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Financing

Construction delays slow new restaurant openings for Noodles & Company

The slowdown comes as the fast casual posted record average unit volumes and 16.3% same-store sales growth for its third quarter.
Noodles & Company
Photograph: Shutterstock

Construction slowdowns and equipment delays are putting the brakes on new restaurant openings for Noodles & Company, pushing back opening timelines even as the fast casual’s sales and traffic rebound from the pandemic.

The Broomfield, Colo.-based chain has revised its new openings estimate for the year to seven to nine new restaurants, down from an earlier estimate of 10 to 15 new units.

Those locations will instead open early next year, with 2022’s planned openings “somewhat backloaded” toward year end, Noodles CEO Dave Boennighausen told analysts late Wednesday.

“We and our franchisees have seen delays in construction, landlord building delivery and equipment availability over the last several months,” Boennighausen said.

He added that there’s a “critical piece of equipment” that wasn’t able to be delivered that caused the bulk of the recent delays.

Noodles opened two company-owned store during its third quarter, one of which had been closed and relocated. The chain ended the period with 450 restaurants, 374 of which are company-owned and 76 of which are franchised.

Despite construction delays slowing new store openings, Noodles is seeing a recovery from the pandemic, posting record average unit volumes for the quarter ended Sept. 28 of $1.38 million. That’s a 15.9% increase over Q3 2019.

The chain also saw same-store sales increase 16.3% systemwide with revenue up 18.1% to $125.1 million versus the same period last year.

Noodles’ restaurant contribution margin was 18.1%, compared to 15.4% during the period in 2020.

Noodles intends to take a 2% price hike across its core menu, lapping price increases taken during Q4 of last year, for a total pricing jump of 7.5%. The chain had previously imposed a roughly 17% pricing premium on orders for third-party delivery.

The chain has finally seen a rebound in its midday business, which had been devastated by the pandemic.

We are “also seeing lunch turn back positive from a same-store sales perspective,” Boennighausen said. “That’s been the daypart most impacted for us, as well as most of the industry, and that had positive same-store sales during the third quarter for the first time in quite a while.”

Those sales increases have been bolstered by the chain’s menu innovation, most notably the introduction of tortelloni, a stuffed pasta, in the spring, he said.

The new dish is driving visit frequency, shrinking the duration of time before a customer’s next visit after trying the dish, he added.

“Tortelloni has been a great hit,” he said. “And we still feel there’s a long runway ahead of us from tortelloni.”

 

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