New Noodles & Company CEO Drew Madsen wants the company to re-focus on traffic, but not like in the past when it looked at incremental upgrades across a wide variety of metrics. This year, the chain wants to make “penetrating improvement” on a handful of items that make the most difference.

Research shows that one of the biggest categories is food taste.

That’s why Noodles will spend 2024 launching a multi-phase menu transformation guided by a “contemporary comfort kitchen culinary identity.”

“While Noodles has consistently introduced new limited-time-offering menus in recent years, it has been a long time since we updated our core menu,” Madsen—who previously served as president and COO of Panera—said during the brand’s Q4 earnings call. “As a result, our menu looks dated compared to newer fast-casual competitors. While we still offer familiar and comforting dishes that many of our existing guests love, we are not currently a compelling alternative for lapsed guests or for new guests. We are in the process of changing that as we use the contemporary comfort kitchen framework to transform our menu.”

Noodles intends to offer core menu items that go beyond “Italian dishes living beside Asian dishes,” are more creatively infused, and align with modern consumer trends. According to Madsen, guests should expect comfort foods that are creamy, cheesy, craveable, wholesome, homemade, nostalgic, and nourishing. Noodles is working with The Culinary Edge, a popular food and beverage consultant, to bring the menu transformation to life.

Overall, roughly half of the menu will be impacted. The changes will touch new concepts, recipes, prices, and layout, including name changes to some products. The fast casual plans to evaluate each part independently and then bring them all together for an in-market test in at least 25 restaurants. As of right now, the new dish concept work is complete, and the brand is preparing to test the first phase of menu recipes later in March. The goal is to start an in-market test early in the summer, with a phased launch to start later in 2024 and into early 2025. The updated menu layout will be amplified by Noodles’ digital menu boards, which were rolled out to all company-owned restaurants last year.

READ MORE:

Noodles & Company Looks for Spark Amid Lingering Sales Slump

Noodles Finds Gold with ‘Under the Rainbow’ Growth Strategy

Noodles & Company Deploys 5-Point Plan to Combat Traffic Declines

Madsen noted that the fast casual will still be a noodle and pasta-based menu with salads and soups; the idea is to make offerings more compelling and choices easier to navigate.

“This is a really big menu change we’re focused on,” Madsen says. “We’re looking at menu architecture. … We’re looking at meaningful improvements to existing dish recipes. We’re looking at adding new dishes that address need states that we aren’t real competitive in at the moment. … I come from the school of measure twice, cut once, and we want to make sure that we get it right before we expand it broadly. And that’s why we’re talking about end of 2024, early 2025. But I think it will have a big impact when it’s in.”

Also, the menu won’t be repositioned in any significant way regarding average check. Noodles wants to maintain its barbell strategy with bottom-tier accessibility, like its buttered noodles and mac and cheese. Madsen believes there’s an opportunity to add more signature dishes at the top, but not necessarily more expensive than what the fast casual offers today.

Noodles’ average guest frequency is one to 1.5 times per quarter, so the CEO knows it will take time for customers to recognize the differences.

“It’s going to take a few visits of guests really enjoying Noodles and ultimately changing their behavior and coming more often,” Madsen says. “So it’s not an immediate thing there. But it is a much more disciplined focus on traffic.”

The culinary game plan is a restart for Noodles after it let go of former CEO Dave Boennighausen late last year. The fast casual was coming off a year in which it saw repeated sales and traffic declines as guests pushed back against price hikes rolled out in February 2023. Madsen was named interim chief executive before he was placed in the role permanently.

The chain hopes to be more careful in 2024 by pricing to protect unit economics and taking it in areas that have the smallest impact on traffic.

“If we use that consistently, I think we’ll avoid the overstep that happened in February,” Madsen said.

In the fourth quarter, systemwide same-store sales dropped 4.2 percent, including a decrease of 4.3 percent at company-owned restaurants and a drop of 3.6 percent at franchise stores. Company comp traffic declined 9 percent. Restaurant contribution margin lowered 50 basis points to 14.7 percent. For full-year 2023, comparable restaurant sales decreased 1.9 percent systemwide, including a 2 percent decline for company-owned locations and a 1.1 percent decrease for franchise outlets. Restaurant contribution margin grew 100 basis points to 14.9 percent.

Noodles expects 2024 same-store sales to be flat to positive 3 percent. Q1 will be slower with negative mid-single-digit comps, fueled by severe weather in January and lapping the price increase in February.

In addition to major menu changes, Madsen’s other priorities for 2024 are strengthening operations (order accuracy and building traffic during dinner), broadening the guest base by increasing active membership and frequency in the loyalty program, developing a long-term strategy to develop the catering business, and improving financial strength.

The company had 470 units at the end of 2023, comprising 380 corporate stores and 90 franchise restaurants. Eighteen locations opened and nine closed in 2023. Noodles projects 10-12 company-operated openings in 2024.

“Successful execution of these priorities will position us for stronger new unit growth in the future, including new franchise locations and opportunities to refranchise company locations,” Madsen said. “I’m very excited about the future of the Noodles brand and believe these priorities I discussed today will improve our operations foundation, strengthen the relevance of and desire for our brands, support long-term traffic growth, and lead to sustainable top-line momentum and profitability growth.”