Noodles looks to smaller stores, drive-thru pick-up lanes to lift it through the pandemic

The fast-casual reported a same-store sales decline of nearly 31% during Q2.
Photograph: Shutterstock

Expect Noodles & Co. to debut smaller-footprint units next year, as well as those with a variety of limited-contact pickup options, as the fast-casual chain grapples with the realities of operating restaurants amid the pandemic.

The chain is already adding some drive-thru pick-up windows to existing stores, with prototypes designed for small-size stores to open in the back half of 2021, according to Noodles CEO Dave Boennighausen.

The Broomfield, Colo.-based brand continues to struggle due to the impacts of the coronavirus, reporting late Thursday a systemwide same-store sales decline of 30.9% for the second quarter ended June 30.  

The chain’s sales improved throughout Q2 and into the latest quarter, with systemwide same-store sales down 4.4% for the two weeks ended July 28. Franchised locations continue to be down more significantly than company-owned restaurants, with franchised units reporting a same-store sales decrease of 35.4% for Q2 and a decline of 7.8% for the two weeks ended July 28.

“2021 might be a bit more company-dominated than a longer-term growth equation,” Boennighausen told analysts. “That said our franchise community, which we’re very proud of and very pleased with their performance, they’ve shown a great amount of interest and potentially also being some of the test vehicles for some of the lower-square footage profile. So, there are indications that we might be able to have a solid mix of company and franchise growth.”

Traditional Noodles units average 2,600 square feet. But the chain has been building restaurants more in the 2,000-square-foot range, he said.

“We already have prototypes designed,” he said. “We have trade areas that we’ve identified. Certainly, next year, you will see a much smaller square footage that’s much more off-premise oriented, incorporating those drive-thru windows."

Pre-pandemic, Noodles was on track to resume new unit growth, with plans to reach 7% unit growth for 2021. The chain has opened two stores in 2020, with plans to open a “couple more” this year, Boennighausen said. The company declined to comment on how many restaurants it would opened in 2021.

Digital ordering now accounts for 67% of the chain’s sales. Currently, 92% of company-owned units offer limited in-restaurant dining or outdoor seating. That’s up from just 40% of restaurants with on-premise options at the end of June.

The chain has found success with low-carb, plant-based offerings like zucchini noodles and Caulifloodles. It will begin testing cauliflower gnocchi next week. The dish is gluten-free and lower in calories and carbohydrates than traditional pasta.

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