Noodles & Co. specializes in noodles and pasta of every stripe, which travels well, the company says
Noodles & Co.
Though restaurant companies have struggled due to the coronavirus pandemic, Noodles & Co.
NDLS,
says COVID-19 has opened doors by accelerating pre-pandemic trends.
“We’re excited for where the brand is,” Dave Boennighausen, chief executive officer of Noodles & Co., told MarketWatch. “We’ll look back two years from now and say 2020 was challenging and terrifying, but gave us an opportunity for growth.”
Noodles & Co., which has more than 450 restaurants spread across the upper Midwest, Colorado, Washington, D.C. and other locations, specializes in noodles and pasta of every stripe, from macaroni and cheese to penne pasta with chicken to spicy Korean beef noodles.
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For those who are looking for vegan or plant-based options, the company also serves Zoodles and Caulifloodles (noodles made out of zucchini and cauliflower) and is testing a cauliflower gnocchi.
“Most cultures throughout the globe grow up with noodles and pasta as a core staple in their diet,” Boennighausen said. “In the long term, people will want a balance of comfort and familiar [as well as] new foods.”
Restaurant dining has dropped dramatically during the coronavirus pandemic as capacity limits keep dining rooms largely empty and consumer preference leans toward cooking at home, or digital ordering, takeaway and delivery.
Boennighausen said 60% of Noodles & Co.’s business before the pandemic was off-premise, and the company’s food travels well.
Moreover, he says the company’s customers are younger.
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“The younger demographic skews more towards digital and more
towards convenience,” he said.
The shift to digital, which has been a prevalent trend in other areas of retail as well, has been happening across food categories.
“Most of the large trends that you’re seeing off-premise
will continue in a post-COVID world,” Boennighausen said. “Delivery might
decline in terms of percentage. But a lot of consumers who had not used
delivery are now using delivery.”
Last week, Noodles & Co. reported a net loss of $127,000, or roughly zero per share, after net income of $4.2 million, or 9 cents per share, last year. Adjusted earnings of a penny per share beat the FactSet consensus for zero EPS.
Revenue of $106.0 million was down from $118.3 million and missed the FactSet consensus for $107.0 million. And systemwide same-restaurant sales fell 3.8%, though the company notes that each month from July through September experienced same-store sales increases. In September, systemwide same-store sales rose 0.4%. Same-store sales for October were about flat.
Meanwhile, the coronavirus pandemic shows no signs of slowing, with the U.S. counting a record 107,000 cases on Wednesday.
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“Spiking COVID cases in the upper Midwest have slowed Noodles
& Co.’s same-store sales momentum…, but we continue to view Noodles &
Co. as relatively well positioned during the COVID crisis,” wrote Truist
Securities in a note.
Truist rates Noodles & Co. shares buy with a $10 price
target.
Noodles & Co. stock has rallied 22.6% for the year to date. The S&P 500 index
SPX,
is up 8.7% for 2020 so far.