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    NDLS
    Earnings call· Jun 2026(Q2 FY26)

    NOODLES & Co NDLS

    Jul 24, 2026 Source

    Executive summary

    Noodles & Company Q2 FY26 — Strongest Performance Since IPO, Raised Full-Year Guidance

    Noodles & Company delivered its strongest performance since becoming a public company, driven by accelerated comparable sales, significant margin expansion, and effective cost management. The company raised its full-year guidance for revenue, margins, and adjusted EBITDA, reinforcing confidence in its operating model and long-term growth strategy. Management highlighted the success of menu innovation, disciplined marketing, and portfolio optimization as key drivers, with momentum continuing into Q3.

    Highlights

    5

    • Restaurant-level margins expanded by over 400 basis points year over year to 17.2%.

    • Adjusted EBITDA increased 79% to $10.8 million in Q2, more than doubling in the first half of the year.

    • System-wide comparable restaurant sales increased 10.3%, with company-owned comps up 11.4% and traffic up 7.6%.

    • Total revenue increased by $0.6 million to $127.0 million despite restaurant closures.

    • Debt balance reduced by $1.4 million in Q2, with a target of at or below 3x adjusted EBITDA by year-end.

    Guidance & targets

    15
    CategoryTargetConfidence
    Total Revenue
    $485 million to $500 million
    high materiality
    High
    Comparable Restaurant Sales Growth
    8.0% to 11.0%
    high materiality
    High
    Restaurant Contribution Margin
    16% and 17%
    high materiality
    High
    General and Administrative Expenses
    $51 million to $54 million
    medium materiality
    High
    Stock-based Compensation Expense
    $2.5 million to $3.0 million
    low materiality
    High
    Depreciation and Amortization Expense
    $24 million to $25 million
    low materiality
    High
    Interest Expense
    $10 million to $11 million
    low materiality
    High
    Adjusted EBITDA
    $34 million to $38 million
    high materiality
    High
    New Franchise Restaurant Openings
    1
    low materiality
    High
    Company-owned Restaurant Closures
    30 to 35
    medium materiality
    High
    Franchise Restaurant Closures
    5
    low materiality
    High
    Total Capital Expenditures
    $9 million to $10 million
    medium materiality
    High
    Debt Reduction
    approximately $10 million
    high materiality
    High
    Year-end Debt Balance to Adjusted EBITDA Ratio
    at or below 3x
    high materiality
    High
    Credit Facility Maturity Review
    review options
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Company-owned Restaurants
    Strong comparable sales growth driven by both traffic and average check, leading to significant AUV improvement.
    Comp traffic: 7.6% increaseAverage check: 3.8% increaseEffective price: 2.1%Average Unit Volumes: $1.57 million (15.9% increase)
    		—11.4%——
    Franchise Restaurants
    Experienced positive comparable sales growth, though with higher variability across the group compared to company-owned restaurants.
    		—5.5%——

    Operational metrics

    27
    Restaurant Contribution Margin
    17.2%440 bps increase YoY
    Q2 FY26

    Highest level in 5 years.

    Cost of Sales
    24.9%160 bps decrease YoY
    Q2 FY26

    Improved due to pricing and mix management.

    Cost of Sales Inflation
    0.7%
    Q2 FY26

    Overall inflation rate for cost of sales.

    Labor Costs
    29.4%230 bps decrease YoY
    Q2 FY26

    Benefited from sales leverage and efficiency gains.

    Hourly Wage Inflation
    1.6%
    Q2 FY26

    Inflation rate for hourly wages.

    Occupancy Costs
    $10.2 milliondecreased from $11.4 million in Q2 FY25
    Q2 FY26

    Decrease due to reduction in company-owned restaurant count.

    Other Restaurant Operating Costs
    20.3%60 bps increase YoY
    Q2 FY26

    Increase primarily due to higher third-party delivery fees.

    General and Administrative Expenses
    $13.9 millionincreased from $12.4 million in Q2 FY25
    Q2 FY26

    Increase primarily due to incentive compensation and professional fees.

    Net Loss
    $4.0 millioncompared to $17.6 million net loss in Q2 FY25
    Q2 FY26

    Loss included a non-cash impairment charge related to restaurant closures.

    Diluted EPS
    $0.67 losscompared to $3.04 loss in Q2 FY25
    Q2 FY26

    Per diluted share loss.

    Adjusted EBITDA
    $10.8 million79% increase YoY
    Q2 FY26

    More than doubled in the first half of the year compared to prior year.

    Capital Expenditures
    $1.5 milliondecreased from $3.4 million in Q2 FY25
    Q2 FY26

    Reduced capital spending.

    Cash Balance
    $1.3 million
    Q2 FY26

    Available cash at the end of the quarter.

    Debt Balance
    $105.4 million$1.4 million reduction QoQ
    Q2 FY26

    Reduced debt despite an extra payroll cycle in Q2.

    Company-owned Restaurant Closures
    2
    Q2 FY26

    Part of portfolio optimization.

    Franchise Restaurant Closures
    2
    Q2 FY26

    Part of portfolio optimization.

    Sales Transfer Benefit from Closures
    250 to 300 bps
    Q2 FY26

    Estimated benefit to Q2 comp restaurant sales from portfolio optimization, exceeding original estimates due to strong off-premise mix.

    Digital Channel Comparable Sales Growth
    18%
    Q2 FY26

    Growth in sales through digital channels.

    Rewards Program Sales Mix
    25%
    Q2 FY26

    Percentage of total sales from rewards members.

    Total Digital Sales Mix
    60%
    Q2 FY26

    Percentage of total sales from digital channels.

    Boost Weeks Planned
    27% morevs prior year
    FY26

    Increased number of strategically timed loyalty events planned for the full year.

    Media Impressions Growth
    nearly doubledYoY
    Q2 FY26

    Achieved with only a 6% increase in spend, reflecting greater efficiency.

    Asian Category Mix Increase
    42%
    promotional period

    Increase in Asian category mix during the promotional period for returned favorites.

    Asian Entree Ordering Mix
    17.8%from 12.5% before promotion
    promotional period

    Percentage of guests ordering an Asian entree during the promotion.

    New Guests from Asian Promotion
    65%
    promotional period

    Percentage of guests participating in the Asian promotion who were new to the brand.

    GM Openings Filled by Internal Promotions
    nearly 3 quarters
    Q2 FY26

    Indicates strong internal leadership pipeline.

    Restaurant Manager Positions Filled by Internal Promotions
    approximately 70%
    Q2 FY26

    Indicates strong internal leadership pipeline.

    Industry KPIs

    3
    MetricValueDetails
    Comparable sales comps10.3%%
    Global system wide sales10.3%%
    Net unit growth development pipeline1restaurant

    Product announcements

    2
    ProductTypeDetails
    New Baked Offeringlaunch
    New Ramen Disheslaunch

    Deals & partnerships

    2
    Chrissy Teigen's Cravings brandPartnership to amplify relevance of chicken artichoke and asparagus rigatoni LTO.

    Paired compelling culinary innovation with the right brand partner and strategic marketing plan.

    Coca-ColaExclusive partnership to introduce Fanta Vanilla Cherry Spritz beverage.

    Beverage developed specifically to pair with the Mac & Cheese lineup, launched during Mac Month in Q3.

    What to watch in Q3 FY26

    5

    New Baked Offering Performance

    Q3 FY26
    CurrentLaunched August 5
    TargetBoosted Q3 reach and results

    Why it matters

    This new LTO is expected to contribute to Q3 performance and validate the disciplined innovation pipeline.

    It should help further boost our reach and results in the third quarter, and I hope you'll keep an eye out next week to see what's coming.

    Q&A highlights

    4

    How much can the Asian offering be broadened, and will LTOs become permanent menu items?

    Management confirmed a consistent 18-month testing process for new items, including multiple ramen dishes for Q4. They are still determining if these will be LTOs or permanent but are confident in the strength of upcoming offerings.

    “we've got an 18-month calendar for items that we believe can be relevant to the brand, whether it's an LTO or a permanent item. And you're going to see some great news for our Q4 ramen launch.”

    asked by Todd Brooks · answered by Joseph Christina

    2 min read5 chapters

    Detailed Narrative

    01

    Operational Excellence and Culture Shift

    The company attributes its strong performance to consistently executing fundamentals, including running better restaurants and fostering a culture of continuous improvement. Nearly three-quarters of General Manager openings and 70% of all restaurant manager positions were filled through internal promotions, indicating a strong leadership pipeline. Improved hourly retention also contributes to greater stability and consistent guest experience, reinforcing the foundation for sustainable growth.

    02

    Disciplined Menu Innovation and Marketing

    Noodles & Company is building a predictable innovation pipeline, exemplified by the successful return of Asian favorites like Indonesian peanut sauté and chili garlic ramen. This strategy increased the Asian category mix by 42% and attracted new guests, with approximately 65% of participants being new to the brand. Strategic partnerships, such as with Chrissy Teigen's Cravings brand, amplify relevance and expand awareness, demonstrating thoughtful innovation can drive incremental growth without sacrificing core menu performance.

    03

    Effective Brand Messaging and Digital Engagement

    The 'Made Right, Right Now' campaign, highlighting fresh, made-to-order meals, was the strongest performing creative campaign of the quarter, driving high video completion rates and website visits. The company's marketing engine is more disciplined, nearly doubling media impressions year-over-year with only a 6% increase in spend. Digital channel comparable sales increased 18%, with rewards members accounting for 25% of sales and total digital sales reaching 60%.

    04

    Portfolio Optimization and Sales Transfer

    The strategy of closing underperforming restaurants near higher-performing ones continues to yield significant benefits. This portfolio optimization resulted in an estimated 250 to 300 basis points benefit to Q2 comparable restaurant sales due to sales transfer. This also leads to ongoing increases in Average Unit Volumes (AUVs) at nearby restaurants, improving efficiencies and contributing to margin growth, particularly given the strong off-premise sales mix.

    05

    Financial Strength and Debt Reduction

    The company reported a significant improvement in profitability, with adjusted EBITDA increasing 79% in Q2 and more than doubling in the first half of the year. Capital expenditures were reduced to $1.5 million in Q2. The debt balance was reduced by $1.4 million in Q2, and the company expects to reduce debt by approximately $10 million for the full year, targeting a year-end debt-to-adjusted EBITDA ratio of at or below 3x, a substantial improvement in financial strength.

    AI-generated summary of the company’s earnings call. Not investment advice.