Noodles & Company Q2 Earnings Call Highlights

Key Points

• Noodles & Company posted stronger second-quarter results, with revenue of $127 million, comparable restaurant sales up 10.3%, and adjusted EBITDA jumping 79% to $10.8 million. The net loss also narrowed sharply versus a year earlier.
• Management raised full-year guidance for revenue, comparable sales, restaurant contribution margin and adjusted EBITDA, signaling confidence in continued momentum. The company also expects to be free-cash-flow positive and reduce debt by about $10 million in 2026.
• Menu innovation, marketing and closures are driving performance, as Asian-inspired promotions and the “Made Right Now” campaign helped lift traffic and digital sales. Noodles also said closures of weaker stores are transferring sales to nearby locations, boosting same-store sales at stronger restaurants.

Noodles & Company NASDAQ: NDLS reported second-quarter 2026 revenue of $127 million, up $600,000 from a year earlier, as double-digit comparable restaurant sales growth largely offset the impact of restaurant closures. The company also raised its full-year outlook for revenue, restaurant contribution margin and adjusted EBITDA.

Chief Executive Officer Joe Christina said the quarter represented one of the company’s strongest performances since it became publicly traded, citing expanding restaurant-level margins, sales growth and improved operating execution. “Our operating model is working,” Christina said, pointing to restaurant operations, menu innovation, marketing efforts and portfolio optimization.

Sales growth and profitability improve

Systemwide comparable restaurant sales rose 10.3% during the second quarter. Comparable sales at company-owned restaurants increased 11.4%, while franchise restaurant comparable sales increased 5.5%.

At company-owned locations, comparable traffic increased 7.6% and average check rose 3.8%, including 2.1% of effective price. Average unit volumes increased 15.9% to $1.57 million.

Restaurant contribution margin increased 440 basis points from the prior-year period to 17.2%, compared with 12.8% in the second quarter of 2025. Hynes said the gain reflected higher sales, pricing, favorable menu mix, lower food waste and labor efficiencies.

• Cost of sales declined 160 basis points to 24.9% of sales, despite 0.7% overall cost-of-sales inflation.
• Labor costs declined 230 basis points to 29.4% of sales, with hourly wage inflation of 1.6%.
• Occupancy costs fell to $10.2 million from $11.4 million, reflecting a lower company-owned restaurant count.
• Other restaurant operating costs increased 60 basis points to 20.3% of sales, primarily because of higher third-party delivery fees associated with increased delivery sales.

Second-quarter net loss narrowed to $4 million, or $0.67 per diluted share, from a loss of $17.6 million, or $3.04 per diluted share, a year earlier. The 2026 quarter included a $4.8 million non-cash impairment charge primarily related to planned restaurant closures.

Adjusted EBITDA increased 79% to $10.8 million from $6 million in the prior-year quarter. Through the first half, the company said adjusted EBITDA more than doubled from the same period of 2025.

Closures support nearby restaurant sales

Noodles & Company closed two company-owned restaurants and two franchise restaurants during the quarter. The company’s portfolio optimization strategy focuses on closing restaurants that are generally near stronger-performing locations.

Chief Financial Officer Mike Hynes said sales transfers from recently closed restaurants benefited second-quarter comparable sales by an estimated 250 to 300 basis points. The company has seen higher-than-expected sales transfer to nearby restaurants, which it attributed in part to its off-premise sales mix.

Christina said the company has averaged sales transfers of roughly one-third from closed restaurants to nearby Noodles locations. He added that the majority of sales and traffic growth was generated beyond the effect of those transfers.

The company expects to close 30 to 35 company-owned restaurants and five franchise restaurants during fiscal 2026. It expects one new franchise restaurant opening for the year.

Menu and marketing initiatives target traffic growth

Management highlighted menu innovation centered on Asian-inspired offerings during the quarter. The company brought back Indonesian Peanut Saute and Chili Garlic Ramen, and said Asian category mix increased 42% during the promotional period. The percentage of guests ordering an Asian entrée rose to 17.8% during the promotion from 12.5% before it.

According to Christina, about 65% of guests participating in the promotion were new to the brand, while 35% were existing customers trying an Asian entrée for the first time. The company plans to launch multiple ramen offerings in the fourth quarter, though management said it had not determined whether those products would be limited-time offers or permanent menu additions.

Noodles & Company also introduced Chicken Artichoke & Asparagus Rigatoni in May, supported by a partnership with Chrissy Teigen’s Cravings brand. Management said it plans to introduce another baked limited-time dish on Aug. 5.

The company’s “Made Right Now” marketing campaign, emphasizing meals prepared to order, was its strongest-performing creative campaign of the quarter across paid media, Christina said. He said the campaign generated the company’s highest video completion rates and more attributed digital and restaurant purchases than other creative across Meta and TikTok.

Digital-channel comparable sales increased 18% in the quarter. Digital sales represented about 60% of total sales, while the rewards program represented approximately 25% of sales, according to Christina. The company plans to continue “Boost Weeks,” targeted rewards events designed to attract loyalty members as well as new and lapsed customers, during the second half and beyond.

Management said total media impressions nearly doubled year over year while marketing spending increased approximately 6%.

Guidance raised; debt reduction expected

For fiscal 2026, Noodles & Company raised its outlook and now expects:

• Total revenue of $485 million to $500 million.
• Comparable restaurant sales growth of 8% to 11%.
• Restaurant contribution margin of 16% to 17%.
• Adjusted EBITDA of $34 million to $38 million.
• General and administrative expense of $51 million to $54 million, including $2.5 million to $3 million in stock-based compensation.
• Capital expenditures of $9 million to $10 million.

The company ended the second quarter with $1.3 million of available cash and $105.4 million in debt, down $1.4 million from the end of the first quarter. It expects to be free-cash-flow positive and reduce debt by approximately $10 million during 2026, including a $4.8 million reduction through the second quarter.

Based on its adjusted EBITDA outlook and an expected year-end debt balance of about $100 million, the company expects debt to be at or below three times 2026 adjusted EBITDA. Hynes also said the company continues to review options related to the third-quarter 2027 maturity of its credit facility as part of its ongoing review of strategic alternatives.

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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