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Noodles & Company resolves to revive flat sales, falling profits

Noodles & Company will escalate its marketing efforts and test the waters of new initiatives such as delivery and its first-ever kids’ meal in an effort to grow sales and profits, which slipped below expectations during the second quarter, company executives said Thursday.

After eight-plus years of “exceptional trends,” the company entered a “sluggish cycle” during the second quarter ended June 30, which Noodles & Company CEO Kevin Reddy told investors he is confident will end soon.

Comp sales for the fast-casual company were flat overall, increasing 0.1 percent year over year in company-owned units and slipping 0.5 percent in franchised locations. Net income fell 13 percent year over year, from $3.5 million to $3.1 million.

As part of its turnaround effort, the company will launch a marketing campaign around the theme of “Made Different,” Reddy said, to boost brand awareness and promote its use of “clean” ingredients. 

In May, Noodles & Company pledged to remove all artificial colors, preservatives and flavoring from its dressings, soups and sauces by Q3, which Reddy said the company has completed ahead of schedule.

“Our goal is to get credit for our hand-crafted fresh, quality, clean ingredients, as well as our complex, artisanal sauces while reaffirming our commitment to real cooking to order,” he added. “And in the upcoming months, we anticipate announcing further progress on our path of pure and wholesome ingredients.”

Brand awareness has been a key issue for the company as well, as executives noted earlier this year that slipping Q1 sales were largely the result of low brand awareness in three important markets: Colorado, Washington, D.C. and Austin, Texas.

Second-quarter revenues for Noodles & Company increased 16 percent year over year, to $115.2 million, rising on the addition of 17 new restaurants.  

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