Good afternoon ladies and gentlemen and welcome to the Noodles & Company's Third Quarter Earnings Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the conference over to you host, Ms. Sue Daggett, (00:35) President of Finance. Please go ahead.

Thank you and good afternoon everyone and welcome to our third quarter 2016 earnings call. Here with me this afternoon is Dave Boennighausen, our CFO and Interim Chief Executive Officer. Let me start by going over a few regulatory matters. I'd like to note that 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 2016 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 most recent Form 10-K 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 2015 fiscal year. This document contains and identifies important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Now, I would like to turn it over to Dave. David James Boennighausen - Noodles & Co.: Thank you, Sue, and good afternoon everyone. Earlier today we reported an adjusted net loss of $0.04 per diluted share with comparable sales declining 0.7% system-wide comprised of a 0.9% decline at company restaurants, and a 0.6% increase at franchise restaurants. Our adjusted EBITDA declined 29% in the third quarter,…

And your first question comes from the line of David Tarantino from Robert W. Baird. Please go ahead. David E. Tarantino - Robert W. Baird & Co., Inc. (Broker): Hi, good afternoon. Dave, I just wanted to ask on these underperforming markets or units. I guess how quickly do you think you'll be able to address those, whether it's through closings or refranchising? And then I have a separate question on those. David James Boennighausen - Noodles & Co.: Sure, yeah. So, David, no, I appreciate that. We're looking at a lot of different alternatives and we do think we'll be able to move relatively quickly on them. That said, we are a little bit early in the process. So I don't think we can necessarily commit to a timetable on when we'll be able to effect any closures or refranchising. David E. Tarantino - Robert W. Baird & Co., Inc. (Broker): I guess the follow-up on that would be, I guess, what is the decision matrix you're using related to those? I guess, what do you need to see to decide to close them, and I guess on the other hand, what scenarios would make refranchising possible? David James Boennighausen - Noodles & Co.: Certainly, so a couple things in there. We're evaluating the entire portfolio and looking, certainly, cash flow would be the number one thing that you would look at relative to what the occupancy costs are at that restaurant, how comfortable we feel about the trade area as well as our site characteristics. As we go through that lens, ultimately that shakes out a group of restaurants that we believe either it's going to be too long of a road or require too much resources, too much distraction in order to make that restaurant be profitable,…

My apologies there. Can you hear me now? David James Boennighausen - Noodles & Co.: Yes. We can, Emily.

Thank you. Sorry about that. And our next question comes from the line of Nicole Miller from Piper Jaffray. Please go ahead. Nicole Miller Regan - Piper Jaffray & Co.: (18:10) I'm just wondering how many are new versus existing markets? And then, what's the cadence? Do you want to start maybe front-end load those from a development or pre-opening perspective or do you – should we even them out from a modeling perspective? David James Boennighausen - Noodles & Co.: Sure, Nicole. So, I think you were cut off the first part of the question. I believe you were talking about the 2017 pipeline, correct me if I'm wrong. Nicole Miller Regan - Piper Jaffray & Co.: Yes. Yes. David James Boennighausen - Noodles & Co.: The cadence will be very much front-loaded, so you can expect actually seven or eight of those restaurants to be just in the first couple months of the year. The markets that they'll be in – keep my word, in 35 states as well as Toronto and Washington, DC. So they're not concentrated significantly, but they tend to be much more in the markets like the Minnesota, Wisconsins, D.C.s, Colorados where we've gotten – we have much more brand awareness, much more consistency in how those new restaurants perform. Nicole Miller Regan - Piper Jaffray & Co.: Okay. That's very helpful. And then maybe talk a little bit about the industry and external factors. I think it's a great discussion around what's in your control and the lot of things you can do, but how do you feel about the consumer and grocery deflation and supply in the industry right now? David James Boennighausen - Noodles & Co.: Certainly, it's a challenging environment, Nicole. I think one thing that's a little bit lost site in our particular story is the fact that even, during what's been a challenging couple of years, we've been in that flat to negative 1% range, which is pretty similar to what the industry has been doing. So the overall concept still has fundamental strength. What we do see is that in particular in the fast-casual side, just the sheer amount of restaurants that are entering markets is so substantial, that's certainly what we've seen here in our home market of Denver, which remains a strong market for us, but it's just had a large increase in capacity. I personally believe that the consumer is actually okay. I think that there is definitely grocery deflation that's causing a little bit more eating at home. But overall I think that the future of restaurant space is still pretty darn bright. And I think we're amongst several that have been slowing down the pipeline a bit to reflect the fact that there's been a little bit of a supply increase that needs to have demand catch up to it a bit. Nicole Miller Regan - Piper Jaffray & Co.: Great. Thank you so much.

And your next question comes from the line of Jake Bartlett from SunTrust. Please go ahead.

Thanks for taking the question. Dave, I have a question on the 10% of the stores that look to be potentially sold or re-franchised. Can you help us understand what that does to the model? Maybe what the AUVs are, kind of roughly what the AUVs are? Looks like they are running about negative $10 million in annual EBITDA. Maybe if you could help us model how that might impact restaurant margins versus G&A. And then also whether these – the closing or the re-franchising would impact same-store sales? How these have been impacting the same-store sales trend? David James Boennighausen - Noodles & Co.: Okay, Jake. There is a one in five chance that I remember all of those questions, so correct me with what I missed. The impact on the financials, you're absolutely right, it's looking at an annualized number of about $10 million that these restaurants are impacting us by. Keep in mind though that we're evaluating the entire portfolio first of all, and some of these restaurants are those that are on the upswing that we absolutely believe, in the long-term, the best thing for us to do is to continue to operate. So I don't want to leave the impression that these 10% of restaurants we need to touch every single one of them with either a closure or a sale or refranchising of it. So I can't really necessarily address what the overall impact is going to be, because we're still going through that process. What I can say from an averaging of volume perspective, we have talked about in the past that most recent classes have been closer to 80% of our company average, that historically had been 85% to 90%. So you can expect that these restaurants are 80% or below in…

So when you look at the $10 million in negative EBITDA impact, that's really on the restaurant margin level. David James Boennighausen - Noodles & Co.: It's primarily on the restaurant level margin. I think the neighborhood of Q3, that's really just restaurant level margin. We didn't assign a burn to it on G&A, but I think you can assume that it would be in the neighborhood of 2% to 3% of sales at the least.

Okay. And then a question on, it sounds like these are really weighing down your margins especially. Your top line has been disappointing, but as you said, not far out of line with what others have done in the industry. But it also seems like you're making, you're trying to make a lot of changes to the system, like trying to fix something or just make change that, meaningful changes on a number of different levels. Why do you feel like the system is so broken? I mean, do you feel like there's a risk of kind of trying to address too much all at once here, or is it possible that bussing is appropriate in the higher volume stores? And it seems like you're taking kind of a blanket approach, but there are some stores that probably don't have as much of these problems. David James Boennighausen - Noodles & Co.: No, that's a good question. Certainly, we're very mindful of the speed with which we take initiatives and launch them nationwide. What I would keep in mind, certainly, I don't think the system is broken. I think that there is a fundamental strength in this brand in terms of how differentiated it is, how unique it is. While I believe we have opportunities on the culinary side, I think our core menu is still is stronger than most. We do think, however, that as a system, we're not a happy with 0% to negative 1%. While it's similar to what the industry is, we believe that we have a brand that should be able to outperform that number. So we think that overall the operations have gotten too complex. And as we look at the initiatives that we're testing, what's important to know is, as we talked about…

Great. Thank you very much.

Your next question comes from the line of Andrew Strelzik from BMO Capital Markets. Please go ahead.

Thanks for taking the question. This is actually Ryan Royce on for Andrew. So just – couple questions. First on the menu simplification, I know you had mentioned removing the sandwiches from the menu. Are you still looking at further opportunities to simplify the menu, or are you going to be introducing the new format of it and then seeing how it goes from there? David James Boennighausen - Noodles & Co.: Sure. Great question, Ryan. So we did also do a little bit more streamlining nation-wide in October removed the BUFF Bowls as well as simplifying our overall catering platform to where we have mainly one that we're selling versus we had two or three different kind of alternatives out there. So there is further streamlining that's actually been done. When it comes to the changes that we think in the future, are important to increase culinary relevancy and have the menu be as strong as possible. The number of items is probably pretty close to what we think it should be. What we do think, however, is that the actual makeup of those dishes, how they're prepared, how they're cooked, there are ways that we can engineer them to where they're much easier for our teams to execute and also much more craveable, much more flavorful for our guests. Those are the things that we're really testing in some of these select restaurants and select markets that we feel can really allow us to capitalize on the variety of our menu without overwhelming the teams.

Great. Thank you. And then, just one more, I know – you had mentioned the pressures from the food at home versus food away from home spread. How do you think about that in the context of pricing going out into 2017? David James Boennighausen - Noodles & Co.: Sure. So we think that given what you see – what we just talked about, the deflationary in the grocery store environment, we don't think it's a time where concept should be piggish when it comes to how they approach price. So we're going to be very prudent with it. What's important, we haven't done a pricing increase since April of this year. We did not see any change in our value scores. So we don't think that there is necessarily a value proposition opportunity or issue that we have. That said, we think it's important to be prudent in how we approach pricing. So we don't expect there to be one in the very near future.

Okay. And then, just one more, if I may. David James Boennighausen - Noodles & Co.: Go ahead.

Looks like it is the first quarter in a while that the franchise comps actually outperformed the company-owned. Is there anything to call out there or any color would be helpful? David James Boennighausen - Noodles & Co.: Sure. So as we said in the past, it's a somewhat small base; we don't have that many restaurants that are in the comparable base relative to the company. So we tend to see a little bit more volatility in their franchise number. That said, we're seeing some very nice improvements in our operational metrics. We've had very strong franchisees for a very long time. I'm very pleased with the way that they execute our brand and bring it to life. They're doing a great job of it and that's certainly a part of why their same-store sales has been stronger of late. At the same time, I don't think the gap between franchise and the company performance is entirely due to that, there's also an impact of just having a smaller population that's a little bit more volatile.

Great. Thank you very much.

And your last question comes from the line of John Glass from Morgan Stanley. Please go ahead.

Hi. This is actually Brian on for John. Just a first question, you just – just kind of a follow-up on the last question. You mentioned your franchise base is doing pretty well; as you think about what to do with those bottom 10% of those stores, do you see demand from your existing franchise base, just very initial demand obviously, don't know for sure yet, but... David James Boennighausen - Noodles & Co.: Yeah. It's still early enough in the process that we haven't had very formal dialogs with our franchise community about potential expansion of their territories. As we said, we've had – continue to have very strong franchisees, they're making some nice progress. Demand that we've seen from an inbound perspective has been pretty consistent over time. So it's definitely one avenue that could be taken. But it's a little too early to quantify what that might be.

Okay. And then, just the last one. You called on the past year off-premise mix was in the mid 40s. You mentioned kind of trying to streamline that testing that in some of your stores. What kind of traction have you seen on that? Have you seen any lift in that off-premise occasion there? David James Boennighausen - Noodles & Co.: Yeah, the challenge with that one is that it's still pretty early. So what we've had in a few of our restaurants – downtown Chicago, as an example, for the last couple years, has been the ability for guests to order online, come into the restaurant, skip the line, pick it up from the shelving unit and leave. We believe there's opportunity well beyond the central business districts to capitalize on that opportunity, but it's pretty early; we've actually only got it in a couple restaurants. So there hasn't been much material lift in that to-go occasion aside from just the natural predilection of the guest to move more in that direction. So we're in that 44%, 45% range; online ordering continues to increase. I think that's been more organic. We have done some good promotions around it, but it's not been as much tied to what we're working on in test now with more of a shelving unit solution.

Got it. Thank you.

I'm showing no further questions at this time. Ladies and gentlemen, this concludes the conference. Thank you for your participation and have a wonderful day. You may all disconnect.