Noodles & Co. plans to refresh its menu boards and add a new vegetable-based dish to build on last year’s entrée game-changer, zucchini noodles, company leaders said Thursday during the chain’s fourth-quarter earnings call.
Specifically, CEO Dave Boennighausen said the company plans to build on its “better-for-you platform” with five to six new items coming later this year including a gluten-free dish. He said these dishes have helped to bring back lapsed users who left the brand because of the carb-heavy pasta menu.
But once Zoodles was introduced last year, many came back.
“Folks that had not been using the brand for a long time had forgotten about us…that’s where we saw the pickup,” Boennighausen told analysts during a conference call.
Broomfield, Co.-based Noodles said it also plans to drive sales through its fast-growing off-premise business, which in the fourth quarter, accounted for 54% of sales. Much of that increase was driven by delivery, quick pick-up shelves inside the store and the company’s test of pick-up windows in select locations.
The windows are “drive through” style lanes for picking up takeout orders without exiting your car. Boennighausen said 75% of new units will have pick-up windows.
The company also plans to invest more in technologies to make online and mobile orders easier on guests.
The pick-up windows and quick pick-up shelves inside stores are among various strategies rolled out in 2018 to reduce friction for guests. One third of sales are generated from customers who walk in the store and wait several minutes to order their food for takeout.
“That’s not optimal experience for us,” the CEO said.
Boennighausen said he’d like to shift those customers into a digital experience, where they make an online or mobile order and pick up their food in a drive-up window. That process increases throughput as fewer guests wait in line to place an order.
Delivery, which launched nationally last fall, accounts for 3.1% of sales. The company expects to offer delivery in 95% of its trade areas soon, the CEO said.
However, like many other operators, Boennighausen expressed concern over the “significant costs” associated with third-party delivery.
To offset those costs, where fees range between 20-30%, Noodles plans to test different pricing strategies on delivery fees to recoup margin losses.
Inside the dining room, Noodles is looking to make ordering easier as well. The company plans to roll out a new menu board that will highlight meals by category including the “most profitable” dishes, Boennighausen said.
In test now in select restaurants, the new menu format features categories such as “Signature Flavors,” which showcases some of the fast-casual chain’s best-selling dishes such as Penne Rosa with Parmesan-Crusted Chicken and Japanese Pan Noodles with Marinated Steak.
Other categories include Classic Noodles, World Famous Macs, Zoodles and other Noodles, and Asian Noodles.
Chief Brand Officer Chas Hermann said menu prices on the new board are also streamlined. Right now, dishes can have up to four prices, depending on the size and protein choice, Hermann told NRN in a post-conference call interview.
“With the new menu, each dish is priced individually, giving the guest much more clarity around the ordering process,” Hermann said via email. “You can still add or substitute proteins, noodles, or Zoodles, but the process is much easier for guests to manage since the price of the dish is prominent right next to the dish on the menu board.”
The nationwide rollout of the new menu format is expected in May.
“I’m excited to get those out nationally in the next couple of months,” Boennighausen said.
Total revenue increased 0.4% to $113.2 million for the fourth quarter ended Jan. 1, 2019, compared to $112.8 million for the same quarter, previous year. Systemwide same-store sales for the quarter increased 4%, compared to a 0.9% drop in the fourth quarter of last year. Same-store sales at company stores, which account for most restaurants, went up 3.7% for the fourth quarter compared to a 0.9% decrease last year.
Net income for the quarter was nearly break even compared to a net loss of $0.5 million, or $0.01 per share, for the same period last year.
The company closed the year with 459 restaurants. Of those, 65 are franchised.
Contact Nancy Luna at [email protected]
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