Noodles & Company (NDLS) Announces New Franchise Agreements
Noodles & Company NDLS continues to boost its presence in the southern United States. The company recently secured two multi-unit franchise contracts to open 24 new franchise restaurants. These include four restaurants in Northwest Arkansas and 20 Noodles & Company locations in Dallas, TX.
With a strong presence across 30 states, NDLS has long aimed to expand into these markets. The expansion marks a significant stride for its franchise business. NDLS believes that its newly onboarded partners and management teams will effectively lead the brand's growth in these markets.
Focus on Expansion
The company's primary growth strategy focuses on expanding by establishing new restaurants. NDLS continues its expansion through recent franchise agreements, focusing on growth in southern and southeastern markets, particularly in Alabama, Florida, Georgia, Texas, and Oklahoma.
During second-quarter 2023, NDLS opened six company-owned restaurants. As of Jul 4, 2023, the company has 465 restaurants system-wide, comprising 373 company-owned restaurants and 92 franchise restaurants.
For 2023, the company expects approximately 20 new restaurant openings system-wide, including one to two franchise openings in the fourth quarter.
Price Performance
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In the past three months, shares of NDLS have declined 22.6% compared with the industry’s 5.2% fall. The decline in comparable restaurant sales due to a lower guest count has been hurting the company’s performance. Lower pricing and a rise in labor costs are added concerns. The company anticipates these headwinds to persist for some time. For third-quarter 2023, the company expects comparable restaurant sales to decline mid-single-digits. Earnings estimates for fiscal 2023 have declined 93.8% in the past 30 days.
Zacks Rank & Key Picks
Noodles & Company carries a Zacks Rank #5 (Strong Sell).
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