Noodles & Company Q1 Earnings Call Highlights

Key Points

• Sales momentum: Noodles reported system-wide comparable sales growth of more than 9% in Q1 and April, marking 16 consecutive months of positive same-store sales, with company AUV up 13.5% to $1.49 million and traffic +4.8%.
• Profitability improvement: Restaurant contribution margin expanded 460 basis points to 14.9% and adjusted EBITDA more than tripled to $7.7 million, driven by lower COGS (down 120 bps), labor efficiencies, and improved restaurant execution.
• Portfolio and outlook: Management is closing underperforming locations (20 company-owned in Q1; 30–35 expected in 2026), rolling out targeted marketing and loyalty programs like "Boost Week," and raised full-year 2026 guidance to $483–498M revenue and $32.5–37.5M adjusted EBITDA while targeting roughly $10M of debt reduction.

Noodles & Company NASDAQ: NDLS reported first-quarter 2026 results that management said showed “consistent and sustainable favorable results” across sales and profitability, supported by improved restaurant execution, more disciplined marketing, and ongoing menu initiatives.

Sales momentum extends into April

Chief Executive Officer Joe Christina said the company delivered system-wide comparable sales growth of more than 9% in the first quarter, and that momentum continued into the second quarter with April system-wide comp sales growth of over 9%, including more than 10% for company-operated restaurants. Christina added that the company has now posted positive same-store sales for 16 consecutive months.

Chief Financial Officer Mike Hynes reported system-wide comp restaurant sales increased 9.1% in the quarter, including a 9.4% increase at company-owned restaurants and an 8% increase at franchise restaurants. Company comp traffic rose 4.8%, while average check increased 4.4%, which included 2% effective pricing during the quarter.

Hynes said company average unit volumes increased 13.5% to $1.49 million.

Margins expand as cost pressures remain modest

Management highlighted significant margin improvement alongside the sales gains. Christina said restaurant contribution margins increased 460 basis points in the first quarter, which he said helped drive adjusted EBITDA to more than triple year-over-year.

Hynes detailed that restaurant contribution margin rose to 14.9% from 10.3% in the prior-year period. Cost of goods sold declined to 25.4% of sales, down 120 basis points year-over-year. Hynes attributed the improvement to lower food waste related to new menu items, menu pricing, and lower discounting, partially offset by higher food costs tied to new offerings and modest inflation. He said food inflation was 0.2% in the quarter.

Labor costs were 30.0% of sales, down 250 basis points from last year, which Hynes said reflected sales leverage and labor efficiencies, partially offset by wage inflation. Hourly wage inflation was 1.9%.

Occupancy costs decreased to $10.4 million from $11.5 million in 2025 due to a lower company-owned restaurant count over the past 12 months. Other restaurant operating costs increased 10 basis points to 21.2% of sales, driven by higher third-party delivery fees from increased delivery sales and higher marketing expense, mostly offset by sales leverage and lower repairs and maintenance costs, according to Hynes.

Portfolio optimization and operational improvements

Christina said the company has been operating “more consistent restaurant operations,” with improved service—particularly during dinner—and reported that guest satisfaction scores increased 10% over the last six months. He said improvements were achieved across in-restaurant, native digital, and third-party delivery channels.

The company also discussed its restaurant portfolio optimization efforts. Christina said Noodles had “too much density” in select areas, particularly as off-premise sales grew, and the company decided to close underperforming restaurants. He said the closures resulted in significant sales transfers to nearby restaurants, increasing baseline average unit volume at remaining locations and improving restaurant-level profitability.

Hynes reported that during the first quarter the company closed 20 company-owned restaurants and three franchise restaurants as part of the optimization project. During the question-and-answer session, Hynes said about 250 basis points of the first-quarter comp increase was attributable to sales transferred from closed locations, with the majority of the comp gain coming from “core business improvement.”

Asked about winter weather impacts, Hynes said there was some timing between periods, but overall it “washed out” and wasn’t a major quarterly impact.

Marketing, loyalty growth, and limited-time offers

Christina said marketing has become “more disciplined, more connected, and more effective,” with performance actively managed across channels to allocate spending more efficiently. He also said a meaningful portion of growth is coming from new guests, noting that new guest active purchases increased 36% year-over-year and loyalty sign-ups grew 33% in the quarter.

The company introduced a “Boost Week” offer in the first quarter, which Christina described as a time-bound activation designed to drive profitable traffic during key periods. He said the winter offer allowed reward members to enjoy “two of our culinary classics for $12,” which helped add new loyalty members, reactivate lapsed guests, and increase website traffic. Based on the performance, Christina said the company plans to make Boost Week a repeatable program run quarterly.

In response to an analyst question on execution timing, management said Boost Week will run in specific weeks of the year outside of limited-time offer windows and is tied to the rewards program, including being available to new guests once they sign up.

On the menu side, Christina said the company is balancing returning fan favorites, bold global flavors, and “culturally relevant partnerships.” He cited the return of Steak Stroganoff as a “highly successful” limited-time offer in the first quarter and said the company highlighted its Asian category in March, bringing back Indonesian Peanut Sauté alongside Chili Garlic Ramen. Christina said that during that limited-time offer window, the Asian category mix increased 40%.

Christina also announced a new limited-time offer available nationwide: Chicken Artichoke & Asparagus Rigatoni. Alongside the launch, Noodles is partnering with “Cravings by Chrissy Teigen” on a Craveable Bundle that includes the new rigatoni dish and a Cravings-inspired “Crispy” treat. In the Q&A, management said the quarter’s limited-time offer would be supported by the Cravings partnership and the bundle, with the rigatoni serving as the primary LTO for the period.

Financial results, balance sheet, and raised outlook

For the first quarter, Hynes said total revenue was relatively flat year-over-year at $123.8 million, with strong comp sales mostly offset by restaurant closures. General and administrative expense was $12.5 million compared with $12.8 million a year earlier.

The company posted a net loss of $3.4 million, or a loss of $0.58 per diluted share, compared with a net loss of $9.1 million, or a loss of $1.58 per diluted share, in the prior-year quarter. Hynes said the first-quarter 2026 loss included a $2.7 million non-cash impairment charge primarily related to the decision to close underperforming restaurants. Adjusted EBITDA rose to $7.7 million from $2.4 million a year ago.

Capital expenditures were $2.1 million compared with $2.9 million in the prior-year quarter. At quarter-end, Noodles had $1.4 million of available cash and total debt of $106.8 million, which Hynes said was down $3.4 million from the end of 2025 as the company paid down debt in a seasonally low quarter.

Based on the first-quarter performance, Hynes said the company is raising full-year 2026 guidance, calling out expectations including:

• Total revenue of $483 million to $498 million, including comp restaurant sales growth of 7% to 10%
• Restaurant contribution margin of 15.5% to 17%
• G&A expense of $50 million to $53 million, including approximately $2.5 million in stock-based compensation
• Adjusted EBITDA of $32.5 million to $37.5 million
• Capital expenditures of $9.5 million to $10.5 million
• 1 to 2 new franchise restaurant openings
• Closures of 30 to 35 company-owned restaurants and five franchise restaurants

Hynes said the company continues to expect to be free cash flow positive and sees an opportunity to reduce debt by approximately $10 million in 2026, inclusive of the $3.4 million reduction in the first quarter.

In closing remarks, Christina said the company remains focused on executing “the fundamentals every day” to deliver a better guest experience, pointing to sequential improvements in guest satisfaction scores, sustained traffic growth, increased engagement, and more consistent restaurant performance.

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.

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