‘The brand is now on the offensive,’ executive chairman says
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In a twist of irony, Noodles & Co., a brand built on heavy pasta dishes, has experienced its best quarter in six years thanks to a low-carb dish.
Zoodles, spiral zucchini noodles introduced in May, drove the company to a 5.4-percent increase in systemwide same-store sales for the second quarter ended July 3. It was the first time the long-struggling Broomfield, Co.-based fast-casual chain had reported positive comps since the first quarter of 2015. The company also reported a 3.1 percent increase in foot traffic, a notable number given that most restaurants are experiencing flat visits.
The jump to positive territory also represented the brand’s best quarterly same-store sales performance in six years, CEO Dave Boennighausen.
“The brand is now on the offensive,” executive chairman Paul Murphy said during a Wednesday afternoon conference call.
Company leaders bet big when they introduced Zoodles in the spring. The non-pasta dish is hand-spiraled vegetable noodles tossed in a romesco sauce. The dish has attracted lapsed customers and carb counters, but is also luring existing customers. Many are using Zoodles as a substitute for signature pasta-based entrees.
“It has really run the gamut of all the different groups we attract,” Boennighausen told analysts during a conference call.
Company leaders said Zoodles has helped change the mindset of customers, many of whom associate the brand as a pasta-only chain. Murphy said Zoodles has opened doors “to people to really kind of re-ID the company and what Noodle stands for.”
Boennighausen said that Zoodles are the start of a plan to bring more better-for-you dishes to the menu.
Total revenue for the second quarter increased 4.1 percent to $117.4 million, compared to $112.8 million for the same period a year ago. Noodles credited the boost to the positive shift in comparable restaurant sales, as well as off-premise sales, which for the quarter accounted for 50.3 percent of sales.
The company reported net loss of $5.9 million, compared with a net loss of $1.8 million last year, in the same period. A bulk of the widened loss was blamed on charges and liabilities tied to the 2016 data breach data and seven restaurant closures during the quarter.
Boennighausen said the brand’s new initiatives continue to “bring energy and life back to the brand.”
Still, he added, “Our work is not done.”
The company had 469 restaurants at the end of the second quarter. Noodles provided a 2018 outlook, projecting systemwide same-store sales to hover between 2.5 percent to 3.5 percent.
Contact Nancy Luna at [email protected]
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Correction: July 19, 2018 This story has been updated to correct the share of Noodles' total sales that off-premise business represents.
