Noodles & Company (NASDAQ:NDLS) Q3 2023 Earnings Call Transcript

Andrew Barish: Got it. And then, can you just update us kind of timing on some of the menu work as you look out to ‘24? And how do you – working with your third-party consultants, how do you balance kind of the simplification and operational improvements you have made over the last couple of years with – wanting to do more stuff on the menu, which potentially could add some complexity back on?

Dave Boennighausen: Sure. No, it’s a great question. So, the firm we are working with is called The Culinary Edge. We have been very impressed and pleased with their work. Together, we are looking at three different areas, Andy, how the menu is architectured, the offerings themselves, and then how to enhance the culinary operations. And I think that’s when you will really see us look at the operating model and say, how can we potentially actually find some efficiencies, while at the same time, investing in some areas to make our menu even more compelling and resonate better and be more contemporary. The first area that you are going to see us address is around the menu architecture. Collectively, we feel with The Culinary Edge that there is opportunities to make the menu less overwhelming, to emphasize our position as the new authority and to optimize price.

We are already in test with certain aspects of that area, and I think you can expect to see us broaden the test and implement that in relatively short order, and then following that will be some of the new menu introductions, as well as ultimately looking at some of the culinary procedures.

Andrew Barish: Got it. Very helpful. And then, are you willing to share what Chicken Parm mixed in the month of September?

Dave Boennighausen: It’s not something that we share. We do share, though, that it is the third highest item in sales. It’s been very consistent with being the third highest in terms of sales volume. And from a taste of food score perspective, with our internal metrics, it’s actually the number one performing dish on our menu. So, very pleased with what we are seeing from a mix perspective and just an overall performance of Chicken Parm.

Andrew Barish: Thank you very much.

Operator: We will go to our next question. Our next question comes from Jake Bartlett with Truist. Jake, please go ahead with your question.

Jake Bartlett: Great. Thanks for taking the questions. Mine was building on Andy’s questions just about the timing. And regarding the menu boards, it seems like that’s going to allow you to do a lot with adding some surgical value and kind of the tiered pricing in different markets. But is that something that you can turn on before it’s fully rolled out, or is the main impact, the primary impact of those digital menu boards to come, is that really much more of a first quarter ‘24 story?

Dave Boennighausen: Yes. So, where we are at today actually is, by the end of this week, Jake, we will be at 85% of our restaurants that are company-owned having the digital menu boards. So, we are actually already starting to develop some of the work with The Culinary Edge on how we can potentially redesign that layout menu. You can expect us to turn that on in certain markets, actually, at the very beginning of next year. And as we test and validate the performance from that, we will certainly expand beyond that to the rest of the country. That said, we have already been able to use the roster of restaurants that had already had digital menu boards to start testing certain things. And an example of that would be, we started to test what if you had a net neutral price structure, but it was such that the base price was maybe modestly higher than what it was in the past, but the protein price lower.

And so, we are seeing some great learnings from that, that we are able to marry with the larger work. So, we are already in process with some of the testing that will inform learnings that we will be able to implement early in Q1.