digits.”

The chain opened seven new restaurants during the quarter, of which five were company owned — the most new restaurants in a quarter since 2016.

Lukach restated that the chain anticipates a total of 35 new restaurants systemwide, for annual unit growth of 8%, with the majority of them opening in the second half of the year.

The chain based in Broomfield, Colo., closed out the quarter with a total of 360 company-owned and 93 franchised locations.

Contact Bret Thorn at [email protected] 

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