How Does Noodles & Company Provide Value to Customers? Value perception is an important concept for all companies, but is especially relevant for consumer-oriented industries such as retail and...

How Does Noodles & Company Provide Value to Customers? Value perception is an important concept for all companies, but is especially relevant for consumer-oriented industries such as retail and restaurants. Most retailers and restaurant concepts periodically make price increases to reflect changes in inflationary items such as cost of goods and labor costs. In 2006, however, Noodles & Company took the opposite approach when it evaluated its value perception through its consumers. Through rigorous statistical analysis Noodles recognized that a significant percentage of current customers would increase their frequency of visits if the menu items were priced slightly lower. The company evaluated the trade-offs that a price decrease would represent and determined that they would actually be able to increase revenue by reducing price. Despite not advertising this price decrease, the company did in fact see an increase in frequency of visits resulting from the change. To measure the impact, the company statistically evaluated both the increase in frequency as well as customer evaluations of Noodles & Company’s value perception. Within a few months, the statistical analysis showed that not only had customer frequency increased by 2–3%, but also that the improved value perception led to an increase in average party size of 2%. Ultimately, the price decrease of roughly 2% led to a total revenue increase of 4–5%.