Operations

Sales fall 46% at Noodles due to COVID-19

The coronavirus wiped out the chain’s sales gains and forced it to temporarily cut some of its workforce and halt planned expansion.
Noodles & Co.
Photograph: Shutterstock

Noodles & Co., which in February had said it was ready for a return to “strong unit expansion,” revealed Wednesday that sales have fallen more than 46% systemwide due to the coronavirus and that it has furloughed some of its workforce.

Preliminary sales results for the quarter ended March 31 showed that same-store sales at the fast-casual chain were up 7.5% for the four weeks of the quarter that ended Feb. 25. And comps remained up 4.6% for the first two weeks of March.

But sales took a nosedive from March 11 to March 31, when systemwide same-store sales fell 46.3%. For the quarter, sales fell 7.2% overall.

About 10% of central support office staff have been furloughed, with an additional 20% reduced to half time, and salary reductions were implemented across all executives and central office staff not subject to other restrictions.

The company has suspended all new unit development, slashing its planned capital expenditures for the fiscal year to between $7 million and $10 million, down from previous expectations of $20 million to $30 million.

Like others during this time, Broomfield, Colo.-based Noodles is trying to keep its franchisees in business by deferring some royalties, along with IT support and marketing fees.

Noodles borrowed $47 million under its revolving credit during Q1, leaving it with a cash balance of about $50.2 million as of March 31. It drew down an additional $8.5 million during the first week of the second quarter and currently has about $58 million in cash on hand and long-term debt of $95.9 million.

The chain has more than 450 units, with 97% of company units and 94% of its franchise locations currently operating for takeout, curbside pickup and delivery.

Noodles is scheduled to release its full Q1 earnings on May 6.

 

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Financing

Crumbl may be the next frozen yogurt, or the next Krispy Kreme

The Bottom Line: With word that the chain’s unit volumes took a nosedive last year, its future, and that of its operators, depends on what the brand does next.

Technology

4 things we learned in a wild week for restaurant tech

Tech Check: If you blinked, you may have missed three funding rounds, two acquisitions, a “never-before-seen” new product and a bold executive poaching. Let’s get caught up.

Financing

High restaurant menu prices mean high customer expectations

The Bottom Line: Diners are paying high prices to eat out at all kinds of restaurants these days. And they’re picking winners and losers.

Trending

More from our partners