News

Noodles & Company CEO remains positive despite Q3 losses

November 10, 2017

Noodles & Company reported another quarter of loss this week, saying during an investor call that total revenue was down 6.9 percent to $114.2 million from $122.7 million over Q3. The losses were primarily to the closure of 55 restaurants during the first quarter of 2017, according to CEO Dave Boennighausen.

Additionally, average unit volumes for the quarter overall decreased $21,000 compared to the third quarter of 2016. AUV's for the trailing 12 months were $1,066,000.

Boennighausen was hopeful, however, saying that over the past 12 months, the chain has taken significant steps to improve the company's fundamentals by solidifying the leadership team and returning its focus to operations. 

"Additionally, we strengthened our financial position, closing underperforming restaurants and completing two private placements,” he said. "We believe these actions have had significant impact across our organization, resulting in improvement in both adjusted EBITDA and restaurant margins." (Adjusted EBITDA increased 52.9 percent to $9.5 million from $6.2 million.)

Paul Murphy, executive chairman, agreed, stating during the call that the company is intensely focused on building average unit volumes through the implementation of a comprehensive strategy to re-energize the brand. 

"Our current initiatives are designed to improve our menu and our operational execution, as well as elevate the off-premise dining experience of our guests, which now represents nearly 50 percent of sales," he said. "As our efforts shift from strengthening our foundation to building sales and further improving margins, we are confident that the steps we are taking will enable the brand to make meaningful progress during 2018 and for many years to come."

Other Q3 highlights

• Restaurant contribution margin increased 320 basis points to 15.6 percent.
• Adjusted net income was $0.9 million, or $0.02 income per diluted share, compared to adjusted net loss of $1.1 million, or $0.04 loss per diluted share.
• Comparable restaurant sales decreased 3.5 percent system-wide, decreased 3.8 percent for company-owned restaurants and decreased 1.6 percent for franchise restaurants.
• One franchise restaurant opened in the third quarter of 2017.

2017 Outlook
Exclusive of restaurant openings and restaurant contribution margin, the company has revised guidance and currently expects the following for full year 2017:

• Approximately 16 restaurants opening, including 13 company-owned restaurants and three franchised locations.
• Total revenue of $452 million to $458 million.
• Company-owned comparable restaurant sales decline of 3. to 3.5 percent
• Restaurant contribution margin of 13.5 percent to 14.5 percent.
• Adjusted EBITDA of $28 million to $30 million.
• Adjusted net loss of $1.5 million to $2.0 million
• Capital expenditures of $20 million to $22 million