Beloved Pasta Chain Is Likely Shuttering 20 Restaurants
As the list of restaurant closures continues to grow this year, one fast-casual eatery may soon be on it. Noodles & Company, a Colorado-based chain that specializes in pasta and noodle dishes, shared during it second-quarter earnings call that it has pinpointed 20 underperforming restaurants that may close on or before their lease terms expire.
During the call, Mike Hynes, the company's chief financial officer shared that these 20 restaurants have combined losses of about $2 million. With the help of a national broker, Noodles & Company has begun conversations with the restaurants' landlords, but the timing of the closures is unknown. The company will decide this on a case-by-case basis.
This year, Noodles & Company expects to close 10 to 15 restaurants, which include some of the 20 underperforming locations. The chain currently has 475 locations across 31 states, according to its website.
"We believe closing underperforming restaurants will allow us to focus more on our restaurants with the most growth potential and provide an increase in company earnings and cash flow post closure," CEO Drew Madsen said during the earnings call.
During its second quarter, which ended on July 2, Noodles & Company re-franchised six locations in the Portland, Ore., area, opened five new units, and closed one. Meanwhile, same-store sales increased by 2%, while traffic at company-owned restaurants dropped by 1.1%. The chain has opened a total of eight company-owned locations this year.
In addition to evaluating its store portfolio, Noodles & Company has been changing its menu. Madsen said the first two test phases of this menu overhaul are "largely complete," with the chain now entering its third phase. This involves offering new and improved menu items in test locations "to assess real-world guest satisfaction, operational feasibility, and any related financial implications."
Madsen noted that Noodles & Company aims to add or upgrade about two-thirds of its menu over the next year. Most recently, the chain launched Lemon Garlic Shrimp Scampi and Chipotle Chicken Cavatappi, which are both selling well, according to Madsen. Noodles & Company also rolled out an improved dish: the Crispy Chicken Bacon Alfredo. This is selling almost 50% more and has higher guest satisfaction than the Alfredo MontAmore, the dish it's replacing.
The chain plans to offer these three menu items nationwide in October. It also started testing five additional dishes and removed one menu item last week. If the new offerings continue to be successful, the chain will launch these during the first quarter of 2025, according to Madsen.
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Not every new dish has lived up to expectations though. Madsen said the limited-time Baked Alfredo with Grilled Chicken "did not perform as well as Steak Stroganoff, despite having stronger concept test scores and similar media support." He attributed this to the item being too similar to previous limited-time offerings.
Going forward, the chain will offer its Spicy Korean Steak Noodles this month. However, it will longer sell Zucchini with Roasted Garlic Cream Sauce, Linguine Rosa, and Linguine Fresca.
A few other areas the company is focusing on include reactivating lapsed loyalty members and increasing catering opportunities.
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