Digital sales climbed 135% accounting for 74% of Noodles & Co. sales during Q2.
“Digital sales have continued to grow rapidly relative to the prior year thus far in the third quarter even as on-premise dining resumes in many restaurants, with 148% growth during the fiscal period ending July 28,” said CEO Dave Boennighausen in an earnings call with analysts.
Comparable restaurant sales decreased 30.9% system-wide, comprised of a 30.1% decrease at company-owned restaurants and a 35.4% decrease at franchise restaurants. A full earnings report is available here.
On-premise dining continues to re-open, and as of August 5, 92% of company locations and 100% of franchise locations offering either in-dining room or patio seating.
At the end of Q2 there were 456 Noodles & Co. locations, including 380 company-owned restaurants and 76 franchise restaurants.
Noodles has joined Chipotle in adding drive-thru pickup lanes for digital orders. Newer locations with drive-thrus are stars of the class, outperforming locations without drive-thrus by double digits. Many reached sales volumes 14% above company averages and combined for restaurant level margin of 19.4%, and the average transaction was only one minute, said Boennighausen.
The company plans to open three new locations later this year and will launch “a more rapid acceleration” of new stores in 2021, more than 70% of new locations will include the order-ahead, drive-through pickup windows, said Boennighausen.
Smaller Packages in the Forecast
The order-ahead, drive-through pickup windows are also being retrofitted into select, existing locations.
Expect more digital pickup windows and smaller on-premise dining rooms. Also Boennighausen pointed to the possibility of having “purely off-premise” locations. “We feel that there is a spectrum of real estate opportunities,” said Boennighausen.
The average store size is about 2,600 square feet, but new construction these days is measuring about 2,000 square feet “…Next year, you will see a much smaller square footage that’s much more off-premise oriented, incorporating those drive-through windows, etc,” he said.
“…We do anticipate that there is going to be meaningful disruption in the real estate environment for restaurants in the coming years. And we’re excited about the opportunity for us to take advantage of that disruption with a more efficient off-premise-oriented footprint.