Noodles & Company’s turnaround gains momentum

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Noodles & Company’s operational improvements and its new value menu seem to be paying off as the fast-casual chain reported sequentially improving same-store sales and traffic over the course of the quarter ended Sept. 30.

For the third quarter as a whole, same-store sales were up 4%, but in an earnings call after market on Wednesday, chief financial officer Michael Hynes said comps were up by just 1.6% in July — about the same as the 1.5% it reported for Q2 — but they grew to 4.5% in August and 5.5% in September. The momentum continued into October when same-store sales grew by 8%.

The improvement came following the July 30 launch of Delicious Duos, a value platform pairing a small entrée with a side, priced starting at $9.99.

Chief executive officer Joe Christina attributed the sales bump in October in part to ongoing operational improvements, but also to the introduction in the beginning of that month of Chili Garlic Ramen, a bowl of broth-less ramen noodles with a chile-garlic spice blend priced at $8.95 as a limited-time offer available through the end of the year.

“This launch delivered on several key drivers: A craveable, high-quality product, a fresh expression of global flavor trends, and an unexpected yet approachable twist on a familiar comfort food,” Christina said. “Together, these elements captured guests’ curiosity and enthusiasm evidenced by strong trial and early repeat performance.”

He added that the LTO attracted younger guests, including first-time visitors.

“The success of our ramen LTO reflects the power of thoughtful menu evolution and flavor innovation working in tandem.”

He said the success builds on the revamped menu launched in March, “which delivered noticeable improved food to our guests.”

“We are building a foundation for sustained growth and I’m confident in the path ahead,” he added.

Additionally, digital sales were up by 12%, mostly driven by third-party delivery.

“Digital remains a critical growth engine for Noodles, strengthening both awareness and accessibility while aligning with our overall sales performance trends.”

Traffic was down by 0.6% for the quarter, but Hynes said it was positive for the second half of the quarter, and average checks were up by 4.6%, inclusive of a 2% price increase.

Average unit volumes were up by 5.4% to $1.34 million.

But the company still reported a net loss of $9.2 million, or 20 cents per share, compared to a loss of $6.8 million, or 15 cents per share, in Q3 of 2024.

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However, $5.3 million of that loss was an impairment charge related to the closures of underperforming restaurants. Noodles has closed a total of 29 restaurants this year, including 15 company-owned and three franchised restaurants in Q3. Hynes said they’re on target to close 31 to 34 by the end of 2025.

This is a good thing, he said, noting that neighboring restaurants capture about 30% of the sales of the ones that are closed.

“We continue to be pleased with results from closing underperforming restaurants,” Hynes said. “The closures remove restaurants with negative cashflow from our system and post-closure we’re seeing nearby Noodles restaurants experience an increase in sales and profits. We expect the closure of underperforming restaurants in 2025 to positively impact 2026 restaurant level contribution by over $2 million.”

Noodles closed out the quarter with 435 restaurants — 349 company-owned and 86 franchised. That’s down from 471 (377 company-owned and 94 franchised) as of Oct. 1, 2024.

Christina said the company had also made “meaningful progress in operations,” focusing on what matters most to customers: order accuracy, speed of service, taste of food, and hospitality. Each of those issues are being addressed with targeted training, and dedicated coaching teams have visited nearly 200 restaurants.

He also teased upcoming LTOs, including an introduction in December of its newest holiday Crispy — its signature puffed rice treat — “created in a collaboration with one of America’s favorite candy bars.” 

Early in 2026 he said the chain would bring back one of the most requested fan favorites, “answering the call for guests who can’t wait to see it return.”

Although he didn’t name the item, Christina’s predecessor, Drew Madsen, who stepped down at the end of August, had said in previous earnings calls that Noodles’ Steak Stroganoff had become a wintertime favorite.

In early September, Noodles hired financial services firm Piper Sandler to review strategic alternatives for maximizing shareholder value (shares closed at 66 cents on Wednesday).  

“The process may include a range of potential options such as refinancing existing debt or other strategic or financial transactions,” Christina said. “No decisions have yet been made and there are no set timetables for completion. Until the review is completed we will not provide additional commentary.”

But Hynes did provide guidance for the full year, revised upward thanks to improved performance. 

He projected revenue of $492 million to $495 million, same-store sales growth of between 3.6% and 4.2% and contribution margin of 12.3% to 12.7%.

Noodles & Company Q3 by the numbers: 

• Same-store sales up 4% comprised of 4% at company-owned restaurants and 4.3% at franchised locations

• Total revenue down 0.5% to $122.1 million

• Net loss of $9.2 million, or 20 cents per share

• Restaurant contribution margin of 13.2% compared to 12.8% a year ago

 

Contact Bret Thorn at [email protected] 

Follow him on TikTok and Instagram: @foodwriterdiary 

 

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