To paint some perspective, Noodles & Company swung a net loss of $37.5 million in fiscal 2017. Heading into the winter of 2017, it reported six consecutive quarters of year-over-year declines at locations open at least a year. The chain then announced it would close 55 restaurants, which it did in Q1 2017—a period where revenue fell 2.4 percent and net loss came in at $26.8 million.
For Dave Boennighausen, who was named the chain’s permanent CEO June 2017, a summer after Kevin Reedy stepped down, the Zoodle is a worthy headline-stealer. But the comeback began long before the product hit menus nationwide in early May.
When Boennighausen first grabbed the interim reins the previous summer, his first task wasn’t to circle product innovation in red ink. Rather, Noodles & Company was staring down turnover north of 200 percent in its restaurants. It was 50 percent at the manager level.
“The first thing that we did was really reengage our team around our core values,” he says. “We had to become much more operations focused in our decision making, and then start going out and making tough decisions we knew would maybe not be the most popular decisions, but would pay out in the long term in terms of helping our operations execute better.”
Noodles & Company significantly streamlined its menu, including removing sandwiches and flatbreads, in an effort to eliminate day-to-day operational fat that wasn’t generating guest value. “We had to get the people side right,” Boennighausen says. “We couldn’t move on until we did that.”
This plan was first outlined in August 2016, news that also came with the departure of CMO Mark Mears as part of a corporate restructuring.
The difficult decision he’s referencing was the shuttering of 55 stores, funded in part by two capital raises. After that, unit count was slowed for the foreseeable future and talk turned to how Noodles & Company could get back on the offensive.
There were three focal points:
To start, Noodles & Company launched a rewards program—NoodlesREWARDS—in July 2017. The chain has taken a holistic approach to the platform, meaning its rewards program heavily influences online ordering. It’s been an effective push, Boennighausen says. Total off-premises sales during Q2 increased 370 basis points over the prior year to 50.4 percent of sales. Also, sales derived from online ordering then subsequently picked up in restaurants, up 620 basis points to 14.3 percent of sales.
Next to note was Noodles & Company’s installation of its initial version of quick pick-up shelving units earlier in the year, which coincided with additional investments in its rewards program and digital marketing strategy.
Lastly, the famed Zoodles. When Noodles & Company launched the product, there was plenty of reason to believe it was going to blast the door off early projections. In turn, the chain introduced a fresh look and feel to its menu boards, welcome wall, and digital ordering platforms. Plateware was updated, as were colors and design elements in its communications. Quite simply: Noodles & Company knew it was about to welcome a new—and lapsed—horde of customers. So it saw an opportunity to showcase a refreshed brand.