Noodles: ‘Challenging consumer environment’ drove down sales in third quarter

BROOMFIELD — Noodles & Co. (Nasdaq: NDLS) posted lower sales in the third quarter of fiscal 2024, a key period that saw the Broomfield-based fast-casual chain roll out a revamped menu. 

Total revenue for the most recent period decreased 4% year over year to $122.8 million, while comparable restaurant sales fell 3.3% systemwide (inclusive of both franchise and corporate-owned restaurants).

Noodles turned a net profit of $700,000 in the third quarter of 2023 into a loss of $6.8 million in the most recent quarter. 

The company introduced its revamped menu last month. The new offerings, which were tested this year in three trial markets, are lemon garlic shrimp scampi, chipotle chicken cavatappi and crispy chicken bacon alfredo.

“In the third quarter, we continued to face a challenging consumer environment with a significant level of industry-wide promotional and discount activity coupled with a marked and unexpected decline in our third-party delivery sales,” Noodles CEO Drew Madsen said in a prepared statement. “As we continue our focus on driving guest experience improvements and evolving our new menu innovations into test markets, we pivoted late in September and October to increase our promotional activity and identify promising new third-party pricing strategies. In early October, we also rolled out nationally the first dishes from our menu transformation.”

Madsen continued: “All of this has resulted in noticeable improvement in our fourth quarter traffic trends to date relative to the third quarter. Although we are seeing variability in our near-term results, largely due to a challenging consumer environment, our team remains focused on executing against all five of our strategic priorities to achieve sustained profitable growth and drive long-term shareholder value.”

Stephen Kennedy, Noodles’ new executive vice president of marketing, is set to begin work this week. The company said he will “lead the company’s brand strategy and customer growth initiatives.” Kennedy’s previous experience in the food space includes jobs at Nestle USA Inc. and Domino’s Pizza Inc. (NYSE: DPZ).

At just after 11 a.m. on Thursday, Noodles’ stock price was $1.03, down 14.17% on the day. 

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