Noodles & Company interim CEO Drew Madsen was made permanent in the role Thursday, and he announced plans for a complete menu overhaul designed to reflect a “new culinary identity of contemporary comfort kitchen" at the struggling fast casual.
Madsen, a board member since 2017 who was previously president of Panera Bread, was named interim CEO in November, after the departure of Dave Boennighausen. After four months of “looking under the hood” at Noodles, Madsen said he saw opportunity to reignite the brand with a return to roots with the menu, and he pledged to stay for three years to complete the work.
The quick jump to action comes as the company reported a 9% decline in traffic at company-owned stores during the Jan. 2-ended fourth quarter. Same-store sales declined 4.2% systemwide, including a drop of 4.3% for company-owned units and a decline of 3.6% at franchised locations.
Madsen outlined a strategic plan with five priorities designed to turn things around for the fast-casual chain. Key among them is a comprehensive look at the menu.
“While Noodles has consistently introduced new limited-time offerings in recent years, it has been a long time since we updated our core menu,” Madsen said in the call with analysts discussing results. “As a result, our menu looks dated compared to newer fast-casual competitors. While we still offer familiar and comforting dishes that many of our existing guests love, we are not currently a compelling alternative for lapsed or new guests.”
The company has hired the San Francisco-based consulting group The Culinary Edge to rework offerings.
Madsen said the company planned to touch more than half the menu, whether with new offerings, improving existing recipes, or rethinking the menu layout and names of dishes.
A goal will be to return to the brand’s roots as “the ultimate curators of contemporary comfort,” he said.
“We need to do more than offer Italian dishes living beside Asian dishes. We need to offer dishes that are creatively fused. Dishes with classic profiles, bold flavors and signature twists that make them our own,” he said.
Comfort means “creamy, cheesy, craveable and satisfying,” he added, but it also means “food that is wholesome, homemade, nostalgic and nourishing.”
But Madsen said the brand plans to stay in its lane as a pasta concept. There will be salads and soups, but it will be primarily a pasta-based menu.
“We’re not trying to change our identity, just update it,” he said.
The rebranding effort will also look at things like order accuracy and pricing. Madsen said the company will look closely at dinner offerings, because the chain has seen more traffic loss at dinner than at lunch.
The plan is to test aspects of the menu changes—in fact some will go in test later this month—and then bring the changes together in a market test with at least 25 restaurants during the summer, with the hope of rolling out the new menu later this year or in early 2025.
Madsen also wants to leverage the flexibility offered by digital menu boards rolled out to company locations last year. A big focus will also be the loyalty program, which has about 5 million members who account for about 25% of total transactions and more than 90% of app orders.
Catering is also a long-term opportunity, Madsen said, and the company has hired a former director of catering from Panera Bread.
The company reported a net loss of $6.1 million for the quarter on revenues that slid 8.9% to $124.3 million.
For the year, revenues were down 1.2% to $503.4 million. Comp sales decreased 1.9% systemwide, including a 2% decline for company owned units and a 1.1% decrease at franchised units.
The company’s net loss was $9.9 million for the year, compared with a loss of $3.3 million a year ago.
The company ended the year with 470 restaurants, including 380 that were company owned and 90 franchised units. Madsen said Noodles will slow growth in 2024, opening a projected 10 to 12 company units, down from 18 company openings in 2023, and up to three franchised locations. The new strategic plan includes refranchising, he noted.
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