Why investors should understand comparable restaurant sales
Must-know: An overview of Noodles and Company (Part 3 of 11)
Comparable restaurant sales
Noodles & Company’s (or NDLS) efforts and initiatives are resonating with customers. This led to a positive top line and bottom line in the second quarter.
Comparable restaurant sales
Comparable restaurant sales decreased 0.6% for company-owned restaurants, 1.2% for franchise restaurants, and 0.7% system-wide. Comparable restaurant sales increased 0.3% for company-owned restaurants and 0.2% system-wide. The sales were adjusted for the Easter holiday shift. Quarter-to-date (or QTD)—through August 12 th— company-owned comparable restaurant sales increased 1.3%.
The restaurant contribution margin decreased to 20.4% in 2Q14—compared to 22.4% in 2Q13. The decrease was mainly due to a loss of leverage from the decline in modest comparable restaurant sales.
Other factors
Seasonal factors cause revenue to fluctuate from quarter to quarter. In the first and fourth quarters, revenue per restaurant is usually lower. This is mainly due to reduced winter and holiday traffic. It’s usually higher in the second and third quarters. These seasonal factors could cause quarterly and annual operating results and comparable restaurant sales to fluctuate significantly.
This also affects its peers like Panera Bread Company (PNRA), Chipotle Mexican Grill (CMG), Popeye’s Louisiana Kitchen (PLKI), and Papa John’s International Inc. (PZZA). As a result, it impacts overall industry metrics—like the PowerShares Dynamic Leisure and Entertainment (PEJ) and the PowerShares Dynamic Food & Beverage (or PBJ).
After the negative impact on first quarter revenue, NDLS experienced some normalization at the beginning of the second quarter. It was followed by softness in May, before it gained momentum in June.
Browse this series on Market Realist:
