Good afternoon, and welcome to today's Noodles & Company third quarter 2021 earnings conference call. All participants are now in a listen only mode. After the speaker's remarks, there will be a question and answer session. As a reminder, this call is being recorded. I would now like to introduce Noodles & Company's Chief Financial Officer, Carl Lukach. Your line is now open. Please go ahead. Thank you, and good afternoon, everyone. Welcome to our Q3 2021 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 details relating to our future performance, should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are only projections, and actual events or results could materially 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 2020 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 of the company's files from time to time with the Securities and Exchange Commission, specifically the company's annual report on Form 10-K, for its 2020 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 direct comparable GAAP measure is available in our third quarter 2021 earnings release and our supplemental information. Now I would like to turn it over to Dave Boennighausen, our Chief Executive Officer. Thanks, Carl, and good afternoon, everyone. I'm excited to share with you today our strong third quarter results, and our progress toward achieving the accelerated growth objectives that we laid out earlier this year. Our third quarter results were highlighted by 16.3% comparable restaurant sales system-wide, allowing us to achieve another company record for average unit volumes at $1.38 million. In addition to strong sales performance, our restaurant level margin in the third quarter expanded 270 basis points versus the prior year to 18.1%, despite the impact of the current inflationary environment. Both our average unit volume growth and our margin expansion have been aided by the success of our new restaurants. With our restaurants open from 2019 to 2021 continuing to perform above company averages for both sales and restaurant level margin. Our success in the third quarter is a result of the three primary strategies that we've been executing to capitalize on the opportunity ahead of us. The first is the continued differentiation of our concept to appeal to a broad range of lifestyles, convenience, and dietary needs. Second, further activating our brand, particularly through our digital assets and marketing strategy. Third, accelerating our unit growth to take advantage of an operating model that we feel is ideally suited for a post-COVID world. As we think about the differentiation of our brand, I'd like to start with a discussion of our ongoing success in executing a disciplined strategy of culinary innovation that is on trend, resonates with guests, and builds brand loyalty. Last quarter, we highlighted the June launch of our Tortelloni offering, noting that for years, stuffed pasta has been our guests' most requested dish. Now, four months past its launch, Tortelloni continues to exceed our lofty expectations, and we're particularly pleased with the conversion that we are seeing from trial to loyalty and frequency for those who have tried it. While our focus for the balance of the year from a menu perspective will be fully capitalizing on the addition of Tortelloni, our teams have also maintained a robust pipeline of innovation for 2022 and beyond. Next year, we anticipate a combination of enhancements to our already strong lineup of healthy alternatives, as well as new twists on familiar favorites. As we continue to differentiate the menu for today's environment, I'd now like to discuss our second strategy, focusing on further activating the brand, particularly through our digital capabilities and improved marketing effectiveness. We have made significant progress with our digital capabilities and their impact on driving new guests, new usage occasions, and increased frequency amongst a broad group of consumers. Digital continues to account for 52% of our sales in the third quarter, even as in-restaurant ordering returned to 70% pre-COVID levels. Of course, one of the biggest tools for driving digital growth is our rewards program, which is rapidly approaching four million members. The insights that we have garnered from that program, combined with increased capabilities to develop more personalized, relevant communication, has allowed us to attract new guests to Noodles & Company, as well as increase frequency of our existing guests. As we said, we believe that we're still in the early innings of more effectively utilizing our digital assets and data, to better engage with our guests, and we expect this strategy to be a meaningful driver of sales growth for years to come. Now I'd like to talk about our third strategy surrounding accelerating unit growth. As I mentioned earlier, the restaurants opened in the last three years continue to perform better than any group of new restaurants in our history, with average unit volumes and restaurant level margins above company averages. We are particularly seeing strength in our new restaurants that contain our order ahead drive-through windows, which we estimate on average increase sales approximately 10%-20% relative to traditional new restaurants. We continue to expect at least 70% of new restaurants to incorporate the order-ahead and have drive-thru windows, as they improve convenience for our guests and are easy to execute for our operations teams. While we are excited about our current pipeline of three restaurants, from a development perspective, we have experienced the same short-term challenges that have been present throughout the industry. We and our franchisees have seen delays in construction, landlord building delivery, and equipment availability over the last several months. As a result, we have pushed three company openings and two franchise openings originally slated for 2021, into early 2022. These openings will be incremental to our prior outlook on unit growth for 2022, and we now anticipate at least 8% system-wide unit growth next year. At the present, we would expect our 2022 openings to be somewhat backloaded given the delays which exist in today's environment. However, our overall pipeline remains robust as we execute our strategy to achieve at least 1,500 units nationwide. A significant contributor to our unit growth will be our franchise community, and we're excited to announce during the third quarter the signing of a new franchise deal to introduce the brand in the El Paso, Texas, and Las Cruces, New Mexico, markets. We're also pleased with the quality and trajectory of our conversations with additional prospective franchisees from both new territories as well as potential re-franchising of select company markets. While we do anticipate further franchising progress for the balance of this year, we also recognize that our prospective franchise partners, most of whom are established restaurant operators currently running additional brands, are also laser focused on navigating the last topic I'd like to discuss today, the restaurant staffing environment. As we said before, for each of our three strategies, continued differentiation of our unique brand strengths, activating the brand through our digital and marketing channels, and accelerating unit growth, the importance of our team cannot be overstated. Our team has done a simply amazing job rising to the challenges of the last eighteen months. Even with the strength of our team and better than industry turnover metrics, we have not been immune to the well-documented staffing difficulties seen throughout the country. During the last half of Q3, these challenges, combined with the impacts of the Delta COVID variant, became more pronounced, resulting in reduced store hours across a number of restaurants in our system. Normalizing for staffing challenges, our sales growth thus far in the fourth quarter remains on par with our record-setting Q3, and we're taking a number of actions to address the current labor environment. We've implemented meaningful increases in our restaurant management compensation as well as instituted thank you and retention bonuses, throughout our restaurant organization. Additionally, we've eliminated many time-consuming tasks of executing our restaurants, some on a temporary basis and others that we believe will make our restaurants more efficient, both in the short and the long term. From recruiting to retention to development, we have piloted or implemented a wide variety of new approaches to aid in combating the current staffing environment, from sharing best practices among our operators to offering sign-on retention bonuses for areas with particularly tough labor markets. While we believe staffing will remain a significant challenge in the near term, including in the fourth quarter, based on trends from the last few weeks, we feel that the worst is behind us, and I'm optimistic that our efforts will allow us to mitigate the impact, as well as make us even stronger in the long term. I also am optimistic given the overall strength and commitment of our teams throughout the country. This commitment, evidenced by the tangible progress we've made across all aspects of the business, has allowed Noodles & Company to successfully navigate an unprecedented environment during the past 18 months. It gives me great confidence that we will successfully navigate the current environment as well, and build off of the record-setting sales results that we saw during the third quarter. I'll now turn it over to Carl to discuss in more depth our financial results. Thank you, Dave, and good afternoon, everyone. In terms of the financial highlights, total revenue for the third quarter increased 18.1% to $125.1 million compared to last year. Comparable restaurant sales increased 16.3% system-wide, comprised of a 15.3% increase at company-owned locations and a 21% increase at franchise restaurants. Average unit volumes for the third quarter were $1.38 million, representing a 16% growth rate compared to 2020, and a 15.9% growth rate compared to 2019. As a reminder, average unit volume is adjusted for restaurants that have been temporarily closed, but is not adjusted for temporarily reduced hours within a restaurant. As Dave mentioned, total revenue during the third quarter was partially offset by both temporarily closed restaurants, and reduced restaurant hours, driven predominantly by industry-wide labor shortages. These temporary closed days and reduced hours were more pronounced in the back half of the third quarter. While it's difficult to measure the exact sales loss due to store closures during the quarter, we estimate the impact at approximately 1.5% of AUV growth relative to 2019. As Dave noted, based on trends over the past two weeks, we believe this impact has peaked and are encouraged by the opportunities we've outlined from a talent acquisition and retention perspective. On a restaurant contribution basis, restaurant level margins were 18.1% in the third quarter compared to 15.4% last year. Relative to the third quarter of 2019, which we believe to be a more relevant comparison, contribution margin increased 100 basis points from 17.1%, driven by sales leverage on higher average unit volumes and labor efficiencies. These benefits also fully outweigh the incremental costs associated with third party delivery, which remains a key driver and investment for our business, and has held steady at 25% of total sales during the third quarter. Reviewing margin drivers in a bit more detail. For the third quarter, cost of goods sold was 25.1% of sales, an increase of 30 basis points from last year, and 20 basis points better than the third quarter of 2019. On our last call, we indicated that cost of goods sold for the third quarter would be unfavorably impacted by commodity inflation, and we are pleased to report that our results were better than anticipated. Our ability to offset the current inflationary environment was driven by temporarily securing shorter term inventory at more favorable rates than the spot market, driving efficiencies in our discounts and the 3% pricing we took on our core menu during the third quarter. Speaking of pricing, our third quarter pricing was, for the third quarter, approximately 5.5%. As we look forward into the fourth quarter, we are still operating with industry-wide inflationary challenges, and anticipate continued incremental costs associated with securing supply for our restaurants, particularly within our protein mix. In light of these headwinds, we are taking an additional 2% price increase on our core menu, which will be affected by the tail end of the fourth quarter. This increase will coincide with the lapping of price actions taken last year in fourth quarter, and we expect full fourth quarter pricing to be approximately 7.5%. Given the expected timing of our price actions, we anticipate that commodity inflation will still have an unfavorable impact on our cost of goods sold, by approximately 50-60 basis points in the fourth quarter, relative to the third quarter. A majority of this increase will be based on the need to temporarily purchase chicken at rates higher than historical levels. Labor costs for the third quarter were 30.0% of sales, which is essentially flat to last year, and a 250 basis point improvement from 2019. From a margin perspective, we saw a benefit in the quarter as a result of the temporary decreases in labor hours due to staffing challenges and reduced hours. As Dave mentioned, this margin benefit was offset by strategic investments in the third quarter in the retention of our team members, primarily through a one-time appreciation bonus. We have also seen an increase in our average hourly rate, driven predominantly by new hires onboarding at a higher rate in addition to overtime payouts. We continue to track the benefits of our Kitchen of the Future initiative. In particular, the rollout of our steamer equipment is meeting our expectations to reduce approximately two additional labor hours per restaurant per day. We have completed over 75% of our steamer rollout thus far in 2021, and we expect up to 90% of steamers to be rolled out by the end of this year. We remain encouraged by the positive results demonstrated by improved cook times, reduced labor hours, and better taste of food scores. As we look ahead to the fourth quarter, we anticipate a similar labor cost percentage relative to the third quarter. Other operating costs for the quarter were 17.5% of sales, compared to 18.6% last year, due primarily to sales leverage. Operating costs were 280 basis points higher than 2019, due to an increase in third-party delivery fees, as this channel remains a critical avenue to drive brand awareness and new guests. Delivery fees were 5.3% of sales in the third quarter, compared to 5.5% in the third quarter last year. We expect third-party delivery to remain an important driver of the business going forward, and as such, we expect our operating cost percentage in the fourth quarter to be at similar levels to the third quarter. G&A for the quarter was $12.2 million, compared to $10.8 million last year, due to increases in both stock-based compensation and temporary pay reductions implemented during 2020. As a percentage of total revenue, G&A decreased 50 basis points compared to last year. G&A includes non-cash stock-based compensation of $1.2 million during the third quarter, compared to $700,000 last year. We anticipate that stock-based compensation will be approximately $1 million next quarter, and we anticipate that G&A dollars in the fourth quarter will be similar to our spend in the third quarter. GAAP net income for the third quarter was $4.7 million or 10 cents per diluted share, compared to a net loss of $0.1 million last year or zero cents per diluted share. We also report net income on an adjusted basis, which adjusts for the impact of impairments, divestitures, and closures. On an adjusted basis, net income was $5.3 million or 12 cents per diluted share, compared to net income of $0.7 million or one cent per diluted share last year. It is important to note that our methodology for calculating adjusted net income no longer includes a tax adjustment related to the valuation allowance impact on our effective tax rate. Accordingly, the adjusted net income reconciliation table in our third quarter earnings press release, uses the same methodology for prior periods. We expect our effective tax rate to remain low for at least the remainder of the year. We do not expect to be a cash taxpayer for the foreseeable future given our sizable NOL. Switching to our outlook for the rest of the year. So far through October, we have seen continued strength in our average unit volume growth compared to 2019, and expect volumes to remain strong throughout the fourth quarter. That said, we also anticipate continued uncertainty related to the extent and duration of the current staffing disruption and the potential impact on our operating hours. As a result, for the fourth quarter, we anticipate total revenues to range between $119 million and $124 million. From a unit development perspective, we remain encouraged by our robust real estate pipeline as we head into next year. For 2021, we now anticipate seven to nine new restaurants system-wide, compared to our previous guidance of 10-15. As Dave noted, the change in guidance is due to equipment availability and landlord delivery timing, which has pushed a handful of company and franchise locations into the early part of 2022. These locations are simply a shift in timing and are considered incremental to our prior guidance of at least 7% unit growth on a system-wide basis in 2022. We now anticipate at least 8% system-wide unit growth next year. From a capital perspective, in anticipation of several locations shifting into 2022, we expect full year capital expenditure of approximately $20 million-$22 million, compared to our original guidance of $20 million-$24 million. Turning to the balance sheet. At quarter end, we had cash and cash equivalents of $3.1 million, and a total debt balance of approximately $23.7 million. During the quarter, we made a full repayment on our revolver and anticipate maintaining a low cash balance going forward to optimize our cost of borrowings. We anticipate that we will produce positive free cash flow through the remainder of 2021. Our ability to maintain strong liquidity will provide ample room to meet our growth objectives. With that, I would like to turn the call back over to Dave for final remarks. Thanks, Carl. Tomorrow, Noodles & Company will release our first social impact report, highlighting our progress and benchmarks across food, people, planet, and community. Our team has much to be proud of in creating a culture of servant leaders committed to fostering a better world. This commitment has allowed our team to navigate uncertainty from COVID to the economy staffing challenges. While we can't ignore the impact of the current staffing environment on our short-term operations, I'm confident that our team will rise to the challenge and come out even stronger than before. Noodles & Company's off-premise digital and people strengths, executed with a differentiated on-trend menu perfectly suited for today's environment, have the company positioned for significant growth over the years to come. Our performance thus far in 2021, including record-setting AUVs in the second quarter and then again in the third quarter, coupled with a strengthening operating and economic model, also bolsters my confidence in the significant expansion opportunity ahead of us through both company and franchise development. I'm proud of what our team has accomplished and look forward to taking the next steps of the Noodles journey together. With that, Shannon, please open the lines for Q&A. Thank you. To ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Jake Bartlett with Jefferies. Your line is open. Hey, Dave. Hey, Carl. Hope you're both doing well. I wanted to start out on the unit growth side. I appreciate the color on the near term growth challenges. I mean, clearly you are not the only ones experiencing the delays there. Just as we think about 2022, you mentioned the growth would be a little bit more back half loaded. Just wanted to hear your thoughts on what visibility you have into that growth. Are you in a place where, leases are pretty much signed and it's simply a matter of getting the construction done, the equipment installed? I mean, just help us think about what level of visibility you have into that 8% growth for 2022. Yeah, absolutely, Jake. We feel very confident with what we're seeing from a visibility perspective. First off, those restaurants that did get pushed from 2021 to 2022, those are all ready to go. There's a critical piece of equipment that wasn't gonna be able to make it in time for us to get the construction timeline done such that it would be late 2021. So instead, those will be in early 2022. Now you're just looking at the balance of the pipeline, of what we had already said is kind of our target rate. We're actually ahead of where we expected to be from an overall LOI perspective. They are in different processes in terms of construction, lease signing and LOIs. We're actually above where we'd expect it to be. While we still do expect that there could be some delays in terms of when the buildings are actually delivered to us and we have all the equipment available, we feel pretty strong with both the quality and the quantity of the pipeline of what we see for 2022. That includes from a franchise perspective. Okay, perfect. Then on the staffing dynamic, I appreciate the comment that it was about a 1.5% AUV impact in the third quarter, if I heard correctly. It sounds like the suggestion is, those challenges maybe have peaked and it's still uncertain, but maybe we're on the downward side of that. Just thinking about the outlook that you provided, Carl, in terms of the $119 million-$124 million of sales, can you just kind of level set us on what that sort of assumes for an AUV growth perspective versus 2019? Is that, I mean, are you assuming a pretty significant step down in two-year growth? Yeah. Because I'm just trying to figure out what the implied impact there is of staffing, if you could help there. Thank you. Sure, happy to. Our sales guidance reflects a similar trend in AUV growth relative to 2019 that we reported in the third quarter. Continued strength there. Really, when you look at the range, on the high end of the range, we reflect an improvement in staffing and the resulting temporary closure days. The low end of the range, we reflect a continuation of current levels through a good portion of the fourth quarter. Really, that's the volatile piece that defines the range. That's super helpful. Perfect. Thank you. If I could slip just one more in, then I'll turn it over. From the menu price dynamic, we've heard consistently from all the restaurants that we cover when you push on price, you're not seeing much resistance from the consumer. I'm just, you know, curious what you've seen on any traffic impacts from the price you've taken so far and kind of what gives you comfort on the next action, the 2% price you're taking in the fourth quarter. Yeah, this is Dave speaking. I think we feel very strong, James, with the overall value proposition at Noodles & Company. Over the years, we've been pretty reticent and pretty soft in terms of the amount of pricing we've taken. As we've continued to evolve and improve the concept, from a quality of food perspective, convenience, speed, et cetera, we feel our value proposition remains very strong. As a reminder, most of the pricing does tend to fall on third-party delivery, which we have seen continues to be an occasion that's not as price sensitive. That's where we've leaned most heavily into from a pricing perspective. The result of both historically not being very aggressive on pricing as well as not being really touching the core menu very much, we still feel like we're in a very good place, and we've not seen resistance to your point over the last several months on any pricing action we've taken. James, the only thing I'll add to that is the three percent pricing increase we took in August. We took those pretty strategically at inelastic areas of the core menu. We were able to measure that specifically when we look at that from a product mix basis and from a dish velocity basis. That sort of gives our confidence that there hasn't been any impact with the price increase. Perfect. Thanks very much. Thank you. Our next question comes from Jake Bartlett with Truist Securities. Your line is open. Hey, guys. Thanks for taking the question and congrats on the continued momentum in your business here. It's impressive to see your year-to-year same-store sales trends accelerating despite all the staffing issues. I just wanna ask more specifically about the trends that you're seeing in same-store sales throughout the quarter. If you could give October specifically or quarter to date specifically, I think that'd be really helpful. Yeah. I think from overall Q3. Let's actually start with Q3. What we have seen, Jack, was momentum in AUV growth across the system, you know, really through July and that first part of August. As you bifurcate restaurants and markets, that have not had as much staffing challenges, we've been able to maintain that same level of trajectory, that same growth momentum as we've gone into October. The only difference you're seeing really is upon the restaurants that have had some staffing challenges. The fundamental strength in the business remains extremely strong. Don't wanna necessarily disclose pure October numbers because there was some volatility as we think of how COVID impacted us across the quarter. When looking at the fundamental two-year growth, that still remains very consistent with what we had seen during the third quarter. Okay. Great. That's really helpful. Then, I mean, if you think about the drivers in the quarter, you know, looking at digital marketing or you know, your food news with the Tortelloni, and then the reopening of the dining rooms, I guess how would you rank order those or any others you can think of? Certainly the Tortelloni has been a great hit, and we still feel there's a long runway ahead of us from Tortelloni. I think what's exciting is not just has it hit core guests, but one metric we're seeing just across Tortelloni, but even across the entire system, is as people get introduced to the brand, they enter that rewards program, we're seeing the duration of time before their next visit continue to shrink. We're continuing to convert people that are trying the brand into more frequent loyal consumers. At the same time, our core group continues to strengthen as they have more reasons to come to Noodles & Company. The combination of Tortelloni and how we're able to leverage that from a data and digital perspective is extremely encouraging. As you go beneath the hood a little bit more, a couple things that I'd point out that gives us continued confidence that digital retention still being north of 50%, even as we're getting in-restaurant sales come back, that seems to continue to be a very sticky retention and feel very strong about that. Also seeing lunch turn back positive from a same-store sales perspective. That's been the day part most impacted for us as well as most of the industry. That had positive same-store sales during the third quarter for the first time in quite a while. Fundamental aspects of the business, just everything seems to be moving in the right direction. We certainly got some noise here, from a staffing perspective, but the fundamentals very strong, strengthened during Q3, and we've been able to maintain that through Q4. Great. That's great. That's really helpful. Just one quick one on development. Can you break out what you expect for company versus franchise openings in 2022 as some have shifted and it's a little different outlook? We haven't disclosed the exact number, and there are some franchise potential candidates we're looking at that would potentially be doing a refranchising as well. Until we get a little closer and that comes to pass, we have said historically that we expect, that the growth is gonna be predominantly company during 2022. We would expect that still to hold. Then as we go to 2023 and 2024 especially, that's when we be looking for about half of the unit growth to come from franchise and half from company. All right. Great. I'll pass it along. Thank you. Our next question comes from Nicole Miller Regan with Piper Sandler. Your line is open. Thank you. Good afternoon. I wanted to ask first on the top line in the AUVs, if we could look past the noise here at the $1.38 million AUV. If you could, look past seasonality, some one-time items and fully, get the price that you're looking for to absorb inflation, what would be the store-level margin? I'm thinking if the long-term is $1.45 million AUV and a 20%, I believe, store-level margin, this $1.38 has to get you quite close to that. Yeah, we think that is pretty darn accurate, Nicole. As a reminder for folks that, you know, just to level set earlier this year, we announced accelerated growth objectives to get to $1.45 million in AUV and 20% restaurant level margin, by 2024. Clearly, the momentum in the business since we initially disclosed those numbers give us pretty strong confidence that we'll be able to meet that objective and potentially surpass it. The $1.38 million does have some one-time noise from an inflationary perspective, as well as some of the compensation actions we took. Would that 18.1% have been 18.5% or 19%? Potentially in a more normalized environment. I can say clearly as we look at the overall, long-term path of $1.45 million and 20% margin, we feel like the results fall straight in line with what we'd expect. Okay, great. Second and last question, also trying to look through the noise. The pipeline in these shifts are clearly very unforeseen issues. I mean, typically in any pipeline, you know, you would have some cushion. I'm just thinking it's not an LOI or signed lease issue at all, right? I mean, you had all your ducks in a row and then here's the new glitch. If you think of next year and the 8% development, is the pipeline like 9%-10% deep so we could have another unforeseen glitch because they seem to be appearing now more than we like, or are you kind of right at 8% on the nose in terms of the pipeline? Yeah, we're building a pipeline, Nicole, assuming that there's still volatility. Whenever you build a pipeline, you assume some level of, you know, fallout for whatever particular reason. We've built that type of cushion into our overall projections. You know, and it does to your point, LOIs feel very good in terms of the lease negotiations and so forth. We have seen some delays just over the last year as you've seen landlords, you know, as they're going through their base building delivery dates and what they expect. You know, they have some of the same challenges that they're looking at. How we've approached it is as we target 8%, we certainly build a pipeline that's beyond that, recognizing that there could be continued things out of our control. All right. Thanks for the update. Have a great night. Thank you. Thank you. Thank you. Our next question comes from Andrew Strelzik with BMO. Your line is open. Hey. Hey, good afternoon. Thanks for taking the questions. I guess first I just wanted to clarify the gap between the company comps and the franchise comps. Are we supposed to understand that that's, you know, basically a function of the staffing challenges it's seen? I know kind of the lapse and things like that, the numbers can be wonky. Is there more in there describing that divergence or is that really the biggest piece of that? Yeah, from a franchise perspective, as a reminder, everybody, we have about 15% of our restaurants, about 77 units, that are franchised. They tend to be a bit more in college locations, Andrew. One thing we've seen both the company as well as franchise, really strong sense for sales growth as college campuses now versus what they were a year ago. You see some outsized growth. Additionally, from the franchise perspective, they encountered some of the staffing challenges in their particular markets a bit earlier than we did on the company side. They tend to be in markets that aren't quite having as much disruption from a staffing side. As we look at the fundamental strength of the business, what gives us the great confidence that we do, is how our best franchise partners have kind of gone past some of these temporary disruptions, how well they've been able to maintain momentum over that time frame. Got it. Okay. That makes sense and that's helpful. Secondarily, I wanted to dig in a little bit more on the turnover commentary. I know, you know, the brand has had periods where turnover has been a challenge and more recently it's been running in a much better place. You know, in an environment now, where every brand in the restaurant space and even outside is kind of fighting for talent and taking actions to try to get as much talent as they can, you know, to what do you attribute continuing to drive, you know, lower turnover? It's really impressive for the brand, and I'm just curious for your insights about, you know, what you think are the biggest drivers contributing to that. I would say that in the 17.5 years I've been with Noodles & Company, in the 20 years in the industry, the most common thread I've seen in any amount, Andrew, is the success of a restaurant is driven more than anything by the tenure of that general manager. We have done very laser focused approach from a culture, compensation, incentive, rewards, just how we've approached that particular group. One thing that gives me so much confidence as we look forward is our tenure of managers is actually higher, even as we've gone through this process. We've been able to maintain that core culture of strong future leaders. As you maintain that core leadership group, it just permeates through the whole organization. I would attribute more than anything, I mean, I think our teams, we just have great leadership across the board from an operations side, but how we've built that best strength and just the overall consistency from a store level manager perspective, has been the most important part. As we said, we're not immune. I think we feel very good not just with how we're weathering this compared to others, but also how it looks from a foundation perspective as we start building out significantly more restaurants. Got it. Okay. The last piece here, I apologize if I missed this or didn't understand fully, but you know, the comment that the worst is behind the company in terms of the staffing challenges or the margin pressures, you know, what is it exactly that you mean by that? Are you actually seeing the percentages get better? Are you seeing the hours improve a little bit? I know there's uncertainty, but I just wanna understand exactly what you mean by the worst is behind the company. Thank you. Yeah. I approach it two different ways. The first part is, you know, every single day our restaurant teams and, you know, our team throughout the organization is looking at the number of restaurants that have been impacted and have had to reduce hours. We're seeing that number just continue to go down over the last couple weeks. It really started to get higher, at the tail end of Q3 and then into the first part of Q4. Then the last couple weeks you're starting to see some really significant progress. Then the underlying cause in terms of just the pure number of employees you have and how staffed you are at the restaurant level, we are seeing significant progress in terms of the number of applications that are now turning into hires and employees within the organization. That has meaningfully improved, really over the last three to four weeks. That was kind of the leading indicator, that we started seeing a few weeks ago, three or four weeks ago, that are now manifesting itself in fewer restaurants that are getting impacted by the disruption. Got it. Okay. Thank you very much. I'll pass it on. Thank you. As a reminder, to ask a question at this time, please press star then one. Our next question comes from Todd Brooks with C.L. King & Associates. Your line is open. Hey, thanks. Good afternoon, guys. Couple questions for you. One, Carl, can we talk about the one-time bonuses paid in the third quarter, maybe what kind of basis point impact that had and, I guess how effective they were? Do you think it's something that needs to be repeated in future quarters or truly one time? Sure. You're right. During the third quarter, we implemented a thank you bonus. Really this was largely offset by some of the staffing levels that we saw in the restaurant due to the reduction in hours. We would characterize this as one time in nature, and something that we would not anticipate repeating. Having said that, in the fourth quarter, Dave did also mention that we are planning some retention bonus and sign-on bonus. That we're also anticipating being offset by the lower staffing levels. Is there a way you can characterize it without the bonus activity that gets us towards that 18.5%-19% restaurant level operating margin that Dave was kind of talking about in response to Nicole's question at these unit volumes? Yeah, I would say that, what we've talked about in the past, Todd, is that we like our prime cost to be at kind of 55% at these levels, so roughly 25% on COGS, 30% on labor. There's a lot of noise in Q3 itself. So as we look fundamentally at the business and how we then, you know, lever from those starting points, I feel very good that we're continuing on that path. As you look at the labor environment from a long-term perspective, obviously retention and having just being an employer of choice will remain extraordinarily critical. So hiring the right folks, retaining them, and then developing future leaders, that will be a critical component as we look at wage inflation and maintaining that kind of 30% level and then levering off of it. At the same time, we also recognize that with wage inflation, we need to continue to look for what's the next Kitchen of the Future. What are the next operational changes we can make, equipment changes we can make, that will allow us to be more efficient and effective at the restaurant level. While we're not able to necessarily say, "Hey, 18.1 would have been 18.5 or 19 in Q3," excluding some of those one-time events, just because there were so many gives and takes throughout the given quarter, you think of COVID incentives, you name it, COVID vaccine incentives. We think that as we get to that increase in volume and we're able to maintain that over sustained time and then continue to build off of that we're well on our way to that 20% target. Todd, just to add some con- Yeah. Todd, just to add some context to what Dave mentioned about pulling forward some of the compensation increases or the wage inflation. In the third quarter, we saw wage inflation just under 6%. As we look forward to the fourth quarter, we're anticipating mid- to high-single digits. Okay. Great. Thanks, Carl. My final question, I'll pass it along. Two parts. One, just on the franchising side. Dave, you pointed to the fact that, listen, a lot of these guys are multi-unit, multi-brand, and they're working on operating through the same challenges that the rest of the space is. Can you talk qualitatively about how the pipeline's building, given how much the results are improving over the course of the year? Then you kind of touched on not wanting to talk about the unit breakdown for growth for fiscal 2022, because there could be some refranchising opportunities with potential new partners. Can you talk about those efforts, what it takes to decide to refranchise corporate stores that have inflected in the return profile, continues to improve and what you would look for in return for making that decision? Thanks. Yeah. Let's start on the second one in terms of refranchising. What we typically look at is a market where if you can find, a strong operator that has infrastructure, you know, has a pipeline of talent from the concepts that they operate, if they can likely grow that market faster than we could, and they were able to capitalize on their experience. You know, clearly there's an asset light aspect of this or just balancing out the portfolio. But from an overall perspective, we look at that growth opportunity and who do we think is best situated to grow that concept or to grow our concepts as quickly as we think is appropriate. Quantitatively, just how we're looking at the pipeline itself, I'm very pleased with what we're seeing. As you referred to, Todd, the Q2 results. Now, as you look at Q3 results, I think everything that we're seeing as a franchisee, they're very attracted to the cash-on-cash return, the momentum in the business, how we're positioned, the effectiveness of our new unit prototype. So as we continue to get more and more, more strength underneath us from a fundamental business success and operating model, we just continue to build more from a flywheel perspective, if you will. So yes, you know, as we said, folks we're talking to, you know, they're working through some of the same, you know, supply chain disruption, staffing disruption issues that we're dealing with from the company side and as the whole industry is dealing with. I feel like as you can expect some good things in the next three-six months in terms of momentum on the franchise side. Okay, great. Thanks, Dave. Thank you. I'm currently showing no further questions at this time. I now turn the call back over to Dave for any closing remarks. Yeah, I just wanna say I appreciate everybody's time this afternoon. Again, you know, thank you to our team. Time and time again over the past 18 months, they've risen to unprecedented challenges, and we're already seeing ourselves kind of starting to get on the right side of this current challenge. As we look into the balance of 2021 and beyond, couldn't be more excited and proud of where the team is and where we're going from this point forward. Thank you again for your time. Have a wonderful evening. This concludes today's conference call. Thank you for participating. You may now dis-