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Noodles & Co Shakes Up Leadership Team, Tackles Declining Sales

After reporting a net loss of $71.7 million in March and the closure of 55 underperforming company-owned stores the first two quarters this year, Colorado-based Noodles & Company is continuing to shake up its leadership team. This week it announced that Paul J.B. Murphy III, president and CEO of Del Taco Restaurants Inc., will be taking over as executive chairman, effective July 10. He replaces Robert Hartnett who was stepping down, but pledging to stay on as a director.

Denver Business Journal had previously reported that Noodles & Company (Nasdaq:NDLS) in April had also abruptly fired its chief operating officer, Victor Heutz, a seasoned restaurant veteran, after a short nine-month stint with the company. At the time, no explanation was given as to why the 11-year restaurant-industry veteran was terminated. Previously, Heutz had been with Buffalo Wild Wings, Starbucks Corp. and Cold Stone Creamery, and he was hired by Noodles & Company only six days prior to CEO Kevin Reddy announcing his resignation effective immediately.

In last week's announcement, Noodles & Company reported that Dave Boennighausen was now the company's permanent CEO. He had been serving as interim chief executive after Reddy left the company last July. Boennighausen has also been the franchisor's chief financial officer since 2012. Now, the Journal is reporting that Sue Daggett has taken over as interim chief financial officer until a permanent CFO can be found. Daggett has served as Noodles' vice president of finance since last August.

The article quotes board member Andrew Taub saying "Boennighausen's financial and business acumen and vision, as well as his ability to bring people together, have been enormous assets during this period of transition, and we are confident that he is the right long-term leader for Noodles & Company going forward."

When announcing in February the closure of 55 company-owned stores, the Denver Business Journal stated that the company's financial performance had been adversely impacted by those restaurants. Many had been opened in the last two or three years in newer markets where brand awareness of the company's restaurants was not as strong as in other markets.

The report said, "Also today, Noodles announced preliminary, partial fourth-quarter results ahead of its official earnings report, projecting 'a system-wide decrease in comparable restaurant sales of 1.3 percent, including a 1.8 percent decline at company-owned restaurants and a 2 percent increase at franchised locations.' It would be the sixth consecutive quarter of year-over-year declines of sales at locations open at least a year."

Noodles had also reported a security breach that may have compromised payment information of some customers who used debit or credit cards at restaurants between January 31 and June 2, 2016.

CEO Boennighausen said this week he plans to improve Noodles & Company's performance across all areas of its business. "We have a unique brand and an experienced and passionate team, and I believe we are taking the necessary steps in order to activate the brand and improve momentum," he said.

According to the Noodles website, the company started in 1995 offering made-to-order noodle dishes, and salads and soups. Today the franchise company has more than 500 locations nationwide.

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