Article

Noodles & Company reports limp Q2 comps

Noodles & Company posted disappointing Q2 results, with comps declining 1 percent for company owned stores, 2.2 percent for franchised stores and 1.1 percent system-wide.

August 15, 2014 by Brenda Rick Smith — Editor, Networld Media Group

Noodles & Company posted disappointing Q2 results, with comps declining 1 percent for company owned stores, 2.2 percent for franchised stores and 1.1 percent system-wide.

Kevin Reddy, chairman and chief executive officer, pointed to soft sales in the Mid-Atlantic region where Noodles & Company has a strong presence.

"Our channel check continues to show challenges industry-wide in the D.C.market," said Reddy in a conference call. "And while the market continues to be a solid performer for us overall with some of our highest volume restaurants its comparable sales performance has lagged the balance of the country."

Reddy also pointed to weaknesses in reaching middle-income families.

Positive notes

Reddy did point out that comps were positive for the second quarter after adjusting for the Easter holiday, and comps for Q3 were up 1.3 percent through Aug. 12.

Noodles & Company plans to continue to focus on roll-out of its catering initiative, which should be in all company restaurants by the end of August. The company is also continuing its increased focus on improving its dinner daypart, which includes the addition of floating servers circulating through the dining room. The dinner initiative is currently active in approximately 25 percent of company restaurants and is included in all new restaurant openings.

Noodles & Company is also seeing increased adoption of online ordering. Online orders have doubled in the last six months to 4 percent.

Looking ahead

Reddy said the company plans to increase marketing spending in the coming months.

"We've seen a noticeable increase in promotional activities throughout the industry as well as marketing spend from competition in our markets. As such we'll be incrementally increasing our spend in the second half of the year compared to the first half," said Reddy. "Historically, when we deploy promotional and social media tactics we consistently see a positive response from our programs and our guests."

Reddy suggested that testing of marketing messages in June may have had some impact on the positive number for the first few weeks of Q3.

About Brenda Rick Smith

---

Brenda has more than 20 years of experience as a marketing and public relations professional. She invested most of her career telling the story of entrepreneurial non-profit organizations, particularly through social media.

Connect with Brenda Rick: