Strategic Movements December 2021


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published December 17, 2021

Noodles & Co Testing Higher Prices

Carl Lukach, CFO of Noodles & Co (NDLS), drove an $8 price tag on their new Tortelloni dish into the market.  The price was a little higher than most dishes, but the dish sold well.  With that evidence, they announced a $0.25 price increase across many similar dinners.  Noodles & Co tested a 15% app delivery surcharge in Chicago and Phoenix and saw no reduction in sales.  With that evidence, they announced plans for a 20% app delivery surcharge across the rest of the nation.  Labor, logistics, and ingredient costs are up, and so are the costs of the competing alternatives from other fast food to groceries.

Sometimes, small price tests are the best means to identify opportunities to drive prices higher.  Will other restaurants and food manufactures learn to price experiment as well?

NDLS closed relatively unchanged at $10.54 on 6 December following the news with a P/E ratio reminiscent of high-growth companies at 108.2; 2020 revenue was $384 million.

Bicycle Maker Learns to Raise Prices

Jason Douglas, reporter with the Wall Street Journal, wrote an in-depth article on the challenges facing a small British bicycle manufacturer.  Titled “Is Inflation Sticking Around? Bicycle Makers Offer Some Clues”, the article provides an excellent case study in pricing.  CEO Richard Thorpe of Karbon Kinetics, Ltd didn’t raise prices despite higher input costs and short supply in 2021.  He also didn’t make any money.  Next year, he states he will raise prices by 25%.  We all live and learn, but let’s learn from other people’s mistakes if we can. Use this story if you are having challenges convincing your team that now is the time to raise prices.

About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.