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Noodles & Co. (NASDAQ:NDLS)
Q1 2019 Earnings Call
May. 09, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good afternoon, and welcome to today's Noodles & Company first-quarter 2019 earnings conference call. [Operator instructions] As a reminder, this call is being recorded. I would now like to introduce Noodles & Company's chief financial officer, Ken Kuick.

Ken Kuick -- Chief Financial Officer

Thank you, and good afternoon, everyone. Welcome to our first-quarter 2019 earnings call. Here with me this afternoon is Dave Boennighausen, our chief executive officer. I'd like to start by going over a few regulatory matters.

During our opening remarks and in response to your questions, we may make forward-looking statements regarding future events or the future financial performance of the company. Any such items, including our guidance about our anticipated results in 2019 and details relating to our future performance, should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are only projections, and actual events or results could differ materially from those projections due to a number of risks and uncertainties. The safe harbor statement in this afternoon's news release and the cautionary statement in the company's annual report on Form 10-K for its 2018 fiscal year and subsequent filings with the SEC are considered a part of this conference call, including the portions of each that set forth the risks and uncertainties related to the company's forward-looking statements.

I refer you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's annual report on Form 10-K for its 2018 fiscal year and subsequent filings we have made. These documents contain and identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. During the call, we will discuss non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

A reconciliation of these measures to the most directly comparable GAAP measures is available in our first-quarter 2019 earnings release and our supplemental information. And with that, I'd like to turn it over to Dave Boennighausen, our chief executive officer.

Dave Boennighausen -- Chief Executive Officer

Thank you, Ken. I would first like to send our thoughts and prayers to our executive chairman, Paul Murphy, and his family. Unfortunately, Paul will not be able to join us on today's call due to an illness in his family. After a temporary disruption in momentum due to unusual winter weather, I'm pleased to report that performance strengthened exiting the first quarter, resulting in the company achieving 3% company comparable restaurant sales growth for Q1.

While our traffic was modestly negative for the full quarter, we returned to positive traffic during the final few weeks of Q1 and have continued this performance thus far in Q2. As a result, we have increased our full-year guidance which Ken will outline shortly. Our return to positive traffic growth is evidence that our strategic initiatives are resonating with consumers and redefining how they view the Noodles brand. As we have discussed in recent quarters, our initiatives have been holistic and are positioning the brand for sustained, enduring growth.

From a culinary perspective, we continue to make great progress better defining how guests can access Noodles & Company regardless of their dietary preferences. Choice has always been a great strength of the brand, and we can change and innovate in ways that allow guests to enjoy the world flavors they know and love as well as discover new ones with all the benefits of healthier noodle options. Our introduction of the zucchini noodle last year removed a major obstacle to the brand by providing a low carb gluten-free noodle alternative for our guests. The zucchini noodle continues to reach new heights in sales, bolstered by a limited time Zucchini Shrimp Scampi offering during Q1.

We continue to see a significant opportunity to build up the initial success of our better-for-you platform. And to that end, yesterday, we introduced three exciting new menu items. The first two are limited time offerings that include a Zucchini & Asparagus with lemon sauce dish as well as a Zucchetti and white wine garlic sauce with balsamic chicken, which features a 50-50 blend of zucchini and spaghetti noodles. Additionally, we launched a new gluten-friendly Pipette shell which, like zucchini, can be a substitute into any dish providing the ability to offer a gluten-friendly pairing with our top-selling Wisconsin Mac & Cheese.

We believe these new offerings continue to reinforce the variety and choice available to our guests. Finally, regarding culinary, this week, we launched nationwide two aspects of our menu presentation that will further highlight the choice inherent in our menu. First, we launched a new personalized nutrition calculator available on our website map, where users can effortlessly create dishes to meet their dietary lifestyles. From keto to paleo and vegetarian to gluten-friendly and everything in between.

Second, we have introduced new menu boards throughout the system, which highlight our better-for-you platform, feature signature flavors and make the decision-making process quicker and easier for our guests. Our culinary efforts have been supported by a strategic and disciplined testing process. And we expect further innovation around plant-based noodle alternatives to be introduced later in 2019. As our culinary initiatives continue to provide more choice for our guests, we have also made great strides in providing increased choice around how guests use the brand from a convenience perspective.

Off-premise sales continue to grow bolstered by our initiatives to remove friction from the noodles dining experience. Off-premise grew to 56% of sales during Q1, a 500-basis-points increase over the Q1 of 2018. This growth has been led by digital ordering which, inclusive of delivery, grew 63% over last year and accounted for 22% of total sales. Exclusive of delivery, digital ordering sales and quick pickup in the first quarter increased 32% from prior year and accounted for 17% of sales, further evidence that our brand is particularly well-suited for the off-premise occasion.

While the digital performance of noodles remains impressive, we also believe there's tremendous opportunity to make the experience even better. During the fourth quarter of 2019, we anticipate relaunching our digital platform, providing significant improvements to both the ordering process as well as our rewards program. While we expect this initiative will further reduce friction for our guests, we also believe that it will be transformative in increasing our capabilities to engage with guests from a marketing perspective in a more personalized, targeted and relationship-driven manner. Separate from our sales through our internal digital ordering platforms, we continue to see significant growth in sales from our third-party delivery partners, which accounted for 5% of sales during the first quarter, compared with just 3.1% of sales during the fourth quarter of 2018.

While delivery overall is accretive to earnings and it certainly offers great opportunity to build sales, we also recognize that it comes with additional costs. As a result, we are currently testing select pricing strategies regarding delivery to ascertain how we can mitigate the impact of delivery fees on our margin profile. Similar to our culinary initiatives, we continue to believe there's significant runway inherent in our off-premise strategy. Aside from the anticipated continued increase in digital and delivery sales, we also believe there's ample opportunity to expand catering, which currently accounts for less than 2% of total sales.

As we discussed last quarter, we anticipate relaunching our catering program during 2020, which we believe will add to our ability to deliver long-term sustained growth. Finally, our investments and best practices and training continue to drive improved operational execution. Our talented team members are a key strength of the brand. In an increasingly competitive labor market, it is imperative that we provide the tools and training to attract and retain talented teams while also identifying opportunities to improve efficiency in our operating model.

And we're very pleased with the progress we've made to date. During the first quarter, we launched a new back-of-the-house labor system and were encouraged by the early impact it's had on our operational efficiency and our employee engagement. Additionally, we remain focused on executing a new initiative to revisit our back-of-the-house equipment, package and flow to ensure continuous improvement in our efficiencies in 2020 and beyond. Our positive traffic growth during the close of Q1 and thus far in Q2 reinforces my confidence in Noodles' opportunity to sustain top-tier performance in the restaurant industry.

We have the right team in place, the right strategy and the inherent brand strengths that allow us to continue to grow both top and bottom-line results in a consistent, reliable fashion. I'd now like to turn it over to Ken to discuss our Q1 results as well as our guidance for the full-year 2019.

Ken Kuick -- Chief Financial Officer

Thanks, Dave. As Dave mentioned, our performance improved significantly during the last portion of the first quarter, allowing us to surpass the expectations for Q1 that we laid out during our prior earnings call. I'd like to begin with total revenue which, at $110 million, was roughly flat versus the prior year as our comparable sales growth was offset by the impact of restaurants that closed during 2018. Comparable restaurant sales in the first quarter were 3% comprised of a 3% increase at company-owned restaurants and a 2.8% increase at franchise locations.

We would also like to note that Q1 2019 benefited by approximately 50 basis points due to a fiscal shift in the Easter holiday, which will be offset by a 50-basis-points headwind this current second quarter. Company-owned comparable restaurant sales included approximately 2.5% of menu price, mix shift of just under 2% and modestly negative traffic. Menu mix benefited from both an increase in our zucchini noodle sales as well as a modestly higher per person spend associated with delivery orders. As mentioned earlier, traffic growth turned positive during the last few weeks of March and continues to be positive thus far in the second quarter.

With the strengthening in our sales performance, we are increasing our full-year comp guidance from a range of 2% to 4% to a range of 3% to 5%. Our comparable sales guidance for the full year implies modestly positive menu mix and traffic growth combined with menu pricing of roughly 3% for the balance of the year. From a menu mix perspective, we anticipate the benefit we saw in Q1 to modestly decelerate as we lapped last year's launch of our zucchini offering. We do, however, anticipate continued mix growth from delivery as well as potential upside from the launch of the new menu board layout that Dave referenced earlier.

This layout features higher priced signature flavors as well as the opportunity for guests to make it a meal by purchasing a drink and a side for one low price. From a menu price perspective, we expect pricing of roughly 2.8% in Q2 and just north of 3% during the back half of the year. first-quarter restaurant level margin of 12.6% surpassed the expectations set forth in the prior earnings call but represented a 30-basis-points decrease relative to last year primarily due to unusual labor impacts as well as an increase in third-party delivery fees. Cost of goods sold during the first quarter was 26.7%, flat relative to the prior year.

We anticipate modest improvement in our COGS line over the balance of the year, reflecting supply chain and pricing initiatives. Labor during the first quarter was 34.1%, a 70-basis-point increase compared to the prior year. This was due primarily to certain high dollar insurance claims incurred during the quarter. While we expect to continue wage inflation of 4% to 5% for 2019, we expect to achieve year-over-year leverage in labor during the balance of the year on the strength of comparable sales growth as well as the benefits of the new restaurant labor model introduced during the first quarter.

Other operating expenses decreased 30 basis points from the prior year to 15.1% of sales, benefiting from leverage on AUV growth as well as reduced marketing expense, which declined 60 basis points to 1% of sales. These benefits, however, were significantly offset by a 90-basis-point increase in third-party delivery fees, which increased to 1.1% of sales. As Dave mentioned, while we feel that delivery as a whole is incremental and accretive to earnings, we are currently testing different approaches to delivery pricing to mitigate the impact that delivery has on margins. General and administrative expenses in the first quarter decreased 10 basis points to 9.2% of sales and included roughly $700,000 of noncash stock comp expense.

During the first quarter, adjusted EBITDA remained flat at $5.6 million relative to prior year, while our adjusted diluted loss per share improved from a $0.04 to a $0.03 loss. We reduced our capital expenditure guidance for 2019 to a range of $14.5 million to $19 million, down from our prior range of $24 million to $30 million. While our capex guidance continues to incorporate investments in new unit growth as well as in our digital and guest engagement platforms, the timing of certain remodel initiatives have shifted to allow further exploration of back-of-the-house efficiency opportunities resulting in a decrease in our capital expenditure expectations for the full year. Long-term debt at the end of the first quarter stood at $49.3 million, a modest increase relative to the beginning of the year due to seasonality in our restaurant cash flow as well as the timing of payments for 2018 cash incentive compensation.

Cash on hand at the end of the first quarter was $1.8 million. Our balance sheet remains strong, and we anticipate that we will be able to meaningfully pay down debt over the remainder of 2019. Our anticipated effective tax rate for the full year is between 1% and 4%. As we noted in our earnings release, given our strengthening performance, we are updating our guidance across many of our key metrics.

We currently expect full-year adjusted diluted earnings per share of between $0.08 and $0.16, up from our prior guidance of $0.06 to $0.15. Our updated full-year guidance is based on the following assumptions: We expect total revenue between $466 million and $474 million, up from prior guidance of $462 million to $470 million; We expect comparable restaurant sales of between 3% and 5%, up from the prior 2% to 4% expectation, and guidance for the full year includes a two-year growth rate of 6.4% to 8.4%. We anticipate restaurant level margin of 15.5% to 16.5%, a 50 to 150 point -- basis-point increase over prior year. We now expect adjusted EBITDA of $37 million to $41 million, up from our prior expectation of $36 million to $40 million.

This implies adjusted EBITDA growth of between 11% and 23% over 2018. And finally, we continue to expect five to nine new restaurant openings systemwide in 2019, including four to six new company restaurants. We expect these restaurant openings to be split roughly equally between the third and fourth quarters and to be offset by approximately five closures of restaurants at lease end. We continue to work diligently and thoughtfully to return to 5% new unit growth by 2021 and remain excited about the long-term growth opportunity of the Noodles brand.

And in closing, our recent performance reinforces the tremendous upside potential of the Noodles & Company operating model, and we look forward to sharing how our top and bottom-line initiatives help drive sustainable, consistent and long-term growth for the brand. And with that, I'd like to turn it back over to Dave for final remarks.

Dave Boennighausen -- Chief Executive Officer

Thanks, Ken. Noodles & Company continues to execute a strategy that will result in an enduring brand with long-term sustained growth. Our fourth consecutive quarter of positive comparable sales in Q1 despite significant weather disruption, coupled with recent momentum, are evidence that our execution has elevated. We are particularly excited about the initiatives we launched yesterday as well as those that will be implemented later in 2019 and beyond.

Over the past two years, the company has made tremendous progress in stabilizing performance, removing obstacles and then building capabilities for future growth. We have now entered a phase of capitalizing on those capabilities to drive significant top and bottom-line growth through disciplined, effective execution of strategic initiatives. I know we are in the early innings of our strategy, and I'm excited for 2019 and for the years to come. Kevin, go ahead, and please open the lines for Q&A.

Questions & Answers:


Operator

[Operator instructions] Our first question comes from Jake Bartlett with SunTrust.

Jake Bartlett -- SunTrust Robinson Humphrey -- Analyst

Dave, just to kind of give us a better idea of the underlying same-store sales trend of the business, can you break out what same-store sales were maybe by month in the first quarter? Maybe give us a greater sense as to what you're running quarter to date for second quarter.

Dave Boennighausen -- Chief Executive Officer

Yes. The challenge with that, Jake, is actually because of the Easter shift and some of the holidays. But from a normalized basis, where we were at, was just modestly positive through the second period. And then as we went into the back -- the last four or five weeks of Q1, that's when you saw us move to positive traffic.

And then as we disclosed some of the menu mix and price, you can see that it was a pretty solid number that we saw in the end of Q1 and then carried on into Q2.

Jake Bartlett -- SunTrust Robinson Humphrey -- Analyst

OK. And then, I think there's some question about what happens when you lap the launch of Zoodles last year around now. What did you find in tests? I know you tested for a long time the changes you made to the menu boards, the new menu items. How confident are you that you can stay positive even in the months that you're lapping the Zoodles launch?

Dave Boennighausen -- Chief Executive Officer

I think we're extremely confident in the momentum of the business and where the trajectory is headed. Happy with what we're seeing as we lap zucchini. We actually lapped zucchini this past Wednesday so about eight days ago. It's extremely early.

We're happy with the results we've seen in that short time frame. As we noted, we expect positive price mix and traffic growth in Q2. But we do expect that the comparisons do get more challenging, and it does remain pretty early in Q2. But we're very pleased with the trajectory we're seeing in the initial stages of that lap of zucchini.

Jake Bartlett -- SunTrust Robinson Humphrey -- Analyst

OK. And then just on the COGS. I would've thought maybe that you would have had some of the benefits of some of the supply chain changes that you've put in place. You also had a decent amount of price.

And so I guess I was surprised you didn't get a little leverage on the COGS. Could you share what your inflation was, your commodity inflation to be -- what you're expecting commodity inflation to be for the year?

Dave Boennighausen -- Chief Executive Officer

I think for the full year of 2019, we still expect that inflation is going to be pretty modest, roughly flat to just slightly positive. We expect the COGS line is one that will improve over the year as we implement a bit more price during the balance of 2019 versus what we did during Q1. As for Q1 itself, we did have a little bit of disruption from the closures. When you close restaurants, there's certainly significantly more waste.

So we didn't quite get the amount of leverage that we would expect on the COGS line in Q1. But we are pretty confident that will rebound in our favor later on in the year.

Jake Bartlett -- SunTrust Robinson Humphrey -- Analyst

Great. And then lastly, on the five stores that you expect to close later in the year, one is, are those company stores? And then second, is that something we should expect kind of on an ongoing basis? Or is this is still a remnant of the store closure plan that you did a couple of years ago? And just rather than get out of leases, you let them run out. But how much more of that do we have to go?

Dave Boennighausen -- Chief Executive Officer

Yes. Jake, we think the normal run rate is for any contract of our size is probably more typical to be one to two restaurants every three to six months. When we did go through of the round of closures that we had two years ago, there were certain restaurants that the lease was going to be expiring in a couple of years and we were making ramps, and we felt that the right decision for the business was to keep those restaurants open. Those are the five restaurants that we're looking at closing at the balance of this year.

And that would pretty much be it until we get to a more normal run rate. We haven't really closed restaurants thus far in 2019. So it's more of those that are in Q3 and Q4. But they are company locations.

Operator

Our next question comes from Andy Barish with Jefferies.

Andy Barish -- Jefferies -- Analyst

Just on the mix to focus on kind of better-for-you. I guess how much, if you could categorize the menu, do you think sort of is better for you today? And what, in your consumer research, is the customer kind of telling you they want? What's sort of the gap between what you're providing today and maybe the demand that's out there, if that's kind of quantifiable?

Dave Boennighausen -- Chief Executive Officer

Yes. No, I mean it's a great question, Andy. And since I started in 2004, which was the height of the Atkins diet. Clearly, the biggest thing that guests were asking for as you go back a couple of years ago and over that time frame, has been something that's low carb.

And that was what made the zucchini so elegant and such a great solution for us. While we've not disclosed mix, incorporating the success we've had in zucchini as well as what we've had with our current solid line up, we're not at the mix level yet of a Mac & Cheese which we've talked about is about 20% of our guest. But we certainly think that there is a potential. Where we do still see opportunity in terms of what the guests are telling us they'd like, they do like the plant-based alternatives.

And we are testing items along the lines of cauliflower. One reason we launched the zucchetti which is a half spaghetti, half zucchini blend, is it kind of allows that person that doesn't necessarily want to go all in but does want to reduce their overall intake of carbs. So what I would say is that the zucchini really addressed the major elephant in the room in terms of low carb, right? I think you'll continue to see us innovate around that plant-based side of the menu.

Andy Barish -- Jefferies -- Analyst

Got you. And then, just on sort of the update with the app and the rewards program. What areas are you kind of focusing on as we look toward the end of the year to improve the customer experience?

Dave Boennighausen -- Chief Executive Officer

We're incredibly excited about this initiative. So we're -- overall, we have a pretty solid program, Andy, in terms of the rewards program, the app, the online experience. There's nothing that's certainly wrong with it. That said, we believe this is a brand, given our unique capabilities to meet that off-premise occasion and our unique capabilities with the younger generation, a more technology savvy generation where we skew from a guest perspective, we believe we should have a best-in-class type guest engagement platform on par with a company like a Starbucks.

So that's why we're looking to launch, hopefully, the early phases of Q4. And what we look to do with that, in particular, just get to know the guest from a 360 degree view. Certainly, the experience with online -- from an online user -- user experience should be significantly better. But at the same time, we want to have the data and be able to be much more targeted than we are today because our program, right now, again, it's solid, but it doesn't give us the flexibility that we think really is warranted, given the potential of this brand.

Andy Barish -- Jefferies -- Analyst

OK. And then just finally for me on -- all the off-premise grow sequentially came from the 2 points of improvement in delivery. Also from the 4Q, is that -- do you think that's a factor of just mostly seasonality and the tough weather out there? And how much more room do you think there is to go just in terms of the quick pickup and improving that customer experience so you can get kind of both those channels working?

Dave Boennighausen -- Chief Executive Officer

Yes. I mean as you look at the map, what we discussed in the call, you have 56% off-premise, just some quick math. 22% is the either the quick pickup or it's delivery and then another 2% roughly in catering, which tells you that there is still over 30% of our guests that are coming into the restaurants, waiting in line, going through the ordering process, and then waiting again four to five minutes. That's just not ideal.

And so we're seeing significant movement progress. We do think the new app and making it easier for people to order online, we'll just continue to make that grow. So we see, while certainly the one-for-one , you see delivery went up the same amount as the overall off-premise, I see tremendous opportunity just to optimize the experience for that guest that's currently waiting in line, which is one-third of our guests.

Operator

[Operator instructions] Our next question comes from Andrew Strelzik with BMO Capital markets.

Andrew Strelzik -- BMO Capital Markets -- Analyst

My first one, just was curious if there was an update to some of the work that's been done by the third-party on kind of the back-of-the-house, the kitchen and the equipment? What have you learned so far? And when should we start to see some of the changes come out of that come to fruition?

Dave Boennighausen -- Chief Executive Officer

Yes. So that's a fair question, Andrew. So it's -- thus far, I mean further analysis and as a reminder for those who may not have followed, we've got a party that's helping us really look at the back-of-the-house and how you can make it more efficient. We've always perceived there being opportunities in terms of making our sub-tailing a little bit more efficient as well as when you look at how we use the piece of equipment, the grill and the oven.

The work that's been done thus far have identified that those are indeed the biggest areas of opportunity, also identified a couple of other smaller opportunities. We're in the process, Andrew, right now of sourcing that equipment, getting into a mock version, really putting it through pressure tests. Our intent is to get some of those changes into existing restaurants at some point in Q4. So again, we don't expect much impact in 2019 except for maybe some small wins but then 2020 and beyond, rolling out those efficiencies.

It is way too early to peg what the labor expectation is, but we certainly think that there's speed and efficiency opportunities from what we're seeing thus far.

Andrew Strelzik -- BMO Capital Markets -- Analyst

Great. And then in terms of the capex guidance and pushing out some of the initiatives, what exactly is being delayed and why was that decision made?

Dave Boennighausen -- Chief Executive Officer

Actually, it's what we just talked about. So we -- as we see some really nice stuff and potential on that back-of-the-house, there's some things we want to do in the front of the house concerning making it easier for to-go, making that experience a little bit better. We do have some outdated restaurants that we know need to be brightened up and brought up to the brand standard. But as we see some of this potential on the operational initiatives -- or the operational efficiency side, we think it's important to be marrying that back-of-the-house with some of the front-of-the-house activities, which just certainly includes to-go.

So since there's been such an intermingling, if you will, of service and production in fast-casual as online and quick pickup continues to increase, we felt the most -- the right thing to do was to marry those processes which really -- just shifted the timing of it more into Q -- into 2020.

Andrew Strelzik -- BMO Capital Markets -- Analyst

OK. And then my last question, on the restaurant level margin guidance, there was no change on the high end despite the raise on comps on both ends. So I was just wondering what kind of -- what's holding back the high end there? It started out as a relatively wide range to begin with but now with the higher comps I'm just curious if anything from a cost prospective has changed?

Dave Boennighausen -- Chief Executive Officer

Yes. Sure. I mean it goes to delivery. So ultimately, as Ken mentioned, we feel delivery is accretive, it's great for earnings.

Certainly, you see the top-line momentum with it. But as everybody knows with the delivery fees, there does come some flow-through pressures. As we mentioned, we are testing some different strategies surrounding price. We did not incorporate those into our guidance, just because it is a bit early, and we just really -- just got that test going in the last four to five weeks.

So we think it's a bit too early for us to really incorporate that potential into our guidance. But that's what you're seeing is that from the margin perspective, the flow through on delivery isn't quite as high as you see in other areas.

Operator

Our next question comes from Greg Badishkanian with Citi.

Spencer Hanus -- Citi -- Analyst

This is actually Spencer Hanus on for Greg. So my question was just in terms of throughput and kind of menu complexity. You guys are bringing on some new products. I mean you mentioned three new products you guys just rolled out and then one at the back half of the year.

How is that going to impact the overall back-of-the-house complexity? And then, any update on throughput and opportunities there?

Dave Boennighausen -- Chief Executive Officer

Sure. I think our operations teams have done an excellent job in terms of as we refocused the brand a couple of years ago to be much more laser focused on operations, they have absolutely -- and we've held to our word that as we introduce new things, we're also going to be taking away things. So we've done the research, the turf studies necessary, Spencer, that as we've introduced these items, there's also a couple that have gone away. And we think that's the appropriate thing to do to ensure that you don't increase the complexity overall at the operational level.

Throughput itself, we have not seen any negative impact of throughput over the course of the last several months in terms of those changes that rolled out. That's one reason we do a pretty disciplined, lengthy test. Most items that we have from a culinary perspective have been in test for six months to nine months at least before they go national. But I promise you, we are very mindful of ensuring that we don't repeat the sins of the past, if you will, in terms of expanding the menu too much.

Ken Kuick -- Chief Financial Officer

The only other thing I'd add, just as a follow-up to Spencer's question is, as we look at that back-of-the-house kitchen and flow, this is absolutely one of the aspects we're looking at is how do you increase the flexibility to continue to support further innovation without negatively impacting operations.

Operator

And I'm not showing any further questions at this time. I'd like to turn the call back over to the management team.

Dave Boennighausen -- Chief Executive Officer

Yes. Well, thank you all for your time this afternoon. As we mentioned, we're extremely excited with where the brand is going, the trajectory that we've seen over the past several weeks, excited with the initiatives that we've rolled out yesterday and what we have for the balance of 2019 and beyond. And again, really appreciate you joining the call.

Operator

[Operator signoff]

Duration: 34 minutes

Call participants:

Ken Kuick -- Chief Financial Officer

Dave Boennighausen -- Chief Executive Officer

Jake Bartlett -- SunTrust Robinson Humphrey -- Analyst

Andy Barish -- Jefferies -- Analyst

Andrew Strelzik -- BMO Capital Markets -- Analyst

Spencer Hanus -- Citi -- Analyst

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