Closures, revamped menu boost Noodles

BROOMFIELD — Closing underperforming restaurants apparently is paying off for Noodles & Co. (Nasdaq: NDLS), as the Broomfield-based chain reported same-store sales climbing across the system in the third quarter that ended Sept. 30, including increases of 4% at its company-owned eateries and 4.3% at its franchised units.

The strong third-quarter report released Wednesday was quite a change for a company that recently had been exploring strategic alternatives that could include a sale. But after a two-year menu to recharge flagging sales by closures and revamping the menu, it appears the efforts are paying off.

In fact, Noodles has upgraded its projections for the year, predicting that same-store sales increases are expected to range between 3.6% and 4.2%, up from earlier projections of a 2.5% to 4% gain.

Fifteen company-owned restaurants and three franchised locations were shuttered during the quarter, leaving the chain with 435 restaurants. With the closure of 14 more company-owned units during October, the company is on track to close between 31 and 34 company units and seven to eight franchisee-owned locations by the end of the year.

“I am very pleased with our recent sales trends, with comparable sales up 4% in the third quarter, which significantly outperformed the fast-casual benchmark,’ new CEO Joseph Christina said in a prepared statement. “We’re especially encouraged that our positive comparable restaurant sales increased sequentially each month during the quarter and have further accelerated in the fourth quarter to date, with October comparable restaurant sales increasing 8%. Our traffic has also been positive since the middle of the third quarter and in October.

“This strong sales performance has been achieved despite a challenging consumer environment and is the result of deliberate, focused efforts across the organization,” Christina said. “The dramatic improvement in our food from our new menu rollout, the strong value proposition of our Delicious Duos platform introduced in late July, the excitement of our recent Chili Garlic Ramen limited-time offer, and the impact of our improved marketing and operational execution are all working together to build significant momentum.

“At the same time, we are continuing to close underperforming restaurants and benefiting from the transfer of approximately a third of their sales to nearby profitable locations,” he said. “All of this is driving margin and Adjusted EBITDA improvement, guest enthusiasm and strengthening our relevance.”

Same-store sales were up 8% in October, with traffic increasing 1.5%, the company said.

Christina in August replaced Drew Madsen as CEO after Madsen stepped down, attributing his departure to health reasons. Deciding to close restaurants was difficult, he said.

“These closures are never easy, but they are the right ones for the long-term health of the brand,” Christina said. “By tightening our portfolio and focusing on high-performing restaurants and markets, we can strengthen operations, elevate the guest experience and focus on innovations that drive continued growth in sales and margins.”

Probably at least in part because of the closures, revenues dipped 0.5% to $122.1 million for the third quarter, and Noodles also widened its net loss to $9.2 million, compared with a net loss of $6.8 million for the same period in 2024.

The company on July 30 introduced Delicious Duos, consisting of a small entrée and a side item for prices starting at $9.99. In October, it unveiled Chili Garlic Ramen, a bowl of brothless ramen noodles with a chile-garlic spice blend. It’s being offered for $8.95 through the end of the year.

“This launch delivered on several key drivers: A craveable, high-quality product, a fresh expression of global flavor trends, and an unexpected yet approachable twist on a familiar comfort food,” Christina said. “Together, these elements captured guests’ curiosity and enthusiasm evidenced by strong trial and early repeat performance.”

Noodles’ stock price closed Friday at 71 cents a share, down 4.91% for the day but well above its 52-week low of 55 cents.

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