It’s hard to rework a menu when consumers’ perception of value keeps changing.
That’s what Noodles & Company learned during the second quarter. The fast-casual chain had expected to see a boost from a menu overhaul launched in March. And, indeed, things were looking pretty good in the first quarter, with traffic up 1.8%.
But by the second quarter, the picture had changed.
Same-store sales for the second quarter were up 1.5% systemwide for the 453-unit chain, but that was largely a result of menu pricing. Traffic was down 2.5%.
Outgoing CEO Drew Madsen blamed an “unexpected decline in guest value perception” following the new menu launch.
Noodles had tested the new menu items in three markets last year, and guests seemed to love them. The company saw no negative reaction to the prices at the time—some of which were higher, reflecting an upgrade in ingredients.
“This drove our belief that the upgraded menu, combined with a significant increase in marketing to build awareness of the new menu and stimulate trial, would help drive traffic growth,” Madsen said.
But by the second quarter this year, the consumer environment had shifted, Madsen said.
Consumers were looking for more even more value and affordability. And the competitive environment was tougher, with the broader industry trying to get their attention with discounting and promotions.
Noodles quickly pivoted to promote a more value-positioned offering: The Delicious Duos, “perfectly portioned” options allowing guests to choose a smaller portion of the noodles of their choice with protein, and a side, for $9.95.
That promotion, launched at the end of June, seems to be having an impact. Madsen said traffic turned positive at the end of July and into August.
Coming soon: The next limited-time offer will be a Chili Garlic Ramen dish, priced at an even lower $8.95.
Noodles’ menu overhaul began in late 2023, when Madsen was named CEO. He brought in menu specialists The Culinary Edge to help reimagine the menu at a time when Noodles’ guests experience metrics were “competitively weak,” Madsen said.
The goal was to reclaim the fast-casual chain’s pasta expertise.
Madsen promised that two-thirds of the menu would be touched, and the new menu was supported by a marketing campaign with the tagline “We know noodles.”
There were new dishes, like Lemon Garlic Shrimp Scampi, Chipotle Chicken Cavatappi and Crispy Chicken Bacon Alfredo. Noodles also leaned into mac and cheese, with several different flavors.
The mac-and-cheese dishes were a hit, even in the second quarter, Madsen said, scoring above average on both taste and value, especially the new Garlic Bacon Crunch, and the new Buffalo Chicken Ranch mac and cheese dishes.
But then there was the challenge of pricing.
The menu work included an upgrade of some existing dishes, like the Basil Pesto Cavatappi. Noodles added more sauce, which previously had been a top guest complaint.
But the chain also raised the price on that dish to offset the more premium ingredients used, Madsen said.
At first, guest satisfaction dropped initially before increasing, which Madsen described as a J-curve. Then, as more guests tried the dish, it became one of the highest-rated, despite the higher price point.
But when it rolled out nationally, that J-curve became more extended, he said, blaming the discounting environment industrywide.
Madson said the operational challenges of rolling out a new menu could also be to blame, and Noodles is still making adjustments. The chain cut the Green Goddess salad, for example, because the recipe was too complex.
And now some recipes are being tweaked with lower-cost ingredients, which he said would still be an upgrade, compared to the previous menu. So far, there has been no perceived impact on taste or guest satisfaction, he said.
Madsen, who at the end of this month is turning the company’s helm to the chain’s former COO Joe Christina, remains optimistic that Noodles can drive traffic back to its restaurants.
The company plans to close up to 49 underperforming company restaurants by the end of 2026, which will pull out those with negative cash flow. So far this year, nine of those restaurants have already been closed.
In the second quarter, revenues decreased 0.7% to $126.4 million. The company widened its net loss to $17.6 million, compared with a loss of $13.6 million a year ago.
Christina steps in at a pivotal time for Noodles. He previously served as CEO of Tijuana Flats, which he led through a bankruptcy and sale in 2024.
Following the second-quarter report, Christina thanked Madsen and the board for the opportunity.
“I am focused on enhancing the guest experience, strengthening operational execution, driving increased traffic and expanding unit-level margins,” Christina said.
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