Noodles misses Wall Street expectations as inflation bites bottom line

BROOMFIELD — Fast-casual pasta chain Noodles & Co. (Nasdaq: NDLS) failed to live up to Wall Street analysts’ projections in the second quarter of 2022 for revenue as ongoing inflation continues to take a major bite of the company’s bottom line.

Total revenue increased 2.7% in the first quarter to $112.6 million from $109.6 million in the first quarter of 2021.

Zacks Consensus Estimate for sales in the most recent period was $113.1 million.

Noodles posted a net loss of $6.4 million, or 14 cents loss per diluted share, in the first quarter of 2022. That’s compared to net loss of $2.0 million, or 4 cents loss per diluted share, in the first quarter of 2021.

Zachs analysts expected losses of 17 cents per share.

Margins decreased significantly primarily due to increased inflation costs associated with both food and wages, Noodles reported.

Noodles opened five new company-owned restaurants and closed two others. The chain also added two new franchise restaurants in the first quarter.

There were 453 restaurants system-wide at the end of the first quarter 2022 — 360 company-owned restaurants and 93 franchise restaurants. Noodles expects to launch 35 new restaurants system-wide in 2022.

Looking ahead, Noodles plans to roll out “an exciting new national brand campaign that reinforces our value proposition to key audiences,” the company said in its earnings report, released after the close of trading Wednesday. 

The company is projecting second quarter total revenue of $130 million to $133 million.

“With the temporary disruption of COVID-related closures now behind us, we believe the company is well positioned to accelerate growth throughout the balance of 2022 and beyond. We remain confident we will successfully navigate a challenging inflationary environment, particularly short-term pressures on our cost of food, and return to the continued margin expansion we saw in 2021,” Noodles CEO Dave Boennighausen said in a prepared statement. “As we exit the temporary disruption of COVID, I’ve never been more convinced in the opportunity for Noodles & Co. to be one of the premier growth stories in the restaurant industry.”

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