Entrepreneurs / Small Business  September 7, 2020

For Noodles’ CEO, team and guests come first

Dealing with all the impacts of the COVID-19 pandemic has been a pain in the neck for people in the restaurant industry. But for Dave Boenninghausen, chief executive of Broomfield-based fast-casual restaurant chain Noodles & Co. (Nasdaq: NDLS), the lessons he learned about making customers happy started with necks.

His first job? Buying neckties for a St. Louis department store.

“One reason I joined Famous Barr back then, even when I was going through college, was that I wanted to do something that was consumer oriented,” Boenninghausen said. “I just liked the ability to have something that’s tangible, that people understand when you talk about where you work.

“Ultimately, I found that restaurant was even better than retail,” he said. At the May Co., then Famous Barr’s parent company, “we were always at the mercy of ‘What is Ralph Lauren doing?’ We didn’t really own the process. Restaurants are just a really unique animal where you have the ability to do everything from the ingredients you’re serving customers to the atmosphere.

“I fell in love with the restaurant space because of the people element,” he said. “So many important events happen over a meal. Important live events occur over food. It’s so emotional.”

Boenninghausen said he and his wife spent a week in Taiwan in 2011 in the process of adopting their first son, Evan, and “I remember every single meal.”

For Boenninghausen, that “people element” extends to Noodles’ employees as well.

“People who work for your restaurants come from all walks of life. Seeing how they progress, how they move through life is fun to watch,” he said. He makes the point to his 456 eateries’ general managers that about 18% of Noodles’ team members are of high school age, and “outside of their parents and maybe a teacher or coach, nobody is having a bigger influence on how that person learns work ethics, learns how to serve others, how to treat others, than that general manager. So it’s a pretty awesome responsibility.”

Armed with a bachelor’s degree in finance and marketing from Truman State University in Kirksville, Missouri, and a master’s in business administration from Stanford, Boenninghausen joined Noodles in 2004, became vice president for finance in 2007, then an executive vice president in 2011. After he became interim CEO in 2015, the company introduced a list of four values: care, passion, pride and loving life. “That last one is the one that sticks and resonates with our team,” he said. “We aspire to make the day of every team member and guest a little better than when they walked through our doors. Our teams do a very nice job of living that.”

The focus on people has made the occasional need for layoffs and store closures painful, he said.

When he became CEO in 2016, he said, “the company had gone through a period where we had grown too fast and somewhat lost the soul of the brand. It ended up that we had quite a few restaurants that were underperformers. When we went through the timeframe of growing too quickly, the biggest challenge we had was that we didn’t have the people side right, so the execution wasn’t where we needed it to be.”

Noodles closed 55 stores in the first quarter of 2017, then started making the transition back to unit growth.

“We took our time, we refined the prototype, we streamlined the menu and helped make operations easier,” he said. “Most importantly, we solidified the management team. Our average GM has been with the company 5 1/2 years. If you go back even just two years ago, that number was just north of four. So we’ve got a much more tenured team.”

This year, that team had to deal with the staggering blow of the coronavirus pandemic. Boenninghausen, 42, said he has “aged about 10 years in the past three months.”

After reveling in seven straight quarters of same-store sales growth, Noodles’ sales fell by nearly half over the last three weeks of March, forcing the chain to furlough or cut hours for nearly a third of its corporate workers and halt investment in new capital development. The remaining full-time executives took salary cuts, and a hiring freeze was instituted.

In its second-quarter earnings report, released in early August, Noodles revealed a $13.5 million net loss, or 30 cents per diluted share, and revenue fell to $80.2 million, compared with $120.2 million in the same quarter in 2019.

However, while most of Noodles’ locations were closed for in-person dining in April and May, patios, carryout and contract delivery remained open, and sales began bouncing back in June, he said. “The strength of our off-premise business and the strength of our digital platforms have allowed us to navigate this a lot better than our competitors. Only 40% of our business was dine-in before the pandemic,” Boenninghausen said, “so we were situated pretty well.”

Sales have returned to roughly flat year over year even without dining rooms being open, he said.

“We’ve been very steady and consistent,” he said. “We ‘ve been very conservative in terms of how we ‘ve opened up dining rooms, how we approached safety and health, and I think that ‘s paying off in terms of serving our guests and teams.

“We feel very comfortable with the trajectory of the business and where we go from here,” Boenninghausen said. “Ultimately, I think that when we look back at the COVID pandemic, it will be, obviously, a painful time in our country ‘s history, and we ‘ve certainly had some challenges, but we think it ‘ll be a time where we solidified the brand, solidified our culture, and set the stage for growing the brand at a faster level.”

That recovery will allow Noodles to return to more traditional restaurant endeavors such as enhancing the menu. That might include some of the broth-based approaches Boenninghausen and his wife encountered in Taiwan.

“We’re most excited about cauliflower gnocchi, a dish that Noodles began test-marketing in Colorado Springs in August. “It fits the heritage of our brand — gluten free, low carb, low calorie,” he said. “It allows you to have the taste and the comfort-food element people love from Noodles & Co. but also have a much healthier profile.”

It also plays to Noodles’ strength.

“Everything is made to order,” he said. “You can customize anything. That’s a big hallmark of why we ‘re special. I don ‘t know that we get the credit for it that we should. There’s much more real cooking in our kitchens than a lot of our competitors.”

But for Boenninghausen, it all goes back to his teams and his customers.

“My biggest worry was, how do you take care of your team members during a time when there ‘s rapid change and such an amount of uncertainty around the pandemic, at a time when they’ll need some flexibility, and when we ‘re asking a lot of them.”

Employees got a “thank you” bonus at the end of the second quarter, he said, and the chain closed its restaurants over the Fourth of July weekend to give them family time. A portion of sales during the pandemic has gone to the company’s foundation, which helps employees deal with various hardships.

“They really are heroes,” Boenninghausen said. “We sometimes don ‘t give the level of love that we should, but we try to take care of them as much as possible. The mission of our brand has always been to inspire and nourish every team member and guest.”

Those are the kind of ties Boenninghausen sells now.

Dealing with all the impacts of the COVID-19 pandemic has been a pain in the neck for people in the restaurant industry. But for Dave Boenninghausen, chief executive of Broomfield-based fast-casual restaurant chain Noodles & Co. (Nasdaq: NDLS), the lessons he learned about making customers happy started with necks.

His first job? Buying neckties for a St. Louis department store.

“One reason I joined Famous Barr back then, even when I was going through college, was that I wanted to do something that was consumer oriented,” Boenninghausen said. “I just liked the ability to have something…

Related Content