GRUB - Delivery Comes at a Premium at Noodles & Company
In October, Noodles & Co. (NASDAQ: NDLS) initiated a 10% premium on its delivery orders, a growing part of its sales. While the impact of the added cost has yet to be determined, CEO Dave Boennighausen commented that he was happy with the early results. He noted that when the premium delivery fee was rolled out during testing, there was very little reduction in sales -- even though the expected consumer reaction would be a drop in demand.
Let's look at why Noodles added the delivery fee and what it means to its bottom line.
Restaurants are facing challenges with declining guest visits and sales. In contrast, meal delivery has been growing. According to eMarketer, 38 million Americans have used a food delivery app at least once a month, an increase of 21% from the previous year. Given the declining in-store results, more restaurants are looking at delivery opportunities.