Hospitality & Tourism July 28, 2022 11:47:34 am

‘Unprecedented’ spike in chicken prices has Noodles execs squawking

By Lucas High

BROOMFIELD — “The price of chicken rose throughout the second quarter to unprecedented levels,” Noodles & Co. (Nasdaq: NDLS) chief financial officer Carl Lukach told investors and analysts Wednesday, raising the cost of doing business for the fast-casual pasta chain and eating into its bottom line.

Inflation, company officials said, is partly to blame for net income falling from $5.7 million, or 12 cents per diluted share in the second quarter of 2021, to $1.3 million, or 3 cents per diluted share.

Net income fell during the most recent quarter despite year-over-year sales increasing from $125.6 million to $131.1 million.

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Thankfully for Noodles, poultry prices have likely peaked.

“The market has already declined 20% versus those historical highs, and we anticipate continued normalization,” Lukach said. “Adjusting for the processing through our distribution systems, we estimate that the decline in chicken price will lead to a 50-basis-point improvement in [cost of goods sold] as we exit the third quarter from peak levels in July.”

Executives are bullish on Noodles’ market positioning and new offerings.

“Our second quarter highlights how strongly Noodles & Co. resonates with today’s consumer. From our recently introduced Leanguini offering to our zucchini noodle to our artisanal sauces, our menu offers great variety that is not easy to replicate at home or at other restaurant competitors,” Noodles CEO Dave Boennighausen said in a prepared statement. “Additionally, our attractive entry level price point of $7 for multiple dishes and our recently launched Uncommon Goodness marketing platform showcase the differentiation of the concept and our strong value proposition, supported by a robust digital ecosystem, which continues to account for over 50% of sales and allows us to drive direct consumer engagement.”