Noodles & pany(US:NDLS)2023-08-10 00:48Financial Data and Key Metrics Changes - Noodles & Company's revenue decreased by 4.5% year-over-year to $125.2 million, and adjusted EBITDA fell by 17% to $9.3 million [6][22] - System-wide comparable restaurant sales decreased by 5.5%, with a decline of 5.9% at company-owned restaurants and 3.4% at franchise locations [22] - The company reported a GAAP net loss of $1.3 million, or a loss of $0.03 per diluted share, compared to net income of $1.3 million last year [27] Business Line Data and Key Metrics Changes - Comparable sales at company restaurants declined by 5.9% in Q2, while dine-in sales, which represented 22% of sales, saw a 14.2% increase in comparable sales growth [8][22] - Average unit volumes in July were $1.35 million, a 14% increase over pre-COVID levels [7][23] - Catering represented 1.4% of sales during Q2, showing a 40% growth from the same period in 2022 [16] Market Data and Key Metrics Changes - Traffic declines improved from a negative 14% in April to a decline of 5.8% in July [7] - Pricing during Q2 was 6.1%, with a significant reduction in the latter half of the quarter to approximately 3% [24] - The company anticipates total revenue for Q3 to be between $125 million and $130 million, with comparable restaurant sales expected to decline in the mid-single digits [24] Company Strategy and Development Direction - The company is focusing on five initiatives: price optimization, technology advancements, introduction of Chicken Parmesan, culinary assessment, and catering program expansion [9][15] - A corporate restructuring is expected to yield nearly $2 million in G&A savings annually, allowing for continued investment in technology and digital enhancements [20] - The company aims to achieve positive free cash flow in 2024 through revised unit growth and completion of technology investments [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that aggressive pricing led to a decline in traffic, particularly among lower-income consumers, and emphasized the need to improve value perception [6][35] - The company is optimistic about its long-term positioning, citing strengths in off-premise sales and suburban locations as tailwinds [8][21] - Management expressed confidence in the potential for recovery and growth, particularly with the upcoming launch of Chicken Parmesan and improvements in technology [14][32] Other Important Information - The company has revised its capital expenditures guidance for 2023 to $45 million to $50 million, down from $53 million to $58 million [19] - The Board of Directors has authorized a share repurchase program of up to $5 million to enhance long-term shareholder value [20] Q&A Session Summary Question: What caused the sharp deceleration in traffic? - Management attributed the decline primarily to aggressive pricing strategies, noting that they need to win back price-sensitive guests [35] Question: How much of the pricing increase was on the in-store menu? - The 13% year-over-year increase was across all channels, including in-store, with specific price increases implemented in previous quarters [38] Question: What measures are being taken to decrease G&A? - Management conducted a review of G&A structure to ensure resources are aligned with growth objectives, resulting in a streamlined approach [40] Question: What is the consumer feedback regarding the culinary assessment? - Initial research indicates opportunities for optimization, including the introduction of Chicken Parmesan, which has shown strong potential [61] Question: When is Chicken Parmesan expected to launch? - The launch is targeted for early fall, with a price point around $10.95 [63]