Noodles & Company (NDLS) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call revealed a 0.8% revenue increase, significant sales growth, and improved restaurant margins, despite ongoing closures and a net loss. The Q&A highlighted confidence in core business momentum and effective menu strategies, with no negative impacts from external factors. While challenges like high food and labor costs persist, the company's operational efficiencies and strategic focus on profitability signal a positive outlook. The positive reaction to operational improvements and strategic initiatives outweighs the risks, predicting a stock price increase of 2% to 8%.
Key Financial Performance
Total Revenue $122.8 million in Q4 2025, a 0.8% increase year-over-year. The increase was driven by system-wide comparable restaurant sales growth of 6.6%, including a 7.3% increase at company-owned restaurants and a 3.8% increase at franchised restaurants.
System-wide Comparable Restaurant Sales Increased 6.6% in Q4 2025. This includes a 7.3% increase at company-owned restaurants and a 3.8% increase at franchised restaurants. The growth was attributed to increased traffic and average check size.
Company Comparable Traffic Increased 1.4% in Q4 2025. This was supported by improved restaurant execution and marketing efforts.
Average Check Increased 5.8% in Q4 2025, inclusive of 2% effective pricing during the quarter. This reflects higher menu prices and customer spending patterns.
Company Average Unit Volumes Increased 9.9% in Q4 2025 to $1.44 million. This was driven by sales momentum and operational improvements.
Restaurant Contribution Margin Increased to 14.1% in Q4 2025 from 11.2% in Q4 2024, a 290 basis point improvement. This was due to better cost management, including a 120 basis point decrease in COGS and a 140 basis point decrease in labor costs.
Cost of Goods Sold (COGS) 26.0% of sales in Q4 2025, a 120 basis point decrease year-over-year. This was driven by menu pricing, vendor rebates, and lower discounting, partially offset by higher food costs and modest inflation.
Labor Costs 30.9% of sales in Q4 2025, down 140 basis points year-over-year. This was due to sales leverage and operational efficiencies, partially offset by 2.3% hourly wage inflation.
Net Loss $6.8 million in Q4 2025, compared to a net loss of $9.7 million in Q4 2024. The improvement was due to higher sales and better cost management, despite a $5.6 million noncash impairment charge related to restaurant closures.
Adjusted EBITDA $7.6 million in Q4 2025, an 88% increase from $4 million in Q4 2024. This reflects improved sales and operational efficiencies.
Capital Expenditures $2.3 million in Q4 2025, compared to $3.8 million in Q4 2024. The decrease was due to reduced spending on company-owned restaurants.
Debt Balance $110.2 million at the end of Q4 2025, with $1.3 million in available cash and over $11 million available for future borrowings under the revolving credit facility.
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Operating Highlights
New Menu Launch: Introduced the most comprehensive new menu in the company's history, including limited-time offers like Chili Garlic Ramen and Steak Stroganoff, which attracted new customer groups and reinforced the brand's authority in noodles.
Delicious Duos: Launched a value-focused meal combination platform offering variety and affordability without compromising quality, which increased consumer awareness of new menu offerings.
Sales Growth: Achieved system-wide comparable sales growth of nearly 7% in Q4 2025 and over 9% in Q1 2026, with traffic growth of over 4%.
Restaurant Closures: Closed underperforming restaurants, resulting in a material transfer of sales to nearby locations and a baseline increase in average sales volume.
Operational Excellence Review Program: Implemented a structured coaching and accountability model to improve training, leadership alignment, and operational standards, leading to better guest satisfaction scores.
Cost Management: Improved labor productivity, managed food costs with precision, and increased marketing efficiency, contributing to a 290 basis point improvement in restaurant-level margins in Q4 2025.
Strategic Alternatives Review: The Board of Directors is exploring options to maximize shareholder value, including refinancing debt or other financial transactions, with no decisions made yet.
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Risk or Challenges
Regulatory and Legal Risks: The company acknowledges risks and uncertainties related to forward-looking statements, as outlined in their annual report and SEC filings. These could impact future financial performance.
Restaurant Closures: The company closed 33 restaurants in 2025 and 20 more in early 2026, with plans to close an additional 30-35 restaurants in 2026. While closures aim to optimize profitability, they involve risks such as potential loss of customer base and operational disruptions.
Economic Environment: The macroeconomic environment has made consumers more value-conscious, which could pressure pricing strategies and margins.
Food and Labor Costs: Higher food costs associated with new menu offerings and modest inflation, as well as wage inflation, could impact profitability despite efforts to manage costs.
Debt Levels: The company has a debt balance of $110.2 million, which could pose financial risks if not managed effectively, despite plans to reduce debt by $5-10 million in 2026.
Third-Party Delivery Costs: Higher third-party delivery fees due to increased delivery channel sales could negatively impact restaurant operating costs.
Strategic Alternatives Review: The ongoing review of strategic alternatives, including refinancing debt or other transactions, introduces uncertainty and potential risks depending on the outcomes.
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Guidance & Outlook
Comparable Sales Growth: The company projects comparable sales growth of approximately 9% for the first quarter of 2026 and 6% to 9% for the full year 2026.
Adjusted EBITDA: The company expects adjusted EBITDA of $5.7 million to $6.3 million for the first quarter of 2026 and $30 million to $35 million for the full year 2026.
Revenue: Total revenue for 2026 is forecasted to be between $478 million and $493 million.
Restaurant Contribution Margin: The company anticipates restaurant contribution margins to be between 14.7% and 16% for the full year 2026.
Capital Expenditures: Capital expenditures for 2026 are estimated to be between $9.5 million and $10.5 million.
Debt Reduction: The company plans to reduce its debt balance by $5 million to $10 million in 2026.
Restaurant Closures: The company expects to close 30 to 35 underperforming restaurants in 2026, with a focus on optimizing the portfolio and transferring sales to nearby locations.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How much of the year-over-year improvement in the '26 guidance metrics is attributed to the sales transfer versus core business momentum?
A:Michael Hynes stated that for the full year '26 guidance of $30 million to $35 million adjusted EBITDA, about $10 million improvement year-over-year is expected. Less than half of this improvement (just under $5 million) is attributed to closures, with the rest due to core business improvement.
Q:Are there any stimulative benefits from early tax refund activity or pressures from gas price increases affecting the 9% performance number?
A:Joseph Christina mentioned that they are not seeing an obvious impact from tax refunds or gas price increases. Performance year-to-date has been consistent, and their same-store sales have been outperforming the industry by over 9 percentage points since early '26. Michael Hynes added that their menu strategy, including Delicious Duos and strong LTOs, has been designed to sustain performance.
Q:What is the mix of Delicious Duos in the sales?
A:Joseph Christina stated that the Delicious Duos mix is around 5%, which aligns with expectations since its inception in late July last year.
Q:Review of Unclear Management Responses
A:None of the questions were avoided or lacked clarity. All responses were direct and provided sufficient detail.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI
Christina Chief
Delicious Duos
LTOs
Noodles restaurant
Ramen dish
accountability
authority
awareness menu
benefit sale
bowl
collection
comp sale
confidence
consistency
core
detail
discount value
focus
fundamental
goal
guest experience
history
launch Delicious
marketing approach
optimization project
option
portfolio optimization
price
result work
return
review alternative
sale acceleration
sale date
satisfaction
standard
traffic period
transfer
NDLS Transcript
Noodles & Company (NDLS) Q4 2025 Earnings Call Transcript
Positive3-25
The earnings call revealed a 0.8% revenue increase, significant sales growth, and improved restaurant margins, despite ongoing closures and a net loss. The Q&A highlighted confidence in core business momentum and effective menu strategies, with no negative impacts from external factors. While challenges like high food and labor costs persist, the company's operational efficiencies and strategic focus on profitability signal a positive outlook. The positive reaction to operational improvements and strategic initiatives outweighs the risks, predicting a stock price increase of 2% to 8%.
Noodles & Company (NDLS) Q3 2025 Earnings Call Transcript
Unknown11-5
The earnings call presents a mixed picture. Financial performance shows growth in sales and digital engagement, but increased net loss due to impairments and cost pressures from inflation and delivery fees. The Q&A indicates positive reception to new menu items but also highlights uncertainties like strategic alternatives and debt levels. The optimistic guidance and operational improvements provide some upside, but risks and uncertainties balance this out, resulting in a neutral outlook for stock price movement.
Noodles & Company (NDLS) Q2 2025 Earnings Call Transcript
Unknown8-13
The earnings call summary shows mixed results: slight revenue decline, increased costs, and a net loss. While there are positive aspects like menu innovations and digital engagement, challenges such as increased food costs, CEO transition, and negative cash flow guidance weigh heavily. The Q&A section provided no clarity, further clouding outlook. Given these factors, the stock is likely to experience a negative reaction in the short term.
Noodles & Company (NASDAQ:NDLS) Q1 2025 Earnings Call Transcript
Unknown5-9
The company's earnings miss and increased food and labor costs indicate financial instability. Despite strong sales growth from new menu items, restaurant-level margins declined. The plan to close multiple restaurants and existing debt levels further highlight operational challenges. Although loyalty engagement is strong, the lack of a share repurchase program and high debt levels are concerning. The absence of specific guidance on ongoing marketing investments adds uncertainty. Overall, the financial risks and operational challenges outweigh the positive sales trends, suggesting a negative stock price movement in the near term.
NDLS Report
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