Financial Data and Key Metrics Changes - For Q2 2019, the company reported net income of $400,000, or $0.01 per diluted share, compared to a net loss of $5.9 million, or $0.14 per diluted share in Q2 2018 [21] - Revenue for the quarter was $120.2 million, a 2.4% increase year-over-year, driven by strong comparable sales growth [21][22] - Adjusted EBITDA increased by 20.5% to $10.9 million, while adjusted earnings per diluted share rose to $0.05 from $0.01 in the previous year [26] Business Line Data and Key Metrics Changes - Company-wide comparable sales grew by 4.8%, with a two-year growth of 9.8%, marking the best performance in six years [8][10] - Off-premise sales represented over 56% of total sales, with digital ordering growing by 47% year-over-year [13] - Restaurant-level margin improved by 160 basis points to 17.1%, the highest since Q2 2015, driven by higher average unit volume and lower marketing spend [23] Market Data and Key Metrics Changes - System-wide comparable sales increased by 4.6%, with a 4.8% increase at company-owned restaurants and a 3.7% increase at franchise locations [21] - Delivery sales grew to 6.6% of total sales during Q2, indicating a growing trend in off-premise dining [15] - The company anticipates a continued focus on digital sales and delivery, with plans to test third-party delivery directly from its website and app [15] Company Strategy and Development Direction - The company aims for disciplined unit growth, targeting 5% unit growth system-wide beginning in 2021, with potential acceleration to 7% in subsequent years [16] - The introduction of new menu items, such as cauliflower-infused rigatoni, is part of the strategy to meet consumer demand for healthier options [12] - The company is also focusing on enhancing its digital platform and rewards program to improve customer engagement and streamline the ordering process [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to sustain growth, citing strong performance in Q2 and the potential for new product launches [28] - The management team highlighted the importance of culinary innovation and operational efficiency in driving future success [10][11] - There is optimism regarding the company's ability to expand its unit count and improve the economic model for franchising [18][19] Other Important Information - The company plans to open six new restaurants in the latter half of 2019, including five company-owned and one franchise location [16] - Long-term debt decreased to $46.1 million, reflecting strong operating results, and cash on hand was $3.3 million [27] - The anticipated effective tax rate for the full year is between 1% and 4% [27] Q&A Session Summary Question: Why wasn't guidance raised despite stronger-than-expected results? - Management indicated that the previous guidance reflected confidence in the balance of the year and that the second quarter performed as expected [32] Question: How did the composition of comparable sales change with the launch of Zoodles? - Management noted that the check size remained strong, and the new menu board contributed positively to sales [35] Question: What is the expected growth strategy regarding company-led versus franchise-led units? - Initially, growth is expected to be more company-driven as the new kitchen design is tested, with franchising becoming a more significant part of the strategy over time [37][38] Question: What testing has been done around the cauliflower rigatoni? - Initial tests showed strong acceptance and repurchase intent, with a pricing strategy that is competitive but not as premium as Zoodles [42] Question: What are the plans for marketing and pricing strategies moving forward? - Marketing expenses are expected to remain around 1% of sales, with a focus on targeted promotions related to the new rewards program [47][48] Question: What insights have been gained from customer research regarding the rewards program? - Customization and relevance of offers were highlighted as key areas for improvement, with plans to enhance targeting and engagement [51][52]
Noodles & pany(NDLS) - 2019 Q2 - Earnings Call Transcript