January 1, Casual Fast Dining Restaurant Faces Potential Restaurant Closures Amid Financial Struggles

As the nation sees a rising number of restaurant closures this year, Noodles & Company, a fast-casual Colorado-based chain known for their pasta and noodle dishes, could be next on the chopping block. The concerning news was revealed during its second-quarter earnings call when the company disclosed that 20 of its restaurants, currently bleeding about $2 million, are being evaluated for possible closure on, or before their leases run out.

Mike Hynes, the company’s Chief Financial Officer, said these underperforming outlets have begun discussions with landlords via a national broker. The exact timeline is unclear, as the company will decide individually based on each outlet’s performance.

This year, the chain foresees the closure of 10 to 15 restaurants, including some from the aforementioned 20. The chain currently operates 475 locations across 31 states, according to their official website.

CEO Drew Madsen explains that shutting down weaker links will allow the company to concentrate on restaurants with higher growth potential. This, he states, will boost both the company’s earnings and cash flow post-closure.

In the last quarter, ending July 2, Noodles & Company successfully re-franchised six locations in the Portland, Ore., area, opened five new establishments, and closed one. In a silver-lining moment, same-store sales increased by 2%. However, traffic to company-owned restaurants slipped by 1.1%. In total, eight new company-owned locations have been launched this year.

In addition to evaluating store performance, the chain has been revamping its menu. The first two phases of a menu overhaul are largely done, with the third phase now underway. It includes testing new and improved menu items in select locations. The goal is to understand customer satisfaction, operational feasibility, and the implications on finances.

The ambitious chain plans on renewing or upgrading two-thirds of its menu within the next year. Recently, they introduced two dishes – Lemon Garlic Shrimp Scampi and Chipotle Chicken Cavatappi, both of which have been received well. There’s also a new and improved dish on offer – the Crispy Chicken Bacon Alfredo, which is outperforming the dish it replaced, the Alfredo MontAmore, by almost 50%.

The company plans to roll out these three items nationwide in October and is currently testing five additional dishes. If the feedback is positive, the chain aims to launch these new items in the first quarter of 2025.

However, not all menu experiments have been successful. The limited-time offer, Baked Alfredo with Grilled Chicken, did not fare as well as Steak Stroganoff, despite strong test scores and similar media promotions. Madsen attributes this to the dish’s similarity to previous limited-time offerings.

Looking ahead, the Spicy Korean Steak Noodles will debut this month, but other dishes like Zucchini with Roasted Garlic Cream Sauce, Linguine Rosa, and Linguine Fresca will be discontinued.

The company is also focusing efforts on reengaging lapsed loyalty members and exploring new catering opportunities, in a bid to turn the tide in its favor.

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