NDLS - Earnings call transcript Q1 2020

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Operator

Good afternoon and welcome to today’s Noodles & Company First Quarter 2020 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 will now introduce Noodles & Company’s Chief Financial Officer, Ken Kuick. yours. is floor The

Ken Kuick

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

me afternoon by with I few Here this matters. would Executive our regulatory like Officer. Chief to start going a is over Dave Boennighausen,

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

our or comparable prepared be our should believe as accordance GAAP. evaluating During be in earnings considered our A non-GAAP most these operating which supplemental useful isolation measures These with we measures in directly reconciliation not for available can the GAAP will XXXX discuss results in performance. of we the and quarter financial measures, is company’s a release information. substitute measures in to first call, the

would turn our Boennighausen, I Chief to like Officer. over it Now, to Dave Executive

Dave Boennighausen

Thanks, Ken everyone. and afternoon good

operational, we great we thus be primary for track During forward. system-wide today’s the has the call, expansion. weeks With on quarter briefly including comfortable and strength together XXXX during our our another will of time on of QX, far discussing to earnings be COVID-XX strategy positive our top will that but of and moving first a our the year impact start strong sales was initiatives. line had felt company’s response results, culinary and business, comparable off-promise our meaningful focus growth the pandemic company was that XX the the of traffic, X.X% of first on off

the first Of of recent weeks strong business, crisis, resulted in the the improved May this XX.X% Entering off-premise its pleased yesterday the XX sequential trajectory XX.X% to sales March. of last as X.X% the comparable accounted over most consistent XX% sales business of Since which the during sales system-wide at weeks sales comparable a during the our the QX. for declined initiatives fiscal and quarter. the and course, decline first improvement the ending in pandemic. restaurants of point, XX.X% in week during the X with investments during fell our weeks have week during At that of our then past have X. comparable we decline COVID-XX for all with QX of Comparable sales fiscal been system-wide, onset the company-owned three last of resulting lowest XX% changed

ordering through of channels where seamlessly and well accustomed and to in extremely menu the is variety enjoy travel dining. food our guests were value regardless Our digital they to already our our are

well that it teams strength restaurant positioning healthy able member during to guests been Noodles been improvement mission that build the Since some these inspire for also guests opened as to proud have team the communities. we weeks. & I and consistent has immensely be Never Company’s more first to upon meals community than will leverage every later continuous over call. have commitment I with I believe serve. last am it our important resulting their our of to outline on nourish made-to-order few grateful brand we provide is are We to stronger the the initiatives in seen have as and our to our in recent mission the of long-term. always been initiatives, we today. XXXX, and in throughout

those or a never company, guests part have pandemic, our of an been to an teams Our frontlines and of team our or be great meal families and as program we milestones part free whether providing have guests, or and or are shown industry. such birthdays amount I other healthcare of care virtually each new XX to In restaurant prouder this love online. as incredible workers unwavering years meals this of on are the guests for family fighting such the my proud those celebrating a to graduations be

anything have Of course, pandemic. years, in encountered never like XX current this we those

in health crisis variety three became As of our and on severity members areas: our second, apparent, convenience guests; accessibility our the increasing ensuring the team key we of for providing menu. altered to third, our strategy and focus guests; safety and and the first the inherent to value

we of priority up practices washing very national diligent extraordinarily intervals. our of symptoms in quality to disinfecting covering and for emergency team thoroughly team to policy policy only of off-premise the have guests. frequency to prohibit sick an and cleaning days of our to first strict an hand procedures, one been and our the XX at leave early enforcing surface of showing model increasing members chains were the regular our pay We from first Our all executing introduced mandatory illness began locations, areas and shift team at members working. protect enhanced to We all cadence has on sick been course assurance

guests our to safe team been for coverings actions allow ensure will we at rooms healthy eventually installing plexiglass with and us. cashier and teams social distancing ensure have a been with facilitate face and perform in of of supplemented to And all checks they environment our infrared members as and all providing the process measures shields These members guests. we the team for taken our Additionally, of to shift. reopen, stations are the dining at every have purchased and be thermometers temperature dining start of have safety

guests. Our second accessibility strategic and for convenience increase priority has our been to

we online have fortunate this strong seamless with for ordering noted off-premise are which crisis I our a way that new business bolstered to systems, by of app As entered brand. fall we enabled the and last earlier, guests launch the the enjoy

allowed Our quickly investments the in address us have to key current to initiatives execute pandemic. on technology

We XXX able to offer easy use locations. been at our have to over to curbside service guests

direct guests it with Additionally channels, brand. delivery engage our access in for to we digital through the late and easier again making March, introduced

delivery, curbside and to our absolute has existing direct off-premise higher in Finally, the before we of in adding launch presence strengthened sales capabilities our of national DoorDash. dollars with they Uber crisis. introduction further our with with the expansion off-premise delivery Eats, partnership expanded of conjunction were today nationally are The our and than

were our to Our to menu. maintain first X in inherent that’s with our value XXXX each for meal from has adults, day. kids connection, plenty In X testing there if family $XX, In great brand April, the indulgent company meal to to our can order great priority uncertain for strategic Noodles offering family from leverage menu time sides, during and every with this next less family have leftover eat been meals people comes favorites the variety the some ensuring of meals healthy to for strategy than culinary to individually. new our towards of disciplined are is lunch we already introduced in adventurous. which to guests family These our of allow At variety two comfortable items, meals, family the of serves the available showcase comfort. early affordable Guests cultivate options and X that our member choose they shifted to ordered & all for at guests to Company. with we approach and

and guest has regular to channels the broadening increasing experience members its been launch frontlines. through Additionally facilitated to a our fall. love engage on with since meal grown our each use comfort is of accommodate enhancing with family dietary meal has guests which purchased, sized to their the guests company they workers preferences by of entrée healthcare target over our family rewards million the to our continue from our program, evolving The and to home. menu own ability the success donating by We to X the how get noodles digital plan last the

over navigate environment to value, sales the strategies current a our weeks us several the safety, While allowed again, convenience have past perspective. and from

in taken improve some Ken these health now to turn more to financial to steps the discuss over also actions of have significant We overall of organization. will the I detail.

Ken Kuick

credit structure currently CapEx mentioned significantly on nonessential our once From our execute in we well during in of In proper the perspective unit focus response and Early perspective the from completing in past crisis majority administrative calls order anticipate initiative. testing Dave. they've performed improving at made four reduce and preserving below up overhead. fell the current saying expenses. opening we restaurants our the certain postponing investment environment. XXXX, strength and and most responses review levels planned put the us the have will dining kitchen and eight our the modifying offset a new our both spending well successful that value. operating the liquidity liquidity we I increased our corporate agreement around corporate prior moved the initiative available the Thanks, two to centered level to restart thorough we associated which the which P&L are we additionally we model have enhanced the the given measures favorable corporate while model to on start growth off on earnings postponed I'll reduced lower the finance in and optimize we deployment late uncertain of ensuring levels. with sales model full to closure restaurants hours At the future number than quarters environment and we our crisis between as on with general sales that strengthening premise operating labor position all have the preserve the amendment that eliminating restaurant, over strategies temporarily the our a discussed much cost of more when associated to before higher that all ensure spending This currently labor meaningfully start by convenience, restaurant sheet delivery. the our onset environment nonessential we party XXXX the packaging to increased with cleaning costs of quickly the rooms as costs included procedures crisis balance such for our to year included reduced or delayed transition we and third of as and the entered of These in of our liquidity safety, we volumes

a an million. we previously additional April. revolving drew in Turning cash $XX down to on credit announced, drew facility and million early $X.X down in our We as March position

we expected. Once administrative we of evolve May to interest well to if comparable month year is be over continues estimate preserve we taken encompassing CapEx remain the us on seen all sales to an expenses of company can As liquidity recovery have for XXXX have approximately while on extended allow a in even inclusive expense if approximately recent X that we all and XXXX. approximately hand of the the down $XX.X given dining we we estimate per is a At cash most slower period sufficient had for through hand. weeks our million liquidity $X resumed cash cash on three XX% in basis time. And the we sales general adequate million steps will cash are decline, situation yesterday have XX% the than that an will into comparable ongoing of believe neutral burn and

long model given pandemic of announced share duration impact That term, previously as we COVID-XX the and Finally guidance economic even successfully over the strength our the ultimately for of with to optimism withdrawn emerge the downturn turn the the have previously our Dave. Dave's it stronger fiscal made the back allow in improvements uncertainty this And the issued said, of will that XXXX. competitively. over I will to past and us initiatives that, recent I and to several quarters navigate

Dave Boennighausen

pandemic Thanks, seen Ken. business & anything Company. disruption in in The years XX has greater my a our than we COVID-XX Noodles caused in have

been has crisis believe heartbreaking for and industry the all to it’s had see do strong that While impact on when bring, become I'm encouraged what particularly Company. I said restaurant will even & future the the business stronger. will actually the of done our to Noodles

Our strong through able our curbside. initiatives to direct investment off-premise be behaviors like and business meet consumer will continued delivery changing

into a a our regulatory restaurants. engage platforms through our which only environment deepen and safe with as meets strong with digital surpasses also clean we rewards them our but family requirements with when their back in will find restaurant Our connection we and meal and and guests soon guests When returns friends program will sharing loyalty hopefully their them on our expectations. all dining for our not welcome

Our the strong a earnings costs in unit more organization long advantage enhanced term through leaner a actually favorable be positioned in of take to will environment. opportunity

from as successfully culture I'm most nourish how proud in few pride our they've operational we Andy brand would the thank partners economy for to look call We care, to all event inspire you I to feel Throughout opportunities past guest and off and so built of event. like the the lines this today and about much Well the today. Q&A. unprecedented community and to our hard love, the a navigate years work serve. turn to joining team downturn. on again there's ahead team addressed over we and perspective position our of capitalizing great business culinary excellence premise us been now positioned allowing this have every galvanized I operational the to importantly, open new will as and I us member, Finally risen has and team for our strong recovers. and has forward around business on

Operator

we from Presenters, Barish question first a Jefferies. Instructions] [Operator Andy have from

Your line is open.

your ask question. may Your

Andy Barish

you doing Yes, well. hi. guys, hope I are

or this different had anything Mac in Just well? if mix staying sales the during balance kind consumers any Zoodle see of wanted still their items comfort with Cheese increase you crisis, of healthier to as seen from of and the or in & Caulifloodle sort in kind like mix time-to-time to want food

Dave Boennighausen

it’s good question. No, a

mix So as whole, see onset bit people I items gravitate were more the see you at the of first the a of this, yes, shift side did of very couple all, tremendous the the of comfort that a think didn’t as ledger. but towards menu a bit on the whole first in more itself, weeks, we

in which meal particularly family momentum, to our weeks that highlights transition on that seen the and the one to that Caulifloodle evolution zucchini pickup and the past reason have the Zoodles more be some being few noodle really at our are Caulifloodles of healthy We the next side, over much looking starting gives see we itself. the around why another actually

comfort story shift yes, bit long and So, towards it’s on we little short, of early swinging a saw back now health. towards

Andy Barish

a some to part, do on you And the if how basis opening in you sort guest, are food something majority anticipate on do stores will continued is slowly you you curb guess play to where then continue can because I side it? are rooms, regular those – you dining to of that getting of a the

Dave Boennighausen

even side. what are we very absolutely excited started. with on list Yes, initiative this curb It actually was – crisis see the we with before we

responding. teams So, think the guests our well and are have certainly executed I

they where certain do allow except we locations stay, the itself in don’t it. facility for Andy, doesn’t anticipate just So,

Andy Barish

Okay. guys. Thanks

Operator

comes [Operator Instructions] Our Capital. question line next from Strelzik from BMO the of Andrew

Your open. line is

Daniel Salmon

and insurance geographical for Hey, taking afternoon. Dan provide well could how is in anything there daypart good pointing the I the performance hoping Thanks if just shifting on more on current versus of This maybe kind performance in is little comp you by mix was curios for any difference out? you color today. in or weekday, actually weekend seeing just as a is differences the environment worth Andrew question. any of as

Dave Boennighausen

I glad question. you am that asked I think

but We day similar you over somewhat that across whole on actually the board. in all a have have been perspective, part bit business a weekends. bit the a surprised That impact – certain not almost pretty so crisis From geographies, from performing and on be this consistently better, as to seen day do see a are pretty on. parts, that overall We restrictions stay-at-home currently having pretty the markets dining the much do we little results orders seemed consistent more across tended it’s the geographies. to

bit interestingly kind have declines a have momentum seen even lot weekdays. been during whether done a few we that we it timeframe, on weeks, at been correspondingly, So, But the of the be than the or in the more last have we over dine-in more traditional has seeing dinners little weekends weekends. of that

Daniel Salmon

are a or operational for are telling speak then Great. Maybe unit taking as there. business support franchisees more communications you yourself relatively asking And from Could what from count little perspective. Appreciate to how the doing? color are smaller the between your your as franchisees, about them the any know insights perspective? provide or additional they a and bit of some you and well part it’s you actions ongoing can a Thanks. we liquidity maybe I a just

Dave Boennighausen

crisis. this that we the passionate prior franchise the I fortunately seen in business and that organization we saw that strong very and Dan, we they capable to have strengthening are think fortunate, very Yes, have a

that it they larger but their has said we allow am proud we to businesses challenge being their that position fees immensely defer as certainly As entities of capitalized a we help impact community on to to time up them more to royalties so I them and the are shore crisis well. well has have well many that risen be will really recognize too had franchise the as franchise reminder, the don’t franchisees tend for liquidity to our how this have

Daniel Salmon

Thank you much. very

Operator

We do SunTrust. another of from you. the Bartlett question Jake have line Thank from

is Your line open.

Jake Bartlett

taking for questions. the thanks Great

you're it happened to the sorry minute about in associate might dead Ken First it another but went happened And into think about have assuming then out you're real I my thinking you're G&A G&A, that been line when so G&A a I'm what discussions for do about quick? could same but starting CapEx talk my am all right with line on went I second to others, you this for the I recap of if to it maybe just going the missed so

Ken Kuick

Yes, sure, our up item old. savings could G&A Definition cost dug in line went comfortable but G&A we through say a the pretty feel into took every seeing. we fixed variable so expenses detail the we're structure versus it, beat good of with lot and reductions that Not of perspective that Jake. where and in meaningful from we that I'd our that

Dave Boennighausen

you feel on you know organization don't that pick – in do we I'd we crisis the that you it of lot out necessarily be and we where the just the services some this long so a etcetera we lot find travel consulting were in or comes a as Jake whether labor it talked as need we a picked back level about at to where able term did coming level of of on say leaner type of I but up well Yes call? corporate restaurant mean, and that to at that expenses other non from the the

Jake Bartlett

burn think the rate -- I'm burn I rate before burn about the right before talking right discussion. the –

about minute, I I for a that So, blank. but think everything it part was heard

it can but So can later. about we I chat we

think feel versus expect meaning also of they the at Assuming it’s it terms our important XXXX or to will questioner. can missed how you in missed hold maybe it, next all G&A would next can do and what caller you I lower be see if you you But much hand

Dave Boennighausen

Yes.

we as metrics burn Ken, expect on through our talk components Ken of you can talk that lose the current we a walk cash million little think, month. roughly sales would a through some bit we same-store of I at maybe can that? the $X current through you levels,

Ken Kuick

that positive the overhaul to we approximately so million slightly run $X we basis around is a just CapEx sure range G&A Yes perspective then a million would on expect restaurant so from a burn expect and would run restaurant $X.X be quick the the, this somewhere cash monthly generally cash our $XXX,XXX

Jake Bartlett

Yes and are cash basis. all-in those

Ken Kuick

Yes that's all cash.

Jake Bartlett

And When family line like stores you you and actions on and really a on I'm some this about us going the think free more the then March, wondering maybe to that planned on curbside? going? to keep if adding lasting taking here planning that going what through should keep meals how you could of Great. improvement but try it whether of to expect than answering promotions the from the you're That's new doing you is kind to tactic helpful. were on to remind can are long talk XXX you these down you're anything in initially some come long new again adding that I could maybe maybe was momentum how offers delivery we

Ken Kuick

ample There Jake. things is there, impact Yes. to

had system XXX that's quite we an restaurants industry facilities. certain ultimately the I'm restaurant digital the team just the and the ongoing because healthier perspective preference, how land a you that the capabilities have that just perspective few around continue please, don't innovation some becoming have family whether around follow see will vast that itself. introduce meal will well on weeks pipeline already at proud majority to just forward the curbside curbside doing several of the from the media for program us I more will expect our be diets around you the probably the on move as technology seen used rewards emphasis accelerating what today's overall will bit this you years So basis of initiatives think about on we can from has and of of next on really some that I really the and are where see enhance restaurants just very dietary in will continue up version. and personalized continue probably us would our use I is continue or mean But our we whatever digital next from of to be a probably the needs fit still but do it's still miss, to consumer And in will you'll a doing how we how or you over whatever more who you that – over trends months. last to weeks diet of Paleo the Keto somebody use type are we to accelerate couple responded

Jake Bartlett

Okay. the lastly now, to this you that you, strategy to, of share gates pace but in get with kind see a in in that stores, allowed us back, that for is you chance do broader are sort stores voice probably and maybe terms of I your you expect, sort you should Dave, give to have that? you before markets reopening is number any what could any And then of of you want which of you

Dave Boennighausen

members is. business tell rush expectations. are necessarily healthy guest a are and actually surpasses meets dining provide our are that we and strong safe to open not and the dining it as That the team regulations a off-premise not we Jake, will rooms, because you, guests we environment said, open such have – in we again a prepared Yes, to I rooms,

to up. to at agencies, but regulatory look But we are ready that do from guests. our to not going also soon are markets We reasonably as take are open is the the we just going what Qs

off-premise on, began first became executing Those throughout bolstered one then there very early that chains plexiglass, been an common practices or lot to will be remain to national the safeguards place in have temperature by a of checks. the as will additional both model We such shift of only industry. place

need necessarily are rush a ready a into we for really We given provide the have that such but feel safe already our off-premise to don’t much strong it pretty great we guests, to business. environment and

Jake Bartlett

improvements. it. appreciate Great. I Congrats the on

Dave Boennighausen

you. Thank

Operator

There Instructions] to questions I from call the line, will the turn further presenters. Sir? now back [Operator are no Dave.

Dave Boennighausen

Now, changing Please taking appreciate time everybody brand stay the bring ahead. to to the the is safe. I but to will with unbelievably times, say challenge future want what very the about a today. raising I call greater just excited obviously I the am thing future join

Operator

this and conference call. this Ladies gentlemen, concludes

Thank disconnect. you now for participating. may You

Noodles & Company (NDLS) 7 May 202020 Q1 Earnings call transcript