News

Is Noodles & Co on the path to recovery?

May 10, 2018

Noodles & Company reported today that it suffered a net loss of $3.6 million for Q1, ending April 2018, but it was a significant improvement over 2017's devastating Q1, when the chain reported a net loss of $26.8 million.

"We are pleased with our performance in the first quarter, in which we continued to see sequential improvement in major metrics, resulting in a 46.3 percent increase in adjusted EBITDA versus the comparable quarter in the prior year," CEO Dave Boennighausen said in a company press release. "Comparable restaurant sales continued to improve and were nearly flat in the first quarter, despite an approximate 50-basis point negative impact due to the shift in the Easter holiday from the second quarter to first quarter of 2018. Exclusive of this shift, comparable restaurant sales were positive for the quarter. As momentum has built throughout the early stages of 2018, we continue to gain traction as we execute on our strategic roadmap."

Key highlights for the first quarter of 2018 versus the same quarter a year ago include:

• Total revenue decreased 5.3 percent to $110.5 million from $116.7 million, due primarily to the closure of 55 restaurants during the first quarter of 2017, partially offset by additional restaurant openings since the beginning of 2017.
• Net loss was $3.6 million, a $0.09 loss per diluted share, compared with a net loss of $26.8 million, and net loss attributable to common stockholders (further reduced by the accretion of the preferred stock to its redemption value) of $27.8 million, or $0.99 loss per diluted share in the first quarter of 2017. 
• Adjusted EBITDA increased 46.3 percent to $5.6 million from $3.8 million.
• Restaurant contribution margin increased 190 basis points to 12.9 percent.
• Adjusted net loss was $1.8 million, a $0.04 loss per diluted share, compared with adjusted net loss of $2.5 million, or an $0.08 loss per diluted share.
• Comparable restaurant sales decreased 0.2 percent system-wide, decreased 0.3 percent for company-owned restaurants and increased 0.9 percent for franchise restaurants.
• One new company-owned restaurant opened in the first quarter of 2018.

Paul Murphy, executive chairman, said that the company, as of last week, had carried out several key initiatives — including enhanced service procedures and processes — that he believes will continue to drive improved financial results.

"We are particularly excited that with this launch we became the first national fast-casual restaurant to offer Zucchini noodles," he said. "This low-calorie, low-carb option tastes great and affirms our position as the authority on noodles in the fast-casual space. The organization has made significant progress in recent quarters, and together we are excited about the opportunity to grow our sales through the nationwide introduction of Zoodles, our off-premise business, and continued innovation around the core strengths of the brand."

2018 Outlook

Based upon management's current assessment following first quarter results, the company is reiterating targets related to its 2018 performance. The following continues to be expected for the full year 2018:

• Approximately one to five new restaurants system-wide, including one to four company-owned restaurants:
• Total revenue of $440 million to $450 million.
• Modestly positive comparable restaurant sales.
• Restaurant contribution margin of 14.5 percent to 15 percent.
• Adjusted EBITDA of $31.0 million to $33.0 million;.
• Adjusted diluted EPS of ($0.01) to $0.03.
• Capital expenditures of approximately $10 million.