Noodles & Company is building up a strong growth pipeline for 2023 with 20 company deals either complete or in the final stages of negotiation. 

“The pipeline, as it sits today, is three times stronger than it was at this point last year, in all phases of development,” chief executive officer Dave Boennighausen said Wednesday during the company’s Q2 review. 

The brand is also making progress on the franchise side. Noodles & Company is in the final stages of an agreement for a large area development deal in the southern U.S, with expected overall unit growth of at least 10 percent in 2023. 

As for this year, Noodles & Company anticipates 21–23 openings, which reflects 5 percent unit growth compared to the prior year. 

This comes in the wake of a Q2 where revenue hit $131.1 million with systemwide comparable sales of 5.1 percent. However, restaurant-level margins fell from 18.9 percent in Q2 of last year to 15.5 percent this year.

The biggest dent has come from soaring chicken costs; more than 50 percent of guests add chicken to orders, chief financial officer Carl Lukach said. 

Things are looking up, however, as chicken prices have declined by 20 percent from the previous historic highs, executives said. 

Lukach also noted the company worked with vendors to optimize the cut of the chicken breast to reduce waste, as well as make chicken more cost effective for the brand. The chicken surcharge Noodles & Company temporarily put on the menu was rolled off about a week and a half ago, Lukach added, and though about 52 percent of customers have an average household income of over $75,000, the fast casual wants to keep menu prices down.

One initiative it’s employing to make this a reality is having seven dishes start at $7. Boennighausen said after increasing the messaging of this price point on digital and physical menus about a week ago, the chain saw momentum from the lower-income customer. 

“This has allowed us to take price without meaningful guest resistance bolstered by the fact that our core price has been relatively stable during the last few years, as most pricing has been concentrated on third party delivery,” Lukach said. 

Though the brand took hits from inflation, average-unit volumes in Q2 reached $1.42 million, an 18.3 percent increase from pre-pandemic levels. This puts Noodles & Company closer to its goal of $1.5 million AUVs by 2024. 

“During the second quarter, 41 percent of our restaurants achieved our accelerated growth objective of average unit volume of over a million and a half with strength from coast to coast and in a variety at a different restaurant formats,” Boennighausen says.

Fast Casual, Finance, Story, Noodles & Company