Noodles & Company

What they do

Noodles & Company operates company-owned and franchise restaurants offering cooked-to-order noodle and pasta dishes, salads, soups and appetizers. As of December 30, 2025, the company operated 423 restaurants in 31 states, comprising 340 company-owned locations and 83 franchise locations. Approximately 59% of 2025 sales were derived from digital ordering, including mobile app, website and third-party delivery. Restaurants are typically 2,000 to 2,600 square feet in suburban, collegiate and urban markets.

Revenue drivers

• Company-owned restaurants — Sales at 340 company-operated locations, driven by in-restaurant dining, quick pick-up and delivery; company-owned comparable sales increased 11.4% in Q2 2026.
• Franchise restaurants — 83 franchise-operated locations generating royalty and fee revenue; franchise comparable sales increased 5.5% in Q2 2026.
• Digital ordering — Approximately 59% of 2025 sales came through digital channels including the mobile app, noodles.com and third-party delivery services.

Recent performance

For the second quarter ended June 30, 2026, total revenue increased 0.5% to $127.0 million from $126.4 million in the prior-year quarter. System-wide comparable restaurant sales increased 10.3%, with company-owned comparable sales up 11.4% and franchise comparable sales up 5.5%. Net loss was $4.0 million, or $0.67 loss per diluted share, compared to a net loss of $17.6 million, or $3.04 loss per diluted share, in Q2 2025. Operating margin was (1.2)% compared to (11.7)% in the prior-year quarter, and restaurant contribution margin was 17.2% compared to 12.8%. Adjusted EBITDA increased 79% to $10.8 million from $6.0 million.

Strategy

The company completed a comprehensive 2025 menu upgrade with eight new and four upgraded entrées, followed by the Q3 launch of the value-priced Delicious Duos platform. A strategic review initiated September 3, 2025 explores alternatives including refinancing debt maturing July 27, 2027. Management is executing a portfolio optimization program, closing underperforming restaurants, with 33 company-owned closures in 2025 and guidance for 30 to 35 additional company closures in 2026. The company implemented a 1-for-8 reverse stock split effective February 18, 2026. Priorities include menu innovation, operational execution, marketing effectiveness and debt reduction from free cash flow.

Risks

• Liquidity and refinancing risk — As of June 30, 2026, cash was $1.3 million, total liabilities were $286.8 million, and the A&R Credit Agreement matures July 27, 2027, creating refinancing risk.
• Negative shareholder equity — Shareholder equity was negative $51.0 million as of June 30, 2026, reflecting accumulated deficits and raising concerns about capital structure.
• Strategic review uncertainty — The outcome and timing of the strategic review announced September 3, 2025 is uncertain, and no assurance exists that any transaction will be completed or its benefits achieved.
• Execution of menu and value initiatives — The company's menu innovation, limited time offerings and Delicious Duos value platform may not achieve desired results if customers do not favor new offerings or pricing.

Outlook

For fiscal year 2026, management expects total revenue of $485 million to $500 million, including comparable restaurant sales growth of 8.0% to 11.0%. Restaurant level contribution margins are guided to 16% to 17.0%, and Adjusted EBITDA to $34 million to $38 million. The company expects one new franchise opening, 30 to 35 company-owned closures and five franchised closures, and capital expenditures of $9 million to $10 million. Management also expects year-end debt balance at or below three times 2026 Adjusted EBITDA.