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Why Noodles And Company Is Struggling To Stay Open

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May 04, 2019

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Why Noodles And Company Is Struggling To Stay Open
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  • With plummeting stocks and store closures plaguing the chain, Noodles and Company has
  • some considerable work to do if it wants to maintain its position as the go-to location
  • for an international assortment of carb bowls.
  • Here are some legitimate reasons why this restaurant is struggling.
  • In February of 2017, Noodles and Company announced it was shutting down 55 locations, which was
  • more than 10% of its restaurants at the time.
  • The company cited underperformance, claiming its overall earnings would have increased
  • by $7.3 million if not for those 55 dead weights.
  • So why did they need to take such drastic measures?
  • Chain restaurants are so not hot right now.
  • With a growing preference for local, sustainable food, a lot of younger consumers are shunning
  • chain restaurants in favor of dining at home.
  • This shift in tastes has left a lot of restaurants reeling, but Noodles and Company is in a particularly
  • vulnerable position because of the wide variety of global dishes they offer.
  • In an attempt to appeal to everyone, you can risk appealing to no one.
  • And it also drives up costs.
  • According to a Forbes write-up,
  • "...localizing a global menu may be a great idea, but it requires too many employees,
  • making the product too costly to deliver."
  • Especially when it might be cheaper to stay home…
  • When you're cooking at home, pasta is generally one of the cheapest options around.
  • A bag of noodles at your average grocery store chain barely sets you back $2.
  • That means it's pretty cheap — and easy — to replicate the Noodles and Company experience
  • at home.
  • And some critics just don't think the chain is high enough quality to justify the cost
  • of dining there.
  • A staff writer for the CU Independent claimed,
  • "I could have gone to Safeway to buy some noodles, some marinara, and a chicken breast,
  • cooked it all myself, added some spices and still spent less than $9.
  • Plus, it would've tasted better."
  • “Well, you know, that's just, like, your opinion, man."
  • In 2016, Noodles & Company got itself in a heaping bowl of hot water thanks to two major
  • lawsuits.
  • After a security breach exposed the credit and debit card information for customers at
  • 28 Noodles and Company locations, the chain was sued by an Oregon credit union for failing
  • to take proper security measures.
  • They argued that as a result, banks were forced to pay massive costs to replace compromised
  • cards and refund fraudulent transactions.
  • The case was later dismissed, but Noodles and Company wasn't so lucky with another lawsuit
  • that year, agreeing to pay more than $3 million to former employees.
  • Those employees had alleged that they were made salaried employees and given the ceremonial
  • title of "assistant manager" so the company could avoid paying them overtime wages they
  • would have been due as hourly employees.
  • Noodles and Company never admitted any wrongdoing, but the events of 2016 left a bad taste in
  • the mouths of many customers.
  • These days, the only thing trendier than gluten-free diets is making fun of gluten-free diets.
  • “You don't even know what gluten is!"
  • "I know what f---ing gluten is."
  • "I do know what gluten is!
  • Gluten is a vague term, it's a term you use to categorize things that are bad, you know?
  • Calories!
  • That’s a gluten.”
  • But for people with Celiac disease, gluten is no joke.
  • And unfortunately, Noodles and Company is about the worst place you can eat if you want
  • to remain gluten free, something they even admit on their website, saying
  • "Even with a strict adherence toward maintaining spotless restaurants, we simply have too much
  • wheat and gluten present to be able to eliminate the cross contamination on our equipment and
  • food prep areas."
  • That's not just a problem for people with Celiac, though — given the widespread popularity
  • of the gluten free diet, it's a problem for the whole chain.
  • When a large portion of your customer base can't eat your food, that's… not good!
  • Keto was the most popular diet of 2018, and it isn't exactly noodle friendly.
  • Keto enthusiasts are primarily consuming foods that are high fat and low carb, so flour-based
  • pasta is a no-no.
  • That's why Noodles and Company introduced the zucchini-based noodle (or "zoodle") to
  • menus in May 2018.
  • CEO Dave Boennighausen happily explained,
  • "For years, the company struggled with the perception that noodles and pasta are unhealthy
  • for you, due to the relatively high amount of carbohydrates in our core dishes.
  • The zucchini noodle has allowed us to address this concern."
  • It was a hit, leading to their best sales quarter in six years.
  • Overall, the sales were up 3.7 percent for 2018.
  • Still, zoodles haven't solved all their problems.
  • Though the promise of zoodles led to a 22% stock surge in April, 2018, stock prices dropped
  • back down by 20% in October, 2018.
  • So will zoodles save the day?
  • You know what they say: the proof is in the noodles.
  • Check out one of our newest videos right here!
  • Plus, even more Mashed videos about your favorite restaurants are coming soon.
  • Subscribe to our YouTube channel and hit the bell so you don't miss a single one.

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Description

With plummeting stocks and store closures plaguing the chain, Noodles and Company has some considerable work to do if it wants to maintain its position as the go-to location for an international assortment of carb bowls. Here are some legitimate reasons why this restaurant is struggling.

In February of 2017, Noodles and Company announced it was shutting down 55 locations, which was more than 10% of its restaurants at the time. The company cited underperformance, claiming its overall earnings would have increased by $7.3 million if not for those 55 dead weights.

So why did they need to take such drastic measures?

Chain restaurants are so not hot right now. With a growing preference for local, sustainable food, a lot of younger consumers are shunning chain restaurants in favor of dining at home.

This shift in tastes has left a lot of restaurants reeling, but Noodles and Company is in a particularly vulnerable position because of the wide variety of global dishes they offer. In an attempt to appeal to everyone, you can risk appealing to no one. And it also drives up costs.

According to a Forbes write-up,

"...localizing a global menu may be a great idea, but it requires too many employees, making the product too costly to deliver."

Especially when it might be cheaper to stay home…

Watch the video to see why Noodles and Company is struggling to stay open!

Massive shutdowns | #
Chain restaurants are old news | #
Quality versus cost | #
Legal woes | #
The cross-contamination issue | #
Zoodles: friend or foe? | #