NDLS - Earnings call transcript Q3 2017

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Operator

Good afternoon, and welcome to today's Noodles & Company Third Quarter 2017 Earnings Conference Call. All participants are now in a listen-only mode. After the presenters' remarks, there will be a question-and-answer session.

As a reminder, this call is being recorded. I would now introduce Noodles & Company's Interim Chief Financial Officer, Sue Daggett.

Sue Daggett

afternoon, good and you, everyone. Thank third Welcome earnings XXXX to our call. quarter

Paul me Chief Executive this with Murphy, Executive afternoon our Here Boennighausen, are our Dave Chairman; Officer. and

forward-looking made. materially on or our have from results to the company's time we of actual and for refer XX-K Form contained part subsequent set risks anticipated related to its our like factors a me from news statements. release the Safe each XX-K a within recent could performance XXXX. results and and relating remarks of Report documents in of number statement future specifically Commission, including such regarding portions to subsequent Reform results may Any Private regulatory a with Let future future details to going considered we that projections, the considered response the performance, those uncertainties. that or I items, over to of and in XXXX identify cautionary afternoon's Annual this in most the files company's and questions, filings of guidance forward-looking the Securities documents important differ forward-looking risks by matters. the our the are and company. start to to company should materially time in year statements that SEC Such Act conference filings about I'd forward-looking and Form cause including company's financial with make Harbor call, the to your opening Exchange the only this contain events be statements events note from are Securities during the statements. meaning forth The the those in you of our uncertainties differ few statement actual projections XXXX the our the statements could fiscal and due and and Litigation These or projections

I like to it over turn to would Dave. Now,

Dave Boennighausen

Sue. Thank you,

embarked Before Paul highlight like and past I to take discuss the what have foundation. few year over in to company's comprehensive a we've accomplished the that on I'd we the strengthening strategy moments

As we that organizational financial of with burden causing and look a faced We company many group challenges. the large on last underperforming both was had a to were capital. back fall, restaurants persistent human

Our challenges and drop in menu to resulting challenges. high executional engagements have Since steps these numerous had employee we resulting also highly become last the address in complex turnover. fall in taken a

team. funded XX.X%. in Earlier our improved this of our third-party over the prior raises in Sue increase in margin metrics of year our point that we inside capital third quarter continues million launching direction believe menu be actions our balance our the as will EBITDA basis to over improvement adjusted we underlying improved QX streamlining the when speak particularly yielded a also of XXX have off-premise several net outline at improved income our shifted royalty restaurant to Moreover During operational time NoodlesREWARDS increase year dining already processes and to our part a closed the underperforming results restaurants use simplifying reengage the Moreover $X by to a included challenged. operational and million focus adjusted XX of occasion year. the this significantly two sheet. resulting we and continues which We the $X.X restaurant including approximately move this industry prior and year expanding We programs XX.X% delivery to of results right app. restaurants field our believe began

a X.X% X.X% system locations. company-owned decline at restaurant and restaurants quarter, X.X% third comparable franchise sales a decline the decreased wide During including at

improved trend a XXXX. remain sales comparable of had significant sales of QX QX the amount during during of While comparable we that and lapping recognize occurred marketing that opportunity discounting course large a despite the encouragingly

our activities months. we comparable I the some our taken to discusses past Paul around sales have Before improving discuss of in of some few trajectory, would the actions like

On the past, reinvest important top-selling & we in we Mac menu our Cheese. to have as thought front discussed was the Wisconsin dish, our it in

XX worked cheddar During revised months and a the past flavor. of on that we quality profile, sharpness increasing the cheddar deeper white has recipe testing have the higher

platform. We Mac menu to on in strengths further & also Cheese permanent a developed capitalize our this

and launched we Buffalo in sauce of Mac, the our nationwide Mac Truffle as October it as Chicken this improved in Barbecue Mac including cheese Mac. Cheese During new & Pork our core return popular our and well in

We have been of menu improved extremely dishes our mix since food scores with improve Cheese to these & Mac pleased for taste our with the continuing performance launch. of and

percentage of points adoption have platform. implemented as of Even in XXX third these We guests X% for also before with results accentuate to order-to-go during sales up signage ordering restaurant, ago. foster who to visit XX% the for our online to we then continuing quick QX to there our believe whole a third accounted activation we system for guests. changes and into opportunity frequency app occasions basis for We year. food continue quarter online currently convenient. an convenience online REWARDS that by our communication the installing units from This to with Off-premise wait ordering guests XX% a perspective. of testing our from our last facilitate a our nearly the prepared. make sales app the our wide, of just in during more of years tremendous both XX% restaurants of improved shelving a and to increase our and particularly experience be two Remarkably accounted of pick suboptimal quarter, large of are in line is to and To come increase wait order satisfaction in and time compared

delivery in anticipate nearly Additionally, third-party initiatives months. continue XX% we offering delivery in the within support of locations our our platform of expand our off-premise next few to and

our the past and at few brand the and executing understand placed restaurants. the execution, around deployment following strategy, over clearly importance In have of we routines and high we speed importance ensuring months innovate culinary on people particular, significant a of service. accuracy, our dealership order consistent inside our level we As

During of August the an and and Brad in hiring identifying best intensely operations. Brad the the we transactions West over consistently our industry. in Brad out. that outperforming and practices as are team growing operator is been years have announced our the experience month base found EVP month with restaurants operator's focused on of XX of within the

opportunity metrics where above continue be operational were ago for a guest improvement. Our they year to with and additional

which will working to the learning restaurants building these has best we the supporting throughout months and members, of several be our top web-based practices our embed out develop will management efforts system throughout leaders from validate within completely next better months. the future This the team next our few allows be us knowledge, system the our rolled introduction Over Further all of train transaction to organization. organization. been

continue Finally, we team. our strengthen to leadership

Chairman. that implement sustained their on that closely I turn at a over that I've to business. strategy. worked foundation I watched Paul solution from together one feel to the XX Murphy our Paul now the Paul I'd thoughts build it are solidify like turnaround have and to team joined growth will which the to Denver Del full-time several years team share over to extremely fortunate roadmap strategic Executive admired Del his has a past months, past the afar successful working executing the years. combined concept executed Taco our the come. in work over we for did as As in was Paul and on Taco that I

Paul Strasen

position Thank afternoon see perspective month the opportunity these the reason the am extremely join to optimistic done team wanted give at potential address some has my tremendous I the brand. continue I'm the a full-time on Noodles in the to you, that business. now at my One XX this The over in and and past Dave. and put decided foundation solvable. the was confident team work fourth Noodles face ground the time and to I take briefly us for have challenges. I strengthened I to challenges brand's we Dave are to months on the about our her be

board actions research we a CEO One needed This to as has research of quest conduct and was well transformation the that the practice menu into the included came Dave as and brand permanent restaurant discovery our appointed performed was as on I best as strategy. to first and within equity. clarify our operations both

excel to on allowed we to today's expand core us solidified the focus AUV our and believe environment. to would of narrow elements continuing start the foundation has brand with its to growth As the comparable all to competitive returning first Noodles like while margins. sales work needed I this which at has has in

unique with Our a the menu flavors restaurant differentiated clean and from with preparation space. around complemented compelling to approach noodles remains in and ingredients the pasta-based and world fresh

Our validates particular, Noodles that states several both consumer, to relevance has the meet in different occasions. our ability today's and need off-premise for group research to

already we and innovate will the begun for improve to continue this work have we As experience Dave opportunity. guests around discussed, off-premise to our

an As we improve inside make the our strengths. better to our opportunity to and the guests messaging we our to outside communicate also walls use four brand for see brand easier

research bit that bit over a a brand too communication become serious years the has Our the our has indicated broad. and too

will look and on feel with our our tests strengths capitalize and that and with in currently believe our guests. groups emotional are develop updated inside We families we an with connections stronger, restaurants

for segment have Mac Noodle the have we developing selling frequency we mentioned, potential opportunities menu, our of dish we and on quality our innovate health. of the & Correspondingly a increase indicates on recognized focus particular menu the invested of our highest to vote. our in around Cheese. Through importance our the the Dave veto that of lighter highest research with As research a remove to also recently a the

with spiralized restaurants. We are our zucchini tests in in-house currently in noodles

and these execution. well popularity are as by dishes as of encouraged ease the of We the taste

a We in opportunity process of noodle our launch noodles support well any as potential the are zucchini the a of national XXXX as testing entrees. of signature substitute in zucchini dish the to noodle QX to further

our Many talented the and reengaging the operational are which and efforts results. believe our field work meaningful noodle solidifying we us the Lastly that the of and on I improving team, has the metrics, as operational mentioned been are over last of test strategy our already done work of the have people initial financial in in leadership components We our base. collectively brand, our off-premise and potential to profile our has our hard are platforms. our a and bolster by completing cold we lot provide encouraged will XXXX. line the on execution, strengthening XX menu for months complement critical A of make progress existing mass the offerings menu salad our menu, occasion preliminary against successful lineup of to

there I the progress done now I for discuss still excited future one work to tangible opportunities and our detail. more to over be in is will is turn [ph] ahead. Sue it While to the being results about made am

Sue Daggett

Thank you, Paul.

primarily total year's decline was Third closing impact to opened first $XXX.X revenue restaurants quarter in due year-over-year subsequent in of decreased company-owned company-owned third during contributions decrease with to The by million. restaurants decline the the to XXXX a quarter sales. XXXX was The offset quarter. X.X% last from XX comparable and combined restaurant of

restaurant XXXX. third of the significant to XXX casual included also basis price locations. commodity a slightly XX.X%, Restaurant continued increase the at over our prior of price to standpoint lower improvements mentioned over and closures, From of traffic at improvement versus ended check. the and on saw year. As margin second benefit improvement anticipate related prior mix we EBITDA call, negligible owned in resulted labor quarter the third sale sales and ahead was neutral average in a benefit point approximately we comparable wide to a noted, a In restaurants a from during a a perspective improvement implementation decreased but Dave last basis the contribution XX began prior a comprised quarter sales We earned see of shift prior that year. the base to decrease the Comparable the running year restaurant September trend. through with million box, restaurant a and from to margin experienced balance company-owned the the expansion system savings relative in initiatives to franchise cadence We $X.X company menu X.X% marketing year. impact X.X% current spend quarter This X% the a fast, the contribution saw point quarter XX.X% the third decrease Adjusted increased inflation black favorable From X.X% restaurants. versus XXXX. of during July August. and X% as of softness we million quarter of second $X.X though, during restaurant and

EBITDA percentage the improvement prior As XXX was point year. from a of total revenues a adjusted X.X%, basis

exclusive for flow take growth On cash basis million in of We are short-term company a the given at opportunity onetime our our the the margins. EBITDA to the backdrop that base allow in strategy impairments moderate us our the have with unit improvements of These free of quarter solidified were look the comparable sales as a improvement coupled restaurant critical expansion the nonrecurring industry. and third company events. growth portfolio non-cash proud and challenging more to has we restaurant $X.X made financial our the generate continue contribution and

quarters built the impairment expansion. of time prior our rapid prominent most that was in during restaurants were As in

franchise During we opened the restaurants. of Through have one quarter third opened. a the XX third new total restaurant company quarter

above we Encouragingly, maintained of as have our XX to during margins. quarter class menu average selection enacted prior two company openings moderated to over the the procedures well have continues the through do not restaurant classes. disciplined estate additional past months. XXXX of success and We We real the we franchise the the As fourth have growth, as this of additional Volumes outperform significantly streamlining year. as only company have anticipate we anticipate any of that well attribute more balance XXXX. openings

confidence near-term modest rate a recent year with still in opportunities our the openings XXXX anticipate ahead only likely few a the growth reinforce fiscal still longer-term during us. in we of growth results While

to culinary on now operational touch restaurant closures would from I guidance. well to XXXX our continue Turning to are and benefit the we our of off-premise that of will remainder as prior the continued optimistic as we like initiatives. XXXX execution

guidance our anticipated of our low-end discussed earnings we previously call, ranges. we on last would likely we stated As the on that be

total We year have restaurant full to includes to of which decline of million for $XXX million. revenue a X% comparable revised XXXX our guidance $XXX leading sales to X.X%

We are $XX to EBITDA on revised expectations $XX of restaurant our of and to margin guidance XX.X% adjusted have million our contribution to XX.X% million. maintaining

context some facility. I Finally, credit our would like share to on

fiscal Our debt of XXXX. balance with million of year million $XX.X as QX end was compared end $XX the the of at

to due expectations. liquidity short-term improvement position Our EBITDA growth and improved lower has our unit

balance through improvement this expect XXXX. of and We will continue the XXXX through

certain execute amendment of our have facility flexibility certain credit ratios We and into strategic to things terms though to revises an commitments [indiscernible] entered roadmap. credit covenant while our also enhance affecting

Now to I over Dave it to would remarks. like final some turn for

Dave Boennighausen

Thank Sue. you,

execution EBITDA essential has it While meaningful on margin executing and today's that to long-term drive will elevates work the and to have diligently extremely Work we a today's am executing strategy. progress to our consumer. operational resonance impact brand, clearly increase organization beyond. Noodles' with our menu, expand, continue fiscal trajectory. off-premise our environment during across on to excited roadmap our I remains on brand's work the strategic and toward XXXX meaningful in that been year the with this capabilities and done our Paul competitive initiative We and our team profile believe occasion a

we close like add Before you'd anything Paul? to

Paul Strasen

Sure forward. about continue I the Noodles' moving brand potential of strategy be regarding confident Dave. our excited and the to

is encouraged am ahead by call the for any a to and these and the questions. Kevin, I turn over many in. the today you go and test to want remain your While thank that please going of the time with results direction that initiatives company I initial

Operator

John [Operator Instructions] of from Glass Our Morgan first question Stanley. comes

John Glass

much. very Thanks

sort just know over did. pieces about a like the going the items your felt I and done brand on the customer of you It brand menu a what research years. talk or of more number you about Paul, originally little you've focusing that Dave maybe core kind are back the base. bit First core maybe to of was

users haven’t to going the or And you forward going a think about and the brand to is how both view detail that of Maybe focused there please? customers? around addressed narrowly that core So in little brand incremental back more you going your more is it's yet? your menu repositioning be

Paul Strasen

actually Paul. this a John, it is is I think combination.

– to couple the little that in have. We some I in more really for maybe able we type much is to platform a I menu address see we're of more aware a research think approach menu more think that occasions we room such of and drive that around core it become is if there we that there. number different also the then is interesting seeing the a a dishes things people of in great into interest our bit can be

of joined I that about things off-premise the brand right one I the use when surprised the being think me XX%. was

different think I and innovate says standpoint from to that’s predisposition I think brand against that. there's in that to culinary can a use the really we ways continue a really

smaller maybe do that over years job menu, keep will two the as than the is make been order executing you important great obviously We it to know the off-premise which any specifically but against can occasion past three a or the occasion. we very sure accuracy of of executing has and menu

be move to is families that occasions you'll so we us of into to working really really states with that we speak, occasions think to we against and we the the have but need group combination our far returning are it's can better do research that with. So, are we the other dealing part to future. broaden and both even and with as doing, an opportunity I see a roots One

John Glass

of closure given you headway just Two backpedalled stores, the the was or margin based make the of excluding what the closures? comp questions excluded decline improvement I more restaurant guess, model the the did

Susan Daggett

contribution terms of in restaurant margin? Yes,

John Glass

Yes.

Susan Daggett

basis to XX point attributable the attributable were Of on We closures the did to XXX make headway the were improvement restaurants. some points basis points basis XXX that. the core

John Glass

some finally Box, absolute index, casual around number relative was to then guess And was Black the of or what mentioned or improvement September magnitude I not relative fast, you in September? quoted you maybe the in what the was what trend that September, optimism and improvement knowing

David Boennighausen

XXX Yes, it is in the John. points basis neighborhood of

John Glass

Relative to QX?

David Boennighausen

the That August. of July were and relative during we where is month

John Glass

quarter not quarter? relative of just but to the so two the to the months Okay, reported first you

David Boennighausen

Correct.

John Glass

Okay, thank you.

Operator

next Our UBS. comes Dennis Geiger with question from

Dennis Geiger

wanted I thanks. operational improvement metrics could. into Great, I the to the dive in if

year, I and one the improvement what solid prior saw to? months? improvement sort the of You some September mentioned and the to was recent do attribute improvement in you even recent of And relative you what seen think in that quarters you you've of drivers can September bigger of say that in wasn't if that it the

David Boennighausen

went I take myself margin So ahead to to When of couple about think go Sue answer and accuracies, stronger. focusing a comes during and August, improvements. month of it the others of and nearly some out key the I'll then we actually of execute of talk some we general managers and Paul, when routines, order the managers, it our and a of let to the on little some every need general assistant bit one areas visited with feel sales deployment, sales where comes really

the still I there's those we know to room got still to that some go. see we're great while operational metrics know terms we've news starting because lot improvements of we've in actions momentum a of think that made in we from of

was some bit the there. been still we margin, on we even fold from the other did saw improvement had discounting finally saw think during prior lap we improvement will One that we lapped comments the where to little of that XXXX, into component so start ex-that all I of Sue’s aspect So that incremental while year. of discounting had some there also a done

Susan Daggett

talked efficiency just I labor in targeted margin, and the talked equipment in in I Yes, the specific smaller improvement in last focus restaurants. about order on couple can introducing we the the we've quarter mean to the of improve calls contribution on initiatives second about

we're initiative rolling as the seeing execute. that procedures QX, for in vegetables of guest efficiencies full and also teams For don't of QX into middle that, we've that efficiencies, able QX as so example the to experience silverware, positive impact more our in are talked more we've going so identified the choppers done impact with saving the but benefit about that labor well was our of of the

we initiatives then XXXX. would to labor we the So I thing lowered think expect that year-over-year year. we over balance over there on would improvement line the XXXX spend And marketing QX, the of - into say is only have had, that did based see continue the QX I that those other on do

Dennis Geiger

as kind Dave, then to through sort if off-premise, the scores coming of the one sort just highlighted look see it start in I into get is thing reaccelerate the going but guest biggest for top we past, could you generally the kind metrics several into to that are line like comp, ’XX after biggest of biggest should the key months come in, that speaking, and kind and we operational of see of one driver? things sneak looking you I drivers the Is is additional that to satisfaction going first it that Great the feel be this of the what that you've ’XX? is loyalty, up through, come through sales

David Boennighausen

a leading bit we improvements bit operational a we've anticipate reap as little indicator, we'll of be burn a more benefits that that. of to little from tend certainly talked some continue slower to about Sure and a

I think excited as off-premise. we look is most into are item about XXXX we the

sales it. XX% very off-premise of is concerted almost having now we're a right mentioned Paul without that from and towards really As effort

start to as around think by REWARDS great That's AUBs around of we there's program. the direction. to platform, that in our innovate to that change us off-premise really right supported continue platform, be opportunity I we a moving going again communication So for is feel where the some

ahead them, to promote And but gives learn Dennis program to also more get connections, come communication the a to emotional us pick when in So line communication such time, satisfaction. the overall to our and that's their difference better it with guests to just enables it us certainly online it have order throughput really us opportunity the restaurants, the their can skip behaviors, an ordering. REWARDS target equalizer people up, makes of enormous we for specifically

I those zucchini together great Paul noodle about two then And very that me, personally think excited mentioned opportunity. So well. I'm for a the have as

there's address there the have and to pretty in gaps menu about healthy is we excited items little opportunity one great that that of our potentially which so a think I opportunity. more

Dennis Geiger

Great, detail thanks the for there.

Operator

Our comes with from SunTrust Robinson next question Jake Humphrey. Bartlett

Jake Bartlett

question. Great, of give trends thanks for would the & Cheese flavor context you have Mac in some typically Dave I'm will day that new had with momentum taking October launch then of about and the in in September? the some current also maintained the the whether and the quarter earlier curious you month the

David Boennighausen

we the week-to-week see far based did. a we they absolute a challenge a that where of Jake from comparable little for bit than is see the that in on entire better So QX. QX sales basis bit restaurant we The thus of type one volatility continue certainly landed are to discounting that

we tends the to to what large now the we REWARDS have So do much we vehicle, year, as prior our see discounting more aspects timing promotions where that towards program as still be is while more much lapped some move consistent. there's the from the

quarter the that. provide on I and little where relative color were actually there's do comparisons we a QX some much think So it numbers for volatility improvement have more are while date QX to throughout we also the encouraging we to a too to little bit full softer in

Jake Bartlett

think a launch? as in math sounds you & Mac sounds would the Cheese it the so that where context you that were down but from the step about of do Okay, like How September. be October in

David Boennighausen

aspects really play I promotion. think that It doesn’t because are at from a there all at me some concern are timing do

As one last year. year we there had LTO a reminder, as being we have the an same this was time did promoted we this - promoted as at

Jake Bartlett

you've to your margin have Okay about much of in there what drive your you side at then past made as progress more any drivers updates the on least, near chain, term the terms some margins? maybe on in talked and being the supply in of margins tangible potentially kind initiatives opportunities

Susan Daggett

and are think think look in this a our bit the we XXXX little what procurement we point to we think have savings at in and a a I but beyond. too really the Yes, quite there focusing about chain procurement, and probably early the the it. are general, optimistic we the taking supply optimism articulate bit supply hard I of It's chain overall at on opportunities about are, function

Jake Bartlett

Okay, just they should system, but you mentioned well? when with remind progress rapid just and the shelf up pick it, then in you're you of might the the us when have delivery put of as could to timing going for if the where be your is

Paul Murphy

I’ll a with quick so, Sure start up. pick

more be it go of next QX of units it So implemented will the are around marketing be communication under right roughly have those shelving of then to promote probably now year. getting really in and through able and process balance QX and in our would intent

ability to a we utilize a relates restaurants up continue so that anticipate there, of it their meaningful little dependence from bit do delivery, pretty As of our in is we're to providers one with systems Where next aspect party XX% the is integrate there to third XX%, on today our months. at delivery few to there. probably have restaurants to within impact on the so will closer

gains The third one apologize, I from you a were perspective? looking I forgot what third for one the

Jake Bartlett

kind you some small growth they of and of think so of competitive casual is be commentary was in the growth terms any on how your one you just that just – have that you headwinds And environment? the is, I then the appreciate competition kind do of is question I slowing of at think it. whether been actually, think new comments entrants, that I seeing fast the spaces that in view which competitors there or actually last whether any real others the was unit large the it, of

David Boennighausen

seen haven't that's I factor. been certainly a Yes, large

indicators to think some terms year. Metro penetrated fast those to as a be over the our during fast encouraged casual awareness That not such the seemed headwind last and probably of of markets headwind what bit I'm trajectory some first but to ourselves that nearly most Denver the seeing. in that in brand of year. we're leading said, other I penetration this DC The of levels, And certainly little our markets an more somewhat part as be see that tend equilibrium. seen downward hitting the I much were still Jake, think seeing with given well we've for the and we as casual concepts of you're starting and of

Jake Bartlett

Got it. Thank you very much.

Operator

Jaffrey. Joshua Piper Long question with Our from next comes

Joshua long

got curious scenes that, needed the the of just any this from support to taking some circle needed Great. question. be behind little you've watch bit you're of like third what be there in investments sounds back on - the the more if the build we curious going strong parties off-premise wanted within around of fact get there forward? or or a to a time I lot pickup rapid and place, CapEx as can systems money a it's there's might of of kind well? other that shelves investment the of Just to up the a kind using human base hours on Thanks to sort so might if it for to focus making grow

Paul Murphy

actually as Sure, comes IT the relatively that near in for to already our in anticipate I term been on to there pick are ordering so units up units, when the it has immediate and initiatives such immediate the inexpensive, we're don't be needs. it online shelving working think place from we quick the shelving CapEx component

Josh opportunity said, that overall know we we're at we the think just as You surface is the of scratching off-premise. roadmap strategic look what in the

it to something continue going. on as see earnings talk call about that's where and well certainly on I think we more our off-premise we'll next I think tuned So stay

utilize delivery continue to We that will third the in-house. required term that amount the near for would given parties try to for just do resources be to of

Joshua long

as it XQ year's point through October That where that guess your want a last on comparisons, kind I maybe the makes year-over-year go part to compares sense discounting? of understood made September, Dave comment to with we of gets first through your then sure that we terms I and were was kind in and of I because of just correctly easier of that you the comments make I kind some think of

David Boennighausen

what activity us right put is our perspective to promotional do tends to right targeted out and discounting more Josh Yes, our and it exactly much our now program REWARDS to be in our holds so utilizing allows that's promotion.

So quarter the look in the QX at year promotion reliance as much of more we we years much including we in with versus approach last how discounting on email more it's and balanced had we of that happened intended do in discounts during program today of that last early half those broader more, utilizing much year. much we first QX, still were QX the promotions have but to prior

this will amount So we've a as of about talked now, the I at a in as significant and benefit think discounting we've then we balance this that you we've of expect become over know, calls general. think that several of quarter you look I been ongoing many lapping

So it’s behind to nice have now that us.

Joshua long

systems for as got terms operational you've to about estate something the you've about those fact for then focusing that continuing and unit is range we of year for that healthy think base, that the to is more rationalized or the just of and disciplined appreciate around kind this become that as or tick execution? on XX going sites the there now, real time ’XX, you favor of in number over seen environment for in in you're place we forward against execute do down you I think a units new expect what this we’ve

David Boennighausen

handful what formal XXXX we guidance, few think a we less actually from sorry for expect in as we XXXX, given But a be Yes, than than but restaurants not haven’t well. on there's side a pipeline be there the mentioned, will Sue XXXX. units there units the I'm you company-side, franchise only less so XXXX in of really as saw,

taking which opportunity entail capitalize off-premise allow opportunity on those also this that the could look to location, from We’re look base off-premise is up Josh, for like would really of lines a a footprint to us along smart things potentially restaurant really does occasion. that windows us the the the focusing incorporating at good pick future on aside what the

prototype taking to got really that validate we've the forward. we're moving pause So this right

Joshua long

for time. questions Thanks or thanks the for the

Operator

Andrew question BMO Capital [Operator Instructions] Markets. Strelzik with from comes next Our

Ryan Royce

Andrew. follow just wanted Thanks for This you? follow Ryan the to delivery. taking on and but on I you wanted there can color for give incrementality? hey actually delivery units, on I how up on questions. of on are comments in just XX% it’s recognize any I from up Royce or size still early is there is to your you're seeing what of terms check –

David Boennighausen

be collegiate that tends The deliveries, and program, resonance to high so XX% we opportunity necessarily challenge tasks that I that there's on you would tend definitely sales that that to is a urban in sites as end so some be do cetera, past to expect incremental bit we would it you sites, start about little assume but et to XX% talked the our had we see be of to meaningful to with the one does number the that tended wouldn't expand more I up of think around think restaurants of say what there is with that We've incremental. sales. and we be our

Ryan Royce

is relative the there quarter or what fourth help fourth Thank wanted level margin smaller quarter margins? puts guidance there on midpoint understand the you just so margin for any to restaurant you reinvestment can restaurant imply then takes and in this me saw the I one of you. side, of rate to would I more the margin a ask of think expansion some And at the quarter.

Susan Daggett

inflation. into as commodity XXXX it little from the and is into of say I just are would XXXX a seasonality that just we driven bit perspective, go little looking and I back of end we some of think at experiencing a modest bit also

David Boennighausen

QX of about anticipate we up expect were, goods during a bit XX.X% QX Yes Ryan. sold will do COGS is tick cost that we

Ryan Royce

Great, thank you very much.

Operator

[Operator Instructions] Capital RBC Our next with comes David question Palmer from Markets.

David Palmer

Hi evening good guys.

and the rolled tested thus rolled delivery, you’ve guess anywhere for I you pickup you significantly far? do results have out on pickup shelves followup out XX% have delivery, there, Another

David Boennighausen

to a basis. moment, week amount in the only steady that of continuing at in just small after They've kind We XX% probably so XX%, David. time the of for we're place out only of been do roll week system a have it really

David Palmer

advertising next sense as and on when that it be think to year? will something you that that well the going respond is incrementality a slow have perhaps you that’s you that Do switch build more or to

David Boennighausen

the XXX% Yes large get implement the have order with make I'll with signage teams the up weigh restaurants. as shelving tell work as get we and think relatively bit our marketing in can communication and it can next units continue XXX% Paul a a as opportunity I so to to it’s Brad accuracy get that well. to quick slow months, think you as we right, into pick sure We very Brad's I I little do over saw ultimately impact. in working of right place, that a think few burn but then we we

Paul Murphy

And sure accuracy and it. with execution to goes our not Yes we're know retraining in restaurant hit to against walk mean that quick of pick hard people the the it's be David, the I to sure sure the that against working are it's as we sure the triple intuitive use just line we making the down into the path before that procedural this double-checked, procedures queue because rollout, that on that hard part travel when to they're and mentioned, then and really that. getting kind the make one operational out is expectation they we've, from I work to the thing we that up guests for once as on just just able make also things Paul. some again hair checked frankly addressing the any that's doing to slowed have mean a signage we’re continue Dave product ordering order make to

want upside executing we're that but So as nice there's do we doing we sure to it. great it, job really I make a think of there,

David Palmer

separate on-premise than How finally you terms tip on comp are can thinking I positively where to comps would about initiatives, on point I off-premise that. the comping couple some you some that is the off, maybe these talking guess way, a imagine of inflection overall positive imagine about next you have on-premise comment want thinking halves two down you your are real half layer going over and the about mentioned I half lot comping Thanks. a now, and to can you things in don't and you quarters basis. But there's I of of is in these know question also start perhaps and if that your this momentum? to the big it to is you're off-premise don't be business even would numbers of maybe I your know, your more

David Boennighausen

Sure.

numbers coming call are line waiting utilizing are of picking I that some I to me just, momentum comp then folks guests the food in to let of vehicle. online now it again about that satisfied expect that and Paul our address that waiting doing show for today on those let up the continues their are want prepared. into And that You through platforms, those our line we and talked that off-premise to our of as that are would restaurants skipping be to right research that we XX% will reiterate the see, but which the was one the sales ordering experience aren’t

tremendous base our absolutely upside them have is getting better core of there So a experience. even existing just to in

for momentum Ask on will things go, to Paul let layering potentially comp could weigh I and the where in.

Paul Murphy

David's at off-premise probably in really the one of bear I the of speak really not line off-premise as of but call, think getting sole that in terms out off-premise. people doing things A business. to of David, look of leaders is you on the a looking business, too certainly be the we going to are bit that, is point think it driver it’s basically sort I we're on Yes can as the that being a at the combination bring heard we XXXX, to

terms actually to convenience of yes that a I XXXX. that Zucchini so at shorter, that that's think those is that line job that will use making noodles I over around because on off-premise that will of in do the as they we're look the part the be it other I think so do testing sure you the the programs, we're work the and we an time drive operational a and have off-premise. I solution the that you, think how our for great with work of influence things communicating do to many business programs, But premise doing product conjunction quality of then on the

and as you're to So, looking also term to as more your make standpoint bit what of being so. off-premise I maintain believe forward that going driver and both that my it. near, a certainly we approach at brand but are growth would we for in we a call and momentum business are and be enduring that hypothesis XX turn so holistic how the a and from we I a XXXX, XX, mid that's think long XX, but able make that right do in And so should can the we turn, best the

David Palmer

Thank you.

Operator

for I'm means today. so that that not call showing any questions further this at time, concluded conference is the

all may have and day. disconnect You wonderful a

Noodles & Company (NDLS) 9 Nov 172017 Q3 Earnings call transcript