Noodles & Co. plans to introduce more pasta alternatives to build on the momentum of the chain’s spiral zucchini noodles, which have contributed to substantial gains for the company.
Total revenue for the third quarter ended Oct. 2 increased 2.2 percent to $116.7 million, up from $114.2 million from the prior year, same quarter. Systemwide comparable restaurant sales increased 5.5 percent, helped by strong same-store sales from franchise restaurants which reported a 7.6 percent increase.
It was the company’s second consecutive quarter of same-store sales growth in excess of 5 percent. Dave Boennighausen, CEO of the Broomfield, Co.-based chain, credited the streak on the continued popularity of zucchini noodles, first introduced in May.
Noodles’ same-store-sales growth is enviable for a number of its fast-casual competitors. The same-store sales gain compares with average comparable store growth of 1.3 percent among 11 Fast-casual brands tracked by NRN for the quarter ended closest to June 30, 2018.
It also represents a financial about-face for the brand, which “struggled with the perception” that pasta was bad for you, Boennighausen said.
Zoodles, hand-spiraled vegetable noodles tossed in a romesco sauce, addressed that head on.
“It allowed us to … really bring back a lot of lapsed users that really enjoyed the brand, but they felt like they haven't been able to use us for a while,” he said.
Going forward, consumers can expect more “better for you dishes” especially in “noodle form,” Boennighausen said.
Off-premise sales also contributed to quarterly gains. This year, the company completed the rollout of quick pick-up shelves at more than 450 restaurants. The shelves allow guests to bypass the cash register line when fetching takeout orders.
The company said off-premise orders now represent 53 percent of total sales. Five years ago, that number hovered around 34 percent.
This fall, the company launched delivery through DoorDash, which is expected to increase off-premise sales. Delivery through DoorDash is available at about 300 restaurants. The company also offers delivery through Grubhub, Uber Eats and EatStreet.
With delivery and off-premise sales becoming increasing popular, Boennighausen and executive chairman Paul Murphy said the company is looking at smaller footprints for new restaurants. The company is also testing pick up windows for takeout orders.
“We are very excited for what 2019 has to bring,” Boennighausen said.
Net income was $1.1 million, or 2 cents per share, up from a net loss of $8.3 million loss, a loss of 20 cents per share, for the same quarter last year. In the first three quarters of the fiscal year, Noodles incurred $3.6 million in charges tied to the shuttering of 12 restaurants, as well as ongoing costs from restaurants closed in previous years.
Average unit volumes, or AUVs, grew by $41,000 to $1.1 million during the quarter.
The company adjusted its 2018 same-store sales guidance to reflect the improved financial performance during the third quarter. Noodles expects systemwide same-store sales to range between 3.5 percent and 4 percent, compared to the previous estimate of 2.5 percent to 3.5 percent.
“We are thrilled with the current trajectory of the company,” Murphy said in a statement. “Our positive momentum in traffic growth indicates our initiatives are resonating, increasing frequency from existing guests, returning lapsed users to the brand, and driving trial from those new to the brand.”
NRN senior editor Alan Liddle contributed to this report.
Contact Nancy Luna at [email protected]
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