For those of you who have been tracking the rise and fall of many quick-service brands, you have undoubtedly stumbled upon the losses that Noodles & Company has sustained over the last five years. In 2017, it announced the closure of 55 under-performing units due to year-over-year declining sales.
In addition to struggling sales, the brand experienced a security breach in 2016 that led to about $11 million in estimated liabilities. In 2016, they reported a net loss of $71.7 million. In 2017, they suffered a net loss of $37.5 million.
Many in the industry were wondering just how long they could sustain the losses. And then came Zoodles.
In May of 2018, Noodles & Company announced the nationwide launch of Zoodles—a dish that utilized fresh spiralized zucchini as the noodle. It comes in two forms:
- Zucchini Romesco: Zucchini spirals topped with a roasted red pepper sauce made with almonds, sundried tomatoes, and garden vegetables.
- Zucchini Thai Green Curry with Shrimp: Zucchini spirals topped with a sweet coconut green curry sauce with pineapple, broccoli, red onion, snap peas, lime, black sesame seeds and cilantro.
It was said to offer an alternative entrée for those looking for low-carb, low-calorie, gluten-free options.
Much to the surprise of those that have been placing wagers on Noodles & Company’s continued participation in the quick-service industry, Zoodles drove the company to a 5.5 percent increase in same-store sales for the second quarter which ended July 3rd. This is the company’s best quarter in six years. Amazing.
Not only did it increase same-store sales, the dish is also being held responsible for increasing foot traffic by over 3 percent—quite a feat when you consider that most restaurants are holding steady in this area.
Total revenue for the second quarter came in at over $117 million, a $5 million increase when compared to the same quarter one year ago.
If nothing else, this information should give those businesses who have been struggling an elbow nudge. If a company can turn around sales with the help of the lowly zucchini, what can you incorporate into your menu that just might increase sales and customer loyalty?
Keep in mind that there were other players in this business’s increased revenue including off-premise sales which accounted for over 50 percent of sales. These include a digital rewards program and in-house shelving units set-up for quick pick-ups.
Health Conscious Guests
One definite takeaway is that it may be time to look at creating a dish for your health-conscious clientele. Think low-fat, low-carb, and gluten-free. And then market it to the mass consumers that are currently backing the Keto diet.
Delivery and Takeout Bonanza
The other takeaway is that it’s time to create a solid take-out and/or delivery system. Some restaurants are creating this segment with the help of third-party vendors such as GrubHub and Caviar while others are doing it themselves. Either way, many operators are finding that “there’s gold in them thar delivery hills.”
Piper Jaffray estimates that $200 billion or one quarter of all restaurant industry sales will shift to digital ordering and delivery over the next five years.
One thing we can be sure of in the restaurant industry is change. It’s nice to hear about a business that attempted something unusual and different in order to increase sales and customer appreciation—and succeeded.
Take a look at your menu and delivery system and see if you’re inspired to create a new dish or protocol. You may just be the next big headline in the industry’s “success story.”