Noodles & Company Returns to Positive Sales Growth

    Digital sales soared 146 percent in September.

    Fast Casual | October 2020 | Ben Coley

    Noodles & Company

    In Q3 overall, systemwide sales dropped 3.8 percent.

    After months of tough sledding through the COVID pandemic, Noodles & Company reported Thursday that it reached positive same-store sales in September.

    The improved numbers were part of the brand’s preliminary Q3 results. Systemwide, the restaurant was slightly in the black; the same is true for corporate stores. Franchises were close, achieving roughly 97 percent of last year’s sales. As of Wednesday, more than 90 percent of dining rooms were open.

    Digital sales also increased 146 percent year-over-year in September.

    This is how Noodles & Company’s same-store sales progressed through the quarter:

    July (Company-owned stores closed July 4 and 5 to reward employees)

    • Company-owned: –8.4 percent
    • Franchise: –7.2 percent
    • Systemwide: –8.2 percent

     

    August

    • Company-owned: –4.6 percent
    • Franchise: –5.1 percent
    • Systemwide: –4.7 percent

     

    September

    • Company-owned: 1.1 percent
    • Franchise: –3.2 percent
    • Systemwide: 0.4 percent

     

    “I continue to be proud of the outstanding efforts of our teams and the resiliency of the Noodles & Company brand that has been demonstrated during the past several months,” said CEO Dave Boennighausen in a statement. “Our return to positive comparable sales, aided by impressive digital growth, is evidence of our strong brand positioning to meet the needs of today's consumer for great tasting healthy food served conveniently where and when guests want it. We also took steps during the third quarter to further strengthen our balance sheet during the quarter and have set our business up for accelerated new unit growth.”

    In Q3 overall, systemwide sales dropped 3.8 percent, which breaks out to a 3.6 percent decline at company-run stores and a 5 percent slip at franchised restaurants. During the initial wave of the pandemic, company-owned comp sales cratered 47 percent in April; franchises tanked 55 percent.

    In the whole quarter, Corporate AUV was flat compared to 2019. But in September, AUV increased 2.4 percent to $1.2 million. In April, AUV was $685,000.

    Total revenue in Q3 dropped $12 million to $106.3 million due to fewer operating weeks from prior refranchising activities and temporary closures.

    The continued rise in digital sales gives credence to Noodles & Company’s plan to add an order-ahead, drive-thru pickup window to at least 70 percent of new units in the pipeline. Boennighausen told QSR in August that the brand brought a Minnesota location to market with the feature, and the average transaction time was one minute. He also noted that at the most, 4 to 5 percent of current stores will retrofit pickup windows.

    The lean into digital could result in smaller boxes and potentially off-premises only units, which opens up a swatch of real estate opportunities. The CEO expects more of that growth to be on the franchise side. Nearly 400 units are company-owned while just under 80 are franchised.

    “We feel that there is a spectrum of real estate opportunities that, as we look four or five months ago, we maybe didn’t realize we had quite as many opportunities as we now do think we have in terms of some of the trade areas and how we can service guests in a wide variety of manners,” Boennighausen said.