Noodles & Company (NASDAQ:NDLS) executives highlighted accelerating sales momentum and improved profitability during the company’s fourth quarter 2025 earnings call, pointing to menu innovation, operational execution, and a portfolio optimization effort as key drivers. Management also reiterated that the board’s previously announced review of strategic alternatives remains ongoing, with no decisions made and no timetable disclosed.
Sales momentum accelerates into early 2026
Chief Executive Officer Joe Christina said the company generated “meaningful and sustained momentum” in 2025, culminating in nearly 7% system-wide comparable sales growth in the fourth quarter. He added that performance has strengthened further in the first quarter of 2026, with system-wide comparable sales growth of over 9% so far, with about a week remaining in the quarter.
Chief Financial Officer Mike Hynes provided additional detail, reporting that company comparable sales were up more than 9% year-to-date in the first quarter of 2026. He emphasized the strength of those results against what he described as a tougher comparison in the prior year period, when first quarter 2025 comparable sales were positive 4.7% and included significant marketing tied to the company’s new menu rollout in March 2025.
Menu launches, LTOs, and value platform highlighted as traffic drivers
Management repeatedly credited menu initiatives for driving guest engagement. Christina called 2025 a pivotal year for the brand, citing what he described as the company’s most comprehensive new menu launch in its history and the introduction of limited time offers (LTOs). Among them, he highlighted Chili-Garlic Shrimp Ramen as one of the strongest recent LTOs and said it likely brought in new customer groups looking for ramen in a fast-casual setting.
Christina said the company recently brought ramen back alongside another fan favorite, Indonesian Peanut Sauté, as part of efforts to raise awareness of its Asian noodle offerings. He added the company is evaluating additional ramen recipes, suggesting a ramen section could be as successful as its mac-and-cheese offerings.
For early 2026, Christina said Noodles brought back Steak Stroganoff as an LTO and supported it with an “AI-driven campaign” designed to generate engagement. He said results exceeded prior launches of the item and positioned it as a recurring winter LTO in future years.
On value, Christina said the company focused on “everyday affordability” without discounting through its “Delicious Duos” platform, which combines menu items at an accessible price point. He said the platform has supported traffic and frequency while maintaining margins and also helped raise awareness of the new menu due to how it showcases different dishes. In the Q&A, Christina said Delicious Duos mix has run around 5% since launching in late July of the prior year, and that mix can vary depending on whether an LTO is active.
Operational excellence and guest satisfaction improvements
Christina said the company strengthened execution through an Operational Excellence Review (OER) program, which he described as a structured coaching and accountability model used by area managers and regional leaders. He said the program focuses on identifying root causes, developing action plans, and reinforcing consistent execution.
According to Christina, guest satisfaction improved over the course of 2025 as measured by SMG, with the company “steadily” closing the gap to the fast-casual category average. He said overall satisfaction reached 72% in January, which he characterized as the closest the brand has been to the fast-casual benchmark since the program launched in early 2024.
Fourth quarter financial results show margin improvement
Hynes said fourth quarter revenue increased 0.8% year over year to $122.8 million. System-wide comparable restaurant sales rose 6.6%, including 7.3% growth at company-owned restaurants and 3.8% growth at franchise restaurants. Company comparable traffic increased 1.4%, while average check increased 5.8%, inclusive of about 2% effective pricing during the quarter. Company average unit volumes rose 9.9% to $1.44 million.
Profitability improved versus the prior year. Restaurant contribution margin increased to 14.1% in the fourth quarter from 11.2% a year earlier. Hynes said cost of goods sold was 26.0% of sales, down 120 basis points, driven by menu price, vendor rebates, and lower discounting, partially offset by higher food costs tied to the new menu and modest inflation. He pegged food inflation at approximately 1% in the quarter.
Labor costs were 30.9% of sales, down 140 basis points year over year due primarily to sales leverage, partially offset by wage inflation. Hynes said hourly wage inflation was 2.3% in the quarter. Occupancy costs decreased to $10.7 million from $11.4 million, which he attributed to a lower company-owned restaurant count over the past 12 months. Other restaurant operating costs increased 40 basis points to 20.1%, driven by higher third-party delivery fees (from higher delivery sales mix) and higher marketing expenses, mostly offset by leverage.
G&A expense was $11.7 million, up from $11.3 million. Net loss was $6.8 million, or a loss of $1.16 per diluted share, compared with a net loss of $9.7 million, or a loss of $1.70 per diluted share, in the prior-year quarter. Hynes said the quarter included a $5.6 million non-cash impairment charge primarily related to the decision to close underperforming restaurants. Adjusted EBITDA rose to $7.6 million from $4.0 million, an increase of more than 88%.
Closures, sales transfer effects, and 2026 outlook
Noodles continued closing underperforming restaurants as part of a portfolio optimization initiative. Hynes said the company closed nine company-owned and three franchise restaurants in the fourth quarter. In total, the company closed 33 restaurants in 2025 and has closed 20 restaurants year-to-date in 2026. The company expects to close 30 to 35 restaurants in 2026.
Management emphasized that closures have led to a “material transfer of sales” to nearby locations, which it views as a permanent benefit to baseline average unit volumes at remaining sites. Hynes estimated closures benefited fourth quarter 2025 comparable sales by roughly 100 to 150 basis points and forecasted a 200 to 300 basis point benefit to first quarter 2026 comparable sales.
In response to an analyst question about how much of 2026 profit growth is driven by closures versus underlying operations, Hynes said that using the midpoint of the company’s adjusted EBITDA guidance implies about a $10 million year-over-year improvement, with “a little less than half” (just under $5 million) due to closures and the remainder due to core business improvement.
Hynes also shared liquidity and capital details: fourth quarter capital expenditures were $2.3 million, cash on hand was $1.3 million at quarter-end, and debt totaled $110.2 million, with more than $11 million available for borrowing under the revolving credit facility.
For guidance, the company projected first quarter 2026 comparable sales of approximately 9% and adjusted EBITDA of $5.7 million to $6.3 million. For full-year 2026, Noodles guided to total revenue of $478 million to $493 million, comparable sales growth of 6% to 9%, restaurant contribution margin of 14.7% to 16%, and adjusted EBITDA of $30 million to $35 million. Additional guidance items included G&A expense of $49 million to $52 million (including approximately $2.5 million of stock-based compensation), depreciation and amortization of $24 million to $25 million, interest expense of $10 million to $11 million, and one to two new franchise openings. Capital expenditures are expected to be $9.5 million to $10.5 million, and Hynes said the company expects to be free cash flow positive with an opportunity to reduce debt by $5 million to $10 million in 2026.
During the Q&A, Christina said the company had not seen an obvious benefit from early tax refunds or a clear negative impact tied to geopolitical conflict or gas price increases, adding that performance trends have been consistent outside of weather impacts.
Christina closed by saying the company’s focus on fundamentals—food, operations, and targeted marketing—has supported the year-over-year adjusted EBITDA improvement in late 2025 and underpins expectations for further growth in 2026.
About Noodles & Company (NASDAQ:NDLS)
Noodles & Company is an American fast-casual restaurant chain that specializes in a variety of noodle and pasta dishes inspired by global cuisines. Its menu features signature entrees such as the Wisconsin Mac & Cheese and Japanese Pan Noodles, alongside soups, salads, shareable sides and seasonal offerings. The brand emphasizes fresh ingredients, customizable meals and a quick-service format designed to accommodate dine-in, takeout and digital ordering channels.
The company was founded in 1995 by Aaron Kennedy in Boulder, Colorado, with the aim of introducing a diverse noodle-centric menu to the American market.
