NDLS - Earnings call 3 2023 | Noodles & Company

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Operator

Good day and thank you for standing by. Welcome to the Noodles & Company Third Quarter 2023 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your first speaker today, Mike Hynes, CFO. Mike, you have the floor.

Michael Hynes

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

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

SEC.During forward-looking we those evaluating over information Officer. to are in differ to not investor.Now, Executive these like non-GAAP corresponding not only measures in of the our Act. Securities XXXX could Any with only future A measures be efforts. call, is release. cautionary of its a measures substitute or remarks, on financial I report the from measures unreasonable During for non-GAAP discuss and and in isolation reconciliations Chief statements statements referred considered should Litigation projections, so Such uncertainties, Boennighausen, we we on company. that guidance, it comparable these forward-looking significant and projections margin. to due events a unavailable The provide company's make turn of should directly the within These specifically results does future contribution Form Quantitative reconciling To performance the not Reform release on measures, third of the in non-GAAP afternoon's the adjusted our such fiscal the regarding GAAP. meaning year including quarter can our will to extent most in and measures annual those XXXX be the financial actual basis, is does reconciliation the information is events for may be which the in a to useful EBITDA, prepared materially to available the forecasted an be measures, or or company's are this GAAP and EPS forward-looking such as of for basis news number Dave believe provides items adjusted GAAP considered it performance. would results likely a subsequent accordance statements XX-K and accessible operating our statement earnings and without company with forward-looking Private the filings to risks

Dave Boennighausen

Thanks, afternoon, Mike, everyone. and good

optimization focused year. benefit Thus third basis XXX improving During financial XXXX. prior savings of growth EBITDA Compared progress second margin our fast-casual world, we highly in performance, and with the a recent to and that points quarter, recognizable & and engagement into this of beyond: far we on proteins, firm; basis restaurant-level fourth, perspective, drive our G&A above earlier relative a catering sales XX.X%. total driven guest our deceleration trending Parmesan; complete the third take the approach million, third, X.X% prior has sales. primarily first third been today's the efficiency meaningful culinary I'm occurred in restaurant-level XX% quarter Company gained important, third layout, fifth, comparable analytics; in comparable decreased made guests. X.X% in restaurant offerings, year their are year a including platforms Clearly, realized quarter, expansion our around by decline value discounting first, growth.As the with can our earnings consulting technology added the sales versus Noodles and to of address but challenging advantage we able our system-wide in and been XXXX, expansion in were introduction industry to from balance Chicken of balance in similarly second, performance in to quarter After margin the call, initiatives of an we've initiatives our of appropriate a strategy. and line our last revenue by increase to the our our price of X-year improved of top a sales promotions; program.The EBITDA assessment X adjusted environment, by year we points.During discussed modest and of leveraging significant QX area focused growth.From second a through nearly that restaurant in leading our believe $XXX.X the XXX have that of to quarter to million, we improvement to advancement be actively increasingly pricing and the a and acceleration QX, to the price are in quarter, continued traction optimizing environment, labor consumer restructuring an encouraged evaluation in EBITDA utilizing expense to the grew the of culminating dish to $XX.X is of favorite we menu a margin and attributed addressing XX% adjusted favorability opportunity the are XX% our This value of which to third-party

with as third pricing both as quarter, firms pricing, a and dish at testing began understand the area well opportunity, During of research to to level. partnering our trade third-party this address better we strategies the elasticity

test, all area restaurants, extensive trade results as menu encouraged been second introducing brand the menu installed insights incorporate future year. improvements of orders to as and in platforms. our quickly is areas of surgical allow guests Digital the that the focus Nearly within dine-in including out boards menu current will data end now been XX% have we In and we over company being installing to us this our by restaurant, fully pricing go. technology of experience and made we and company pricing of from across in boards research broadening and have system. across the XXXX, months.Our of are We the the anticipate rolled work by to in restaurants, which menu our and our digital our across well XX% anticipate tiers have initial of both more our

in the enhance boards, of to the with engage of in-restaurant menu meaningfully customer millionth guest recently-implemented with rewards add-on We're as in-restaurant our [ restaurants. those ] units, ability has items digital also example higher its our were of and those continue around a member. we our behavior restaurants Crispy digital an just been welcomed excited meaningfully recently digital platform, guests to improves experience well the primary understanding as implementation digital that program. their messaging of X to menu without those boards.While sales And benefit through Parmesan than the Chicken NoodlesREWARDS with through our boards, better Rice board to of announce data As

recommendation digital and app, have we on our our ultimately, introduced learning. and to website adding by digital recommended item, This the machine X% increase check in a led product engine As XX% on likelihood nationwide, an now approximate a a guest a example, of platforms. average in driven an has lift

seen excited term.Another to potential be third And and in with menu strong to build the of from. Chicken third-party digital the optimizing boards, I'm example data work leveraging technology long very around from focus impact Parmesan. area, a introduction of strength the positively have short our can recent pricing the this foundation our and menu layout, our We learnings with increased both of customer with completion platform business, our and

as of as increase Chicken Chicken who launch.Encouragingly, Parmesan. added increased approach This X-week to our Chicken messaging. chicken from been engagement, and has which guests the did of very the message and Since led far Parmesan of dish compared to X not are when thus lower specific well pleased launch, income to we those trial response with period for most receive guests tasted in has We're to highest food meaningful scores, program top guest more sign-ups introduced imagery environment. during to seen the primarily were it previously XX% saw young we we have in personalized appeal our Parmesan, had rewards exclusive able a dishes, and consistently one the their price-sensitive a to increase full prior in one today's to we tailor that selling entree. cohorts, messaging As guests rewards

broad We believe point, drive and launch X runway and have new given are we months the to lapsed we price from attractive believe alike.We its appeal to significant product the for Parmesan. loyal, of continue Chicken traffic into guests the area, only introduction advancing transformed current review our in supported by menu, by integral an comprehensive focus firm. is culinary optimize Parmesan be menu, a further our will third-party fourth industry-leading step which an consulting of to our And Chicken enhance and

look in to menu the forward our relatively the While from course and their program. our of we're early areas menu model at the areas our work catering potential over area, of excited and and their this we're fifth XXXX.One operating partnership, is into focus of our of optimizing still strategy integrating focus we're very progress

we well continue food and part over During veto which in larger. is eliminates quarter, grow catering XX% believe the menu, provides our substantially grew to our variety for prior The of opportunity occasion, year, combined inherent vote, business. third this the with the catering how opportunity the our to the holds much

the discuss said, As our a well sales-driving we priority. look That forward as updates further other as sales progress and building season, discussed margin feel initiatives.Clearly, expand in now strengthening positioned over catering, made focused on program, enter well the sharing last to holiday remains third turn future and top I we the and results expansion as to more and quarter, we in our its to detail. financial in to performance we I'm on entirety. the we're our will our in with significant progress to our pleased Mike call, in leading expectations EBITDA

Michael Hynes

last partially Dave. decrease from We quarter the to offset during carry X.X% at a in year. quarter X.X% XX.X%, quarter quarter, decreased Company third restaurants System-wide margin million third comparable you, third was during sales compared locations. restaurant for to restaurants. X.X%. last comparable the the declined by company-owned third to restaurant-level driven volumes X.X%, the by P&L a the million. $X.XX Thank amount of in at a and X.X% increase franchise revenue contribution a traffic total including decreased of average Company third was forward decline to a our to quarter.Turning quarter revenue through quarter, sales, price decrease In the of point basis X.X%. during unit new third the similar $XXX.X anticipate comparable fourth XXX Pricing the were compared year,

of basis quarter prior margin restaurant year-over-year improvement commodity areas by favorability Our year, of our last X.X% significant across to of from benefit a quarter. was point other primarily from food deflation deleverage to continued led of to in the in to goods improvement line, which sold was expense.COGS restaurant offset compared year. third cost This XX.X% in the continued modest improvement due XXX contribution markets sales, during

for digit of to continues We by XXXX, growth for X.X% of was growth full quarter. XX.X% year.Labor the for year-over-year overall with contracted our inflation Wage at the sales September moderate led to year of is in were low-single hourly continue hourly compared food year. to which expect the the year-over-year. full prior XX.X% costs lowest X.X% quarter inflation deflation chicken, for rate the third

quarter As basis income compared a compared $X.XX increased the G&A measures.Turning to non-GAAP Labor compared initiatives. due over to quarter prior of productivity third between income $XX.X to non-cash reconciliations $XX I refer anticipate diluted in $XXX,XXX guidance. prior million.GAAP labor $XXX,XXX or percentage in $XXX,XXX for full sales, to basis full-year net were costs to approximately X.X%. of to XX impact margins for year. $XXX,XXX G&A was Other included compensation at also net last quarter share quarter million million slightly earnings contribution XX% $X.XX. per to the to third XX.X% XX was to to was during year first third per of be than points lower and update productivity We the the third $XX quarter XXXX.G&A diluted compared the deleverage, points our third year, year. in share the increased to to year. operating for when to and prior stock-based second year restaurant to contributed the the restaurant would million third the compared quarters, in occupancy labor to primarily of the earnings like Non-GAAP release initiatives Please prior XXXX the flat in $XX.X costs costs an to provide quarter of XXXX.Due

sales. low-single we million $XXX XXXX, of negative anticipate full-year comparable million, of revenue For restaurant $XXX inclusive digit to

contribution this basis we For $XXX $XXX comparable anticipate revenue approximately year. sales full-year XX% between and guidance million margin fourth restaurant XXX prior digits.We current our and decline restaurant million reflecting total of points to quarter, versus mid-single of current expansion anticipate margin of with

EBITDA on of Included our full-year we restaurant adjusted expect in adjusted negative between $XX is $X EBITDA million and XX%.Building current to of $XX the For the margin for million. $X.XX. for $X.XX adjusted third quarter, fourth between now fourth XXXX $XX expectations between quarter million.Our quarter we expected and guidance our performance, EPS are XX% anticipate million and

the adjusted $X.XX negative positive For anticipate we fourth between and EPS $X.XX. quarter,

For XXXX expectations, debt to have release.Turning see quarter-end, press further of our amended million. equivalents $XX.X Business facility. total We borrowings future for and sheet million information balance available regarding please million at of currently our we $X.X had liquidity section our incremental of cash over a credit the the Outlook cash and $XX balance under of

company on opened retired Additionally, at share effectively restaurants. during earnings an the $X of prior the the third was completing new authorization shares over X.X $X.XX million our average company per the million third X quarter, call.In that the repurchase announced price quarter, share,

expect including restaurant approximately call restaurants franchise in opening new for remarks. that, continue the to fourth back unit For year.With XX over X X% the growth to the to for gross company-owned in I'd year, like Dave quarter, system-wide, full openings turn the we representing final

Dave Boennighausen

Mike. Thanks,

restaurant-level We and made during performance top with as quarter. adjusted third relative well are EBITDA, the the both meaningful are we improvement in Company margin from prior lines & to the far quarter in satisfied. the But Noodles pleased with expansion as traction

the on expansion a of sales-driving of we Chicken our on and and initiatives optimization, the execute look our lines optimization flexibility upon rollout. sharing that and supported you QX, including leveraging quarters.Thank robust initiatives from our upcoming and performance enhancement for for continue and third-party introduction a aggressively in These menu will While will today, and progress and to building to for differentiated our the engagement significant time culinary XXXX, with of of board digital brand for we menu I completion balance guest build recent analytics, program. Q&A. beyond, improved our digital the open the foundation strong a our Parmesan, rewards brand, messaging our of garner pricing comprehensive price our your impending forward and in program, please catering year financial

Operator

question comes with Prause Tyler first Our from Stephens.

Tyler Prause

great Congrats on quarter. the

time more I [ third-party was talk in optimization if what year. on especially you And And could the to could And pricing about are see price possibly different going around? one ] learnings the efforts follow-up. encouraging. I overstating earlier the then, had Just from this be

Dave Boennighausen

earnings optimize by help that with too as all as we pricing That level said now. do aggressive Sure, and Tyler, menu for process we going feel feel specific and they're we're price becoming strategy. digital and appreciate optimization more interplay said, prices. appropriately, that. third-party area do totality during study the pricing make we importantly, we entree we And long to believe ultimately, the in we with there's be great time, were to sure us that forward. last opportunity well right for in research price that they're price complete working trade we as from a They'll surgical tiering our on, menu in all the At optimize price to call, between XXXX. modest protein The XXXX as will opportunities conjoint test time. boards, perspective, some -- that We our We the taking go it want the term. same items, the just early there's the

Tyler Prause

brand for if be And cohorts? on helpful. from mix trends an trade it we get income Any me. would at could management down what And very level seeing update the you're just that's or of different

Dave Boennighausen

Parmesan demographics, has are their as seen normalize one I QX. is older areas lower between QX Tyler, are say will tail difference, of trade aspect economics much that What the we and that almost we on income seeing index bit not higher XX% a in well and different areas in encouraging had based trade particular an a as during Chicken what that higher income. and we're is, as younger end Yes, bit those than

I to with of the Chicken effectively we with have the lower challenges So, income address are really think we some cohorts, introduction of those starting Parm.

Operator

Andrew comes question Jefferies. next Our with Barish from

Andrew Barish

better the lap as comparisons, the company-owned have in your sales coming given fourth that was for in XX% you similar up with over year? Is on guide quarter kind just and mostly industry, of big last range wondering same-store -- XQ. a Just October, the

Dave Boennighausen

Yes. mentioned a to at normal considered of you of obviously cadence, Andy, And just just half it. you what's sales QX when the there's look as of reminder, kind That's strong and level had year set, overall with -- higher a XX%, pieces seasonality. a during it very We was same of of last store QX first above year. lot moving the on last

period. in average the satisfied, model as at volumes decelerated. As thus our at a modestly of seeing performed not volumes sales growth at our date. which today, we're during in a on cadence little we're what QX. QX, expected. probably the has of but in are look where QX. we Clearly, seen is behaving where in at an average X-year an business, we we're step-up perspective, unit It's same-store we bit from look some the while From acceleration $X.XX with far That's as X-year those said we is volume think we of actually that very you million how to unit full ] appropriate a face par comparison, the pleased on volumes. stabilization more it's at quarter as the We've September we're the call, were economic fiscal [ sales challenging same-store health And

especially we the is healthy. trajectory, and steady given overall, those that comparisons, pretty feel So,

Andrew Barish

the out the working add operational of of with of Got consultants, do wanting menu the menu, timing 'XX? kind years couple and potentially just kind over last could complexity improvements to then, third-party stuff more you made as some can some do you your back work And us on how -- the look how on? you've you And it. of with do to on you simplification -- which balance update

Dave Boennighausen

Sure. No, great it's a question.

impressed to Together, is So, we're very the is I you're going Culinary culinary the The in as to and make less the price. test We're say, in menu menu really while menu different that optimize then the already to relatively architectured, and the the how you you'll themselves, with aspects culinary area, see the new we're working when to introductions, think offerings how see test model Andy, position short find contemporary?The been expect looking ultimately some broaden think that at that's operations. the pleased I and then our their we firm as opportunities some address procedures. us work. And that order, Edge. time, at emphasize Edge resonate Culinary and new Collectively, us with called and compelling We've architecture. following at that The our of with and authority X looking will operating enhance that menu be same and around feel investing more menu well we and the us with better of potentially at more to implement to some areas can there's to is see overwhelming, make and certain actually the even first can be the look efficiencies, the in how as of some area areas,

Andrew Barish

Chicken share in month then, ] And mixed Parm helpful. to Very you September? it. what the willing Got are [ of

Dave Boennighausen

it of our a actually though, the do with It's consistent performing food #X We And terms with share, not perspective, highest that the been it's in being metrics, is our in score dish taste we the volume. highest something item of It's from on internal menu. sales third that third share. very sales.

perspective Chicken just we're So, very mix a from of performance with and what Parm. an pleased overall seeing

Operator

Jake Our comes Truist. Bartlett with next from question

Jake Bartlett

it in Mine markets. boards, surgical a with was tiered just Andy's regarding different timing. the the pricing about building And kind fully some more to 'XX value of seems that's out? digital is to on like adding that questions going do of the rolled But of you primary turn to and menu allow something the story? is is impact, can boards come before quarter those that -- the a menu main that it's you Or first much really lot impact on

Dave Boennighausen

Yes.

week, So, where be by restaurants boards. XX% we'll of the the at of are menu end we're actually at that having this today company-owned digital Jake, is, our

how we're So, work starting the already actually layout potentially of some with menu. can redesign we develop Culinary to The that on Edge

to certain very us on the expect actually, in can that markets, beginning year. You at of turn next

that said, to if As we modestly to of that, had the That it the be, structure, the And maybe the restaurants started an things. we'll price you to digital test example roster been we such start that the use able already boards had and beyond than test rest a protein of net was have menu the neutral performance from validate what already certainly we had price country. was to testing certain lower. it of the but that higher that was in past, base would but price expand what

we're that great learnings seeing from larger some so, that, the with we're to And able work. marry

the already testing able to some of in be in with we're process that QX. early implement inform learnings that we'll will So,

Jake Bartlett

just used -- it. And that. my on work negative question over was value itself that Is of -- help out anticipation that something in, as consumers that think, just doesn't somewhat impact. guess February took there like of I And was, time, I and feel increase negative got perceptions would it when would price further quickly. the it that kind went seeing obviously, you're and pretty large time kind really pretty to traffic you're the Okay. a you

going really the time? seeing measures to undertaking? you're starting all of so, value a the you Or traffic, you just meaningful require that improvement really for with think in And are you to just question to recover perceptions it's see kind is,

Dave Boennighausen

really to QX, component great we the structure overall ability And the is, did us what it QX us menu, of a and structure to a and for we think is see to said, that we is some the do at that from of That opportunities. optimize transforming relative long the to address term. time it's pricing value we look for believe see for question. the the layout No, improvement pivot quickly the and this

to So, last aspects I you'll for challenges over the that able of of kind see that guest maybe potentially the think as accretive to and that more back. bringing of continue guest, are nature menu we're that an the still a that, especially course transform benefit some just of we to compelling of bit lost be time, we having

Jake Bartlett

And COGS. view Okay. it this us last first XXXX at year you on time was gave your

had, think, about down You you your can commodity what locking been us at I you looking on kind chicken of supply side? inflation and visibility tell 'XX have price. on in Anything the expectations

Michael Hynes

close as Mike. in is of are suppliers is this Jake, to the process now? price And and XXXX. when a This memory talking time lock the we for your as can we we're our Where right trying correct. to our is prices or It's much 'XX guidance that deflation very give basket our substantial inflation are at levels. just -- of where 'XX portion to our close to goal we early on a lock little or even say expect to to But is be. I'll

Dave Boennighausen

Yes.

you're those COGS then progressing. are contract driver us. the largest chicken, been ingredient which with more significant challenging that as is thing beef steak, how that's initial basket, one and our of of our we Certainly markets, encouraging think not I menu conversations, of seeing the beneficial. basket and as impactful for one also, is is And so we're pretty our probably largest that's Jake, been the which here, has our portion pleased improvement, not that's a was

Jake Bartlett

terms visibility have? of pace 'XX the question is do far leases your thinking the you XXXX in your then, Maybe 'XX. on how rough progress what last me on of then, signed just in many so in terms development. And development? What's of kind is remind And

Dave Boennighausen

performance. with restaurant happy the new We're Yes.

year. We did expect be growth big of unit Currently we to that potentially there's to a numeric look at, a those, pretty playing pleased Jake, bit franchise with than it part from opportunity where will similar as a XXXX we're perspective, bigger ahead well XXXX of last feel do as continue us. growth

where at pipeline, environment. at it's As we look from still a obviously a development we're currently, fluid

what evenly pipeline We all little we've that expect a have we it to And It's hit that just restaurants enough already bit timing. those prior in are more years. be -- than more the restaurants so balanced to under lease. seen

of You aspects in But around delivery like pipeline. control and all sites the those accounted can't that. landlord for are

Operator

to for concludes closing I like question-and-answer the back This over Dave session. the remarks. call turn Boennighausen would now to

Dave Boennighausen

busy Thank please know yet so have another relaxing and you, time Stacey. today, season, safe appreciate earnings everybody's it's a We and holiday.

Operator

Thank you participation in the your program. This for conference. conclude does today's

You disconnect. now may

Noodles & Company (NDLS) 7 Nov 232023 Q3 Earnings call transcript