Noodles & Company introduced a new menu, but the perceived value among consumers subsequently altered
Noodles & Company Faces Traffic Slowdown Despite Successful Menu Overhaul
Noodles & Company, the popular American fast-casual restaurant chain, has reported a traffic decline of 2.5% in the second quarter of this year, marking a contrast to the 1.8% growth seen in the first quarter. The decline is attributed to the challenges of converting initial interest into sustained customer visits, despite a comprehensive menu overhaul that began in late 2023.
The menu transformation, which involved two-thirds of items being new or improved, included premium ingredients and reimagined fan favorites. The launch was supported by a marketing campaign with the tagline "We know noodles." One of the new dishes, the Delicious Duos promotion, was introduced at the end of June and helped to turn traffic positive at the end of July and into August.
The menu overhaul followed 18 months of testing and development, and initial results showed promising test market results with increased guest satisfaction and popular dishes like Buffalo Chicken Ranch Mac & Cheese and Cajun Shrimp Fettuccine. However, the broader market did not sustain the initial uplift in traffic.
Industry precedents suggest that large menu overhauls can drive short-term guest interest but may struggle to maintain long-term traffic without accompanying improvements in service experience, marketing, or overall brand positioning. Noodles & Company supported its overhaul with a Goodness Guarantee policy, indicating the company expected some variability in customer reception.
The company's revenues decreased 0.7% to $126.4 million in the second quarter, and the net loss widened to $17.6 million, compared with a loss of $13.6 million a year ago. Outgoing CEO Drew Madsen blamed an "unexpected decline in guest value perception" following the new menu launch.
In an effort to turn things around, Noodles & Company is planning to close up to 49 underperforming company restaurants by the end of 2026. The company is also introducing a new limited-time offer, Chili Garlic Ramen, priced at an even lower $8.95.
Joe Christina, the former COO of Noodles & Company, is taking over as CEO at the end of this month. Christina, who previously served as CEO of Tijuana Flats and led the chain through a bankruptcy and sale in 2024, has expressed his focus on enhancing the guest experience, strengthening operational execution, driving increased traffic, and expanding unit-level margins.
So far this year, nine of the underperforming restaurants have already been closed. The company is also focusing on mac and cheese, with several different flavors being introduced as part of the menu overhaul. The mac-and-cheese dishes, including the new Garlic Bacon Crunch and Buffalo Chicken Ranch mac and cheese, scored above average on both taste and value.
The Basil Pesto Cavatappi dish, which was upgraded as part of the menu overhaul, initially saw a drop in guest satisfaction due to its higher price point but became one of the highest-rated dishes over time. Noodles & Company is actively engaging with customers on social media platforms like Facebook, Twitter, and LinkedIn to gather feedback and improve its offerings.
In light of Noodles & Company's traffic slowdown, the restaurant industry is now evaluating the long-term impact of extensive menu overhauls on customer visits. To counteract this, the company is focusing on improving service, marketing, and overall brand positioning, aiming to enhance the guest experience and Drive traffic to the food-and-drink business. Furthermore, the finance aspect comes into play as Noodles & Company is planning to close underperforming restaurants and introduce more affordable limited-time offers, like the Chili Garlic Ramen, to support their business lifestyle and revenue goals.
