Noodles & Co. Class A Aktie

Good morning, and welcome to today's Noodles & Company's Second Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to introduce Noodles & Company's Chief Financial Officer, Mike Hynes. Thank you, sir. You may begin.

Thank you, and good morning, everyone. Welcome to our second quarter 2026 earnings call. Here with me is Joe Christina, our Chief Executive Officer.

I'd like to start by going over a few regulatory matters. During the call, we may make forward-looking statements regarding future events or the future financial performance of the company. Any such items should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are only projections, and actual events or results could differ from those projections due to a number of risks and uncertainties, including those referred to in this morning's news release and the cautionary statement in the company's annual report on Form 10-K and subsequent filings with the SEC.

During the call, we will discuss non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our second quarter of 2026 earnings release. To the extent that the company provides guidance, it does so only on a non-GAAP basis and does not provide reconciliations of forward-looking non-GAAP measures. Quantitative reconciling information for these measures is unavailable without unreasonable efforts.

With that, I'd like to turn the call over to Joe Christina, our Chief Executive Officer.

Good morning, everyone, and thank you for joining us. This quarter marks one of the strongest performances since Noodles became a publicly traded company. That's a milestone our entire team is incredibly proud of and one that reflects just how far we've come in the past year. More importantly, these results showcase that progress is happening faster than even we anticipated, and they reinforce our confidence in the long-term sustainability of the improvements we are making in the business.

When we spoke with you last quarter, our strong momentum had become consistent across the system. Our second quarter results proved we've not only sustained it, but we have further accelerated it to yet another important milestone as our restaurant-level margins expanded by more than 400 basis points year over year to over 17%, a level of margin not seen at Noodles in the past 5 years.

Adjusted EBITDA increased approximately 80% in the second quarter, and through the first half of the year, we more than doubled adjusted EBITDA compared to the same period last year. Our comparable restaurant sales have now been positive and increasingly positive for the last 18 months. And our comparable restaurant sales and positive traffic growth have far exceeded the fast casual Black Box Index for the last 12 months.

The strong sales performance has continued in the third quarter, with quarter-to-date company-owned comparable sales up approximately 10%. The accelerated comparable restaurant sales, significantly improved margins, the success of our portfolio optimization plan, and resulting in dramatic improvement in profitability are all evidence that the operating model we built is working well.

As Mike will describe in more detail, given our results to date and our outlook for the second half of the year, we have raised our fiscal 2026 guidance for revenue, margins, and adjusted EBITDA. When combined with our expectations to further pay down debt with free cash flow, we now expect our year-end debt balance to be at or below 3x 2026 adjusted EBITDA.

What gives me confidence is how we've achieved those results. We've got here by consistently executing the fundamentals that we know can drive this business. First, we're running better restaurants. Everything starts with delivering a consistently great guest experience, and our teams continue to raise the bar every day. Second, we've created great food that gives guests more reasons to choose Noodles by bringing relevant, craveable innovation to the menu while staying true to what makes our brand unique. Third, we're engaging those guests through a more disciplined and connected marketing approach that builds awareness, strengthens loyalty, and attracts new guests to the brand. Fourth, we have and will continue to close restaurants that predominantly are in proximity to higher performing nearby restaurants.

Given our high mix of off-premise sales combined with strong brand recognition, this is resulting in a transfer of approximately 1/3 of the sales from the closed restaurant on average, which further raises the Average Unit Volume at the nearby restaurants, improving efficiencies and resulting margins. I should add that a significant majority of the sales and traffic growth has been realized over and above the sales transfer benefit from closed restaurants, as evident that our initiatives and the implementation of our strategy is working across the board. Together, those priorities reinforce one another, creating a business that's more profitable, more resilient, and positioned for sustainable long-term growth.

The biggest difference today is the culture we build across the organization. Our team members believe they can influence outcomes. They take great ownership of the guest experience, holding themselves and one another accountable, and embracing a mindset of continuous improvement. That's creating better execution in our restaurants every day, and it's the reason we believe that progress we're making is not only sustainable, but will further grow.

Let me start with our restaurants. Everything begins with the guest experience. The commitment we've built to running more consistent restaurants hasn't changed. We're still focused on the new operational playbook introduced last year, because we know it's the right one. Better hospitality, better execution throughout the day, particularly during dinner, greater accountability, consistently doing the fundamentals well. What has changed is how deeply those behaviors have taken hold across the organization. Our teams have embraced the idea that every interaction with a guest matters, and that the small decisions they make every day directly influence restaurant performance.

We aren't looking for one big breakthrough. We're focused on making hundreds of small improvements every day, and together, those improvements create a meaningfully better guest experience. The culture shift within the organization is shining through to a new and focused mindset. Winning is no longer something our teams hope for. It's become what they expect. They believe they can influence outcomes, and that confidence is spreading across the organization. You can feel it in our restaurants. There is a renewed sense of pride, ownership, and energy throughout the system.

We're also seeing that momentum reflected in the strength of our teams. During the quarter, nearly 3 quarters of our general manager openings and approximately 70% of all restaurant manager positions were filled through internal promotions. That tells me we're building a strong leadership pipeline and creating new opportunities for our team members to grow their careers with Noodles. We're also continuing to improve hourly retention, creating greater stability in our restaurants and helping our teams deliver a more consistent experience for our guests.

Running a better restaurant is more than an operational initiative. It's the foundation of everything else we do. When we consistently deliver a great restaurant experience, we strengthen our brand, earn more repeat visits, and create long-term relationships with our guests. Second, we're continuing to strengthen demand through a disciplined approach to menu innovation. Our goal isn't simply to launch new items. It's to build a predictable innovation pipeline that keeps Noodles relevant, gives guests new reasons to visit, and reinforces what makes our brand unique.

During the quarter, we leaned into one of our greatest strengths, our Asian menu. While guests know us first and foremost for great Mac & Cheese, we long offered a diverse lineup of globally inspired noodle dishes, and this quarter we intentionally celebrated that heritage. Guided by guest feedback and historical performance, we've complemented our core Asian offerings with the return of favorites like Indonesian peanut sauté and chili garlic ramen, 2 dishes guests had been asking us to bring back.

The response reinforced that this strategy is resonating. Our Asian category mix increased by 42% during the promotional period, with that percentage of guests ordering an Asian entrée growing from 12.5% before the promotion to 17.8% during it. Just as importantly, our core entrées remained strong while these limited-time offerings drove incremental growth for the category, demonstrating that thoughtful innovation can expand guest choices without sacrificing the performance of our everyday favorites.

We were also encouraged by the quality of the guests we attracted. Approximately 65% of guests who participated in the promotion were new to the brand, while the remaining 35% were existing guests who tried an Asian entrée for the first time. We look forward to reinforcing the learnings and success of this strategy and creating a stickiness to these new guests by launching new ramen dishes in the fourth quarter. We're excited to be giving more detail on that front as we get closer to the launch.

We saw the same disciplined approach with our chicken artichoke and asparagus rigatoni LTO that launched in May. The dish combined fresh seasonal ingredients with a flavor profile that resonated with guests. And we amplified that relevance through our partnership with Chrissy Teigen's Cravings brand, which especially attracted a target guest demographic. By pairing compelling culinary innovation with the right brand partner and a strategic marketing plan, we created a launch that generated excitement, expanded awareness, and reinforced that Noodles can deliver food that's both craveable and culturally relevant. That's exactly the role we want innovation to play.

Our limited time offerings are becoming more than promotional events. They are helping tell the Noodle story, keeping the brand culturally relevant, celebrating the strength of our core menu, and reintroducing guest favorites when the timing is right, all of which create reasons for both loyal and new guests to engage with the brand and visit us more often.

We also continue to sharpen how we communicate what makes Noodles different. Through ongoing guest research, we know that fresh prepared meals and fresh ingredients remain among the strongest drivers of quality and value perception, particularly with younger consumers. That led us to launch our Made Right, Right Now campaign, which highlights something that's always been true about our restaurants. Every bowl is prepared to order, cooked over an open sauté pan, and doesn't begin until the guest places their order. Rather than simply telling guests we're fresh, we're showing them the care, craftsmanship, and real-time preparation that makes every meal distinctly Noodles.

That message has clearly resonated. Made Right, Right Now was our strongest performing creative campaign of the quarter across paid media, delivering our highest video completion rates while driving more website visits and more attributed digital and in-restaurant purchases than any other creative across Meta, TikTok. To me, that validates that when we pair meaningful consumer insights with authentic storytelling, we create evergreen brand messaging that not only builds awareness, but also drives guest actions. It's another example of how we've strengthened our brand positioning while reinforcing the reasons guests choose Noodles over traditional fast food.

That momentum has continued into the third quarter with the launch of Mac Month, including our exclusive partnership with Coca-Cola to introduce the Fanta Vanilla Cherry Spritz, a beverage developed specifically to pair with our Mac & Cheese lineup. Guest response has been encouraging, particularly among younger consumers, and the exclusive offering has generated meaningful earned media and social conversation that continue to shine a spotlight on our Mac & Cheese platform throughout the month. More importantly, it has demonstrated how we're creating differentiated experiences that generate excitement around the brand while giving guests new reasons to choose Noodles.

Before I move on, I'd like to leave you with a quick preview of what's ahead. Next week, we'll introduce our newest limited time dish, inspired by strong guest demand for a baked offering that performed exceptionally well in testing. We look forward to officially sharing it with our guests on August 5, and we believe it reflects the disciplined, guest-led innovation pipeline we're building at Noodles. 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.

Finally, we're seeing the benefit of a more disciplined and connected marketing engine. Over the past year, we've built a marketing system where brand performance and consumer insights all work together rather than operating independently. That allows us to move beyond one-off campaigns and create an ongoing dialogue with our guests. More importantly, the system is driving a healthier and more balanced growth model, especially through our digital channels, where second quarter digital channel comparable sales increased 18%. As part of that digital channel growth, we're growing traffic among our rewards members while continuing to attract new guests through relevant brand messaging, compelling food news, engaging social content, and smarter media investments rather than relying primarily on discounting.

We're also seeing continued success in reaching younger consumers by aligning our media strategy with how they discover brands today. Whether it's leaning into culturally relevant partnerships, engaging creators and influencers, or investing in channels where younger audiences spend their time, such as TikTok, YouTube, and Pinterest, we're expanding awareness while making our marketing dollars work harder. In the second quarter, we nearly doubled total media impressions compared to a year ago while increasing spend only by approximately 6%, a reflection of both greater efficiency and more disciplined execution.

Just as importantly, every campaign, every offer, and every menu innovation now fits within a broader strategy. Each touchpoint is designed to build the brand, deepen guest relationships, and create sustainable traffic over time, not simply generate a short-term sales lift. Another example of that is our Boost Weeks. These are strategically timed loyalty events that serve a very specific purpose, bringing more guests into our reward ecosystem and creating opportunities for them to experience the brand. Unlike broad-based discounting, these targeted offers allow us to reward loyal guests, attract new and lapsed guests, and encourage repeat visits during key periods throughout the year. They're an important part of our strategy because they help build lasting guest relationships while remaining disciplined in how we invest our promotional dollars.

Based on the success of these Boost Weeks to date, we plan on continuing them into the second half of the year and beyond. That's the marketing organization we're building. It's more disciplined, more connected, and more accountable. And as these capabilities continue to mature, we believe they're becoming an increasingly important competitive advantage for Noodles.

When I step back and look at the progress we've made, I believe it's clear that Noodles is back. Not because of one quarter or one campaign, but because we've built an organization that's consistently executing. We're running better restaurants, creating food guests crave, and engaging them with smarter marketing. That's the foundation for sustainable growth, and it's what gives me confidence in where we're headed. There's still work ahead of us, and we're never going to declare victory. Continuous improvement remains part of who we are. But quarter after quarter, we're proving that progress we're making is sustainable. I'm incredibly proud of the team for the commitment they've shown and the results they've delivered. And I'm excited about the opportunities we see as we move throughout the second half of the year.

With that, I'll turn the call over to Mike to review our financial results.

Thank you, Joe. In the second quarter, our total revenue was $127 million, which was a $600,000 increase compared to last year, driven by strong comparable sales growth, mostly offset by the closing of certain locations. System-wide comp restaurant sales during the second quarter increased 10.3%, including an increase of 11.4% at company-owned restaurants and an increase of 5.5% at franchise restaurants. Company comp traffic during the second quarter increased 7.6%, and average check increased 3.8%, inclusive of 2.1% effective price during the quarter.

Company Average Unit Volumes in the second quarter increased 15.9% to $1.57 million. Our strong comp sales growth, which was a further acceleration from our first quarter sales growth, continues to drive impressive year-over-year margin growth. Our restaurant contribution margin in the second quarter increased 440 basis points to 17.2% from 12.8% in the second quarter of 2025, resulting in a much strengthened operating model. Cost of sales in the second quarter was 24.9% of sales, a 160 basis point decrease from last year, which was driven by menu price, favorable menu mix shift, and lower food waste, partially offset by modest inflation. Our overall cost of sales inflation in the second quarter was 0.7%.

Labor costs for the second quarter were 29.4% of sales, which was down 230 basis points from the prior year, primarily due to the benefit of sales leverage and labor efficiencies, partially offset by wage inflation. Hourly wage inflation in the second quarter was 1.6%. Occupancy costs in the second quarter decreased to $10.2 million compared to $11.4 million in 2025 due to a reduction in our company-owned restaurant count over the last 12 months. Other restaurant operating costs for the second quarter were 20.3% of sales, which was up 60 basis points from the prior year. The increase was primarily driven by higher third-party delivery fees from higher third-party delivery channel sales, partially offset by lower marketing spend.

G&A in the second quarter increased to $13.9 million compared to $12.4 million in 2025, primarily due to an increase in incentives-based compensation, partially offset by decreases in wages and professional fees. Net loss for the second quarter was $4 million, or a loss of $0.67 per diluted share, compared to a net loss of $17.6 million, or a loss of $3.04 per diluted share last year. The loss in the second quarter of 2026 included a $4.8 million non-cash impairment charge, primarily related to our decision to close certain restaurants. Our adjusted EBITDA in the second quarter increased 79% to $10.8 million compared to $6 million in the second quarter of 2025.

Our second quarter capital expenditures totaled $1.5 million compared to $3.4 million in 2025. At the end of the second quarter, we had $1.3 million of available cash and our debt balance was $105.4 million, which was a reduction of $1.4 million from our debt balance at the end of the first quarter, despite having an extra payroll cycle in the second quarter. In the second quarter, we closed 2 company-owned restaurants and 2 franchise restaurants. Our portfolio optimization project continues to be an important lever in our overall business improvement.

In the second quarter, we continue to see a significant transfer of sales from recently closed restaurants to nearby Noodles locations, which we estimate to have benefited our second quarter comp restaurant sales by approximately 250 to 300 basis points. This sales transfer also creates a step change and an ongoing increase to the AUVs at the restaurants that were in proximity to the closed restaurants, which results in efficiencies across the board, helping our margin level to grow to a very respectable 17.2% for the quarter. In fact, we have seen a greater reach in sales transfer to other restaurants than we originally estimated, which is attributable to our strong off-premise sales mix.

While portfolio optimization provided a meaningful benefit, the significant majority of the comp restaurant sales increase was driven by the improvement in our menu innovation and other underlying business fundamentals that Joe highlighted. Overall, we are extremely pleased with our results, which continue to exceed our expectations. Our accelerated sales growth and effective cost management are delivering contribution margin, adjusted EBITDA, and free cash flow improvements that are well ahead of what we originally expected coming into 2026.

As we look forward to the rest of the year, we're raising our full year 2026 guidance to the following: Total revenue of $485 million to $500 million, including comp restaurant sales growth of 8% to 11%. Restaurant contribution margin between 16% and 17%. General and administrative expenses of $51 million to $54 million, inclusive of a stock-based compensation expense of $2.5 million to $3 million. Depreciation and amortization expense of $24 million to $25 million. Interest expense of $10 million to $11 million. Adjusted EBITDA between $34 million to $38 million. One new franchise restaurant opening. Restaurant closures, we expect 30 to 35 company-owned restaurants and 5 franchise restaurants. And we estimate total 2026 capital expenditures of $9 million to $10 million.

We continue to expect to be free cash flow positive and have the opportunity to reduce our debt balance in 2026 by approximately $10 million, inclusive of the $4.8 million reduction year-to-date through the second quarter. Based on our full year adjusted EBITDA guidance and a projected debt balance of approximately $100 million at the end of 2026, we expect our debt balance to be at or below 3x adjusted EBITDA, which is a substantial improvement to our overall financial strength from where we were a year ago. And in connection with our ongoing review of strategic alternatives, we are continuing to review options with respect to the maturity of our credit facility in the third quarter of fiscal year 2027. For further information regarding our 2026 expectations, please see the business outlook section of our press release.

With that, I'd like to turn the call back over to Joe for final remarks.

Thank you, Mike. As we close today, I'll leave you with this. When we began to implement our new strategies over the last 12 months, we committed to building a stronger Noodles by having better food, running great restaurants, making smarter investments and executing with discipline. Today it's clear, we're delivering on those commitments. As stated earlier, our restaurant level margins expanded by more than 400 basis points year over year. Adjusted EBITDA increased by approximately 80% in the second quarter, and through the first half of the year, we more than doubled adjusted EBITDA compared to the same period last year.

We've also delivered the strongest second quarter comparable sales performance since becoming a publicly traded company, which is far exceeding the industry Black Box results. Those results reinforce what we've been saying all year. The momentum at Noodles is real. Our operating model is working, and consistently executing is translating into stronger financial performance. When considering our further menu innovation and focus on additional improvements in the second half of the year and beyond, we are very excited at what lies ahead for Noodles & Company.

Thank you for your continued confidence in Noodles. We look forward to updating you next quarter.

I'll turn the call back over to the operator.

[Operator Instructions] Our first question is from Todd Brooks with Benchmark StoneX.

Congrats on the continuing improvement in the results that you're seeing. It's very impressive. So kudos to you guys.

Thank you, Todd.

Thank you.

Joe, I wanted to spend some time on innovation, and I know we're not going to get a lot of detail about specific items, but you were talking about the success that you're seeing with some of the Asian inspired dishes and the fact that that's bringing really kind of a new audience to the brand as well. As you talked about a broader ramen platform going out, two things. One, how much can we broaden out this offering? And two, is there a point where it becomes, instead of LTO driven, more of a permanent menu item?

Well, thanks for the question, and yes, I think part of what I'm very proud of from the innovation team is we have now a consistent testing process out in our restaurants and 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. We're finishing up the testing of multiple ramens, ones that we believe can be part of the fourth quarter launch, as well as future LTOs that keep that very important innovation going in our restaurants. And so we haven't determined whether it's an LTO or a permanent item yet, but the offerings that will be coming in Q4 are going to be very exciting and it's going to be multiple offerings at that time.

Okay, great. Thanks. And can you remind us, and you talked about the baked launch coming up in early August, and then you've talked about the ramen launch in Q4. What are we lapping against from an innovation standpoint last year in the second half? And how much stronger do you feel like these offerings may look relative to what you guys rolled out menu-wise last year?

Yes, we're lapping against the chili garlic ramen launch from last year at the end of September and into the back half of Q4. And we're really confident in the items that we've been testing, that our innovation is very strong, and we believe that ramen is going to be part of the conversation of where you go when you want ramen in the restaurants. And so we feel really strong and good about what's coming in the back half of the year.

Okay, great. And then when you're talking about just the improvement you made on the marketing side of the operation, and really that growth in impressions on a 6% dollar increase in spend is really impressive, but you talked about Boost Weeks also as a component and how you can lever that loyalty base that you've built. Can you remind us where the loyalty base stands? And, Mike, I don't know if you can give me kind of a comparison, how many Boost Weeks we're running this year versus prior years, and do they match up, or -- just trying to figure out if this is a tool that we're kind of pulling that lever more here in '26.

Yes, our rewards program is about 25% of our sales currently. And just as a reminder, digital in total is just about 60% of our sales, so a real strength for the company. Boost Weeks is something that we really leaned into in the back half of last year, and so we are going to have, for the full year '26, more of those. We've seen great results with them, great engagement with our rewards members, and it's something we want to continue doing.

Okay, great. And then just a final one if I can. If you think about the company's same-store sales versus the franchisee's same-store sales, it seems like the spread really kind of grew this quarter. Is there something that drove the strength at the company level? Or just can you help explain kind of that 600-basis-point delta?

Yes, we're watching that too, Todd. And I think what we can say right now is that we see a lot of variability in the franchise group and their performance. And it really depends by market. It's still a relatively small group to the overall system. And so it doesn't take much variability to create that disconnect with the company. But we see overall health across the system. We see some of our franchise groups that are outperforming the company average, and so we're encouraged by just the breadth of the same-store sales growth and what it means to the strength of our system.

With no further questions, this will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Good afternoon, and welcome to today's Noodles & Company First Quarter 2026 Earnings Conference Call.

[Operator Instructions].

As a reminder, this call is being recorded. I would now like to introduce Noodles & Company's Chief Financial Officer, Michael Hynes. Please go ahead, sir.

Thank you, and good afternoon, everyone. Welcome to our first quarter 2026 earnings call. Here with me this afternoon is Joseph Christina, our Chief Executive Officer. I'd like to start by going over a few regulatory matters.

During the call, we may make forward-looking statements regarding future events or the future financial performance of the company.

Any such items should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

Such statements are only projections, and actual events or results could differ from those projections due to a number of risks and uncertainties, including those referred to in this afternoon's news release and the cautionary statement in the company's annual report on Form 10-K and subsequent filings with the SEC.

During the call, we will discuss non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

A reconciliation of these measures to the most directly comparable GAAP measures is available in our first quarter 2026 earnings release.

To the extent the company provides guidance, it does so only on a non-GAAP basis and does not provide reconciliations of forward-looking non-GAAP measures. Quantitative reconciling information for these measures is unavailable without unreasonable effort.

With that, I would like to turn the call over to Joseph Christina, our Chief Executive Officer.

Thanks, Mike, and good afternoon.

As we look at our performance in the first quarter and into the second, the story is clear. We are delivering consistent and sustainable favorable results across Noodles & Company, demonstrated by system-wide comp sales growth of over 9% and adjusted EBITDA more than tripling year-over-year in the first quarter.

More importantly, this momentum continued into the second quarter with April system-wide comp sales growth of over 9%, including over 10% for our company-operated restaurants.

To date, we have delivered positive same-store sales for the last 16 consecutive months.

In conjunction with the increase in comparable sales, our restaurant contribution margins increased by a significant 460 basis points in the first quarter, with the combination of the strong sales and margin increases reflected in the over tripling of our adjusted EBITDA results.

What gives me confidence in the sustainability of our results is that our progress is driven not by a single initiative or unlock.

It is a result of a focused, disciplined approach to executing the fundamentals of our business and doing the small things right every day, with those small improvements adding up to meaningful wins.

Moreover, we are seeing those winning behaviors spread across the organization, leading to stronger execution and a better overall guest experience.

What's important to understand is that this progress is not accidental. It is a result of how our teams show up and operate every day. We are seeing that come through clearly in 3 areas.

First, we are running more consistent restaurant operations. Second, our marketing is more disciplined and more connected.

And third, our culinary strategy is driving demand through relevant craveable food. Let me start with our restaurants.

Put simply, we are operating better restaurants today than we were a year ago.

Across the system, we are executing at a higher level in the moments that matter most to our guests. We are seeing meaningful improvement in service, particularly during our dinner daypart, where consistency and hospitality have the greatest impact.

Our overall guest satisfaction scores increased by 10% in the last 6 months, with significant improvement achieved in all of our major sales channels: in-restaurant, native digital, and third-party delivery.

That comes from more focused, more aligned teams who understand what matters most and hold themselves accountable to it.

We are recognizing strong performance and reinforcing it, which raises the standards across the system. Guests are noticing the difference, and that is showing up in stronger in-restaurant sales and more consistent traffic patterns.

At the same time, as execution in our restaurants has improved, our marketing has become more disciplined, more connected, and more effective.

We're not relying on a single campaign or promotion. We are operating with a consistent ongoing dialogue with our guests anchored in what we do best, delivering craveable globally inspired noodle dishes.

That work is showing up in the business. We're seeing it in both sales and transactions, supported by stronger engagement across our paid, owned and earned channels.

Importantly, a meaningful portion of that growth is coming from new guests entering the brand. In fact, new guest active purchases increased 36% year-over-year and loyalty sign-ups grew 33% in the quarter, clear indicators that our brand is reaching new audiences.

We also become intentional in how we invest. In paid media, we are actively managing performance in real time across channels, allowing us to allocate dollars more efficiently and maximize return.

We are not separating traffic from brand. The same work that brings guests into our restaurants is also strengthening how they think about noodles.

In the first quarter, we introduced what we call a boost week offer, a focused, time-bound activation designed to drive immediate profitable traffic during key periods.

During this window, reward members can enjoy 2 of our culinary classics for $12. The results were strong as we added new loyalty members, reactivated last guests, and drove a meaningful increase in traffic to our website.

Based on that performance, we plan to build this into a repeatable program and execute it on a quarterly basis. We also launched our fresh campaign, highlighting ingredient quality and reinforcing the care that goes into every dish, helping to elevate how our guests perceive our food.

On the culinary side, we are executing a focused strategy that balances fan-favorite returns, bold global flavors, and culturally relevant partnerships to drive both frequency and new guest engagement.

This progress began last year with the most significant menu transformation in our company's history as we introduced a range of new and enhanced dishes that strengthen the core of our offerings.

We followed that with our Delicious Duos platform, which reinforced our value proposition in a disciplined way as well as provided further reinforcement of the new and enhanced menu items.

Later in the year, we introduced Chili Garlic Ramen, one of our most successful limited-time offers, which brought new guests to the brand and further reinforced noodles as a credible, differentiated fast casual destination for globally inspired noodle dishes.

In the first quarter, Steak Stroganoff returned as a highly successful limited-time offer. We brought it back in response to strong guest demand, and the results reinforce both the strength of our loyal guest base and our ability to attract new guests.

We also expanded how we supported that launch through differentiated marketing initiatives to build broader awareness and reach beyond our core guests. More broadly, fan favorites like Steak Stroganoff played an important role in our strategy.

For long-time guests, they create a reason to return. For new guests, they provide an easy entry point into a brand through dishes we know resonate.

We continued that approach into March by highlighting our Asian category and bringing back Indonesian Peanut Saute alongside Chili Garlic Ramen.

This work reinforced our global flavor profile, showcasing the variety on our menu and helped lift the overall Asian category. During this LTO window, our Asian category mix has increased 40%, a clear signal that this strategy is resonating with guests.

As limited-time offers remain a key part of our menu strategy, I'm excited to share our newest LTO, Chicken Artichoke and Asparagus Rigatoni, which is available today nationwide.

This dish is a bright spring-forward pasta that brings together fresh seasonal ingredients with the comforting flavors our guests expect from noodles.

In tandem with this LTO, we are partnering with CRAVINGS by Chrissy Teigen to offer guests a craveable bundle, which includes our new Chicken Artichoke and Asparagus Rigatoni alongside a CRAVINGS-inspired, crispy and nostalgic sweet and salty twist on our signature treat.

This is another example of how we are delivering craveable food while elevating it through the right partnership. We know noodles and the CRAVINGS brand, which has a significant following among one of our key demographics, certainly knows cravings.

Together, we are bringing those strengths to life in a way that allows us to show up in culture authentically while driving awareness, trial, and engagement.

Across all these efforts, the true line is clear.

We are executing well in our restaurants, supporting them with disciplined marketing and delivering craveable food, creating a better guest experience that is translating into consistent performance and steady growth in both comparable sales and margins.

At the same time, we have taken a disciplined look at our portfolio and how our restaurants are performing across markets. In select areas, we had too much density, particularly as our off-premise sales continue to grow, so we made the decision to optimize our footprint.

By closing underperforming restaurants in these areas, we have seen a significant transfer of their sales to nearby restaurants, which results in a higher baseline average unit volume for those go-forward restaurants, which also further improves restaurant-level margin and profitability.

It also allows us to focus our resources on our strongest restaurants, improving efficiency and driving better overall company profitability. The progress we are seeing is helping across the business and is building on itself.

We are seeing a shift in mindset across the organization, and our teams believe they can impact results. They are taking ownership.

And as we continue to reinforce strong execution, winning is becoming contagious across our teams. That is what allows this momentum to sustain. As we look ahead, we will stay focused, remain disciplined, and continue executing at a high level every day.

With that, I will turn it over to Mike to walk through the financial details.

Thank you, Joe. In the first quarter, our total revenue was relatively flat compared to last year at $123.8 million, with strong comp sales growth, mostly offset by the closing of underperforming locations.

System-wide comp restaurant sales during the first quarter increased 9.1%, including an increase of 9.4% at company-owned restaurants and an increase of 8% at franchise restaurants.

Company comp traffic during the first quarter increased 4.8%, and average check increased 4.4%, inclusive of 2% effective pricing during the quarter.

Company average unit volumes in the first quarter increased 13.5% to $1.49 million.

Our sales growth in the first quarter, which was an acceleration of the sales growth we saw in the back half of 2025, delivered impressive restaurant contribution margin growth.

Our restaurant contribution margin in the first quarter increased 460 basis points to 14.9% from 10.3% in the first quarter of 2025.

[Indiscernible] in the first quarter were 25.4% of sales, a 120 basis point decrease from last year, which was driven by lower food waste related to new menu items, menu pricing, and lower discounting, partially offset by higher food costs associated with our new menu offerings and modest inflation.

Our food inflation in the first quarter was 0.2%.

Labor costs for the first quarter were 30.0% of sales, which was down 250 basis points from the prior year, primarily due to the benefit of sales leverage and labor efficiencies, partially offset by wage inflation.

Hourly wage inflation in the first quarter was 1.9%.

Occupancy costs in the first quarter decreased to $10.4 million compared to $11.5 million in 2025 due to a reduction in our company-owned restaurant count over the last 12 months.

Other restaurant operating costs increased by 10 basis points in the first quarter to 21.2%.

The increase in other restaurant operating costs was primarily driven by a combination of higher third-party delivery fees from higher third-party delivery channel sales and higher marketing expenses, which were mostly offset by sales leverage and lower repairs and maintenance costs.

G&A in the first quarter was $12.5 million compared to $12.8 million in 2025.

Net loss for the first quarter was $3.4 million, or a loss of $0.68 per diluted share, compared to a net loss of $9.1 million or a loss of $1.58 per diluted share last year.

The loss in the first quarter of 2026 included a $2.7 million noncash impairment charge primarily related to our decision to close underperforming restaurants. 

Our adjusted EBITDA in the first quarter more than tripled to $7.7 million compared to $2.4 million in the first quarter of 2025.

Our first quarter capital expenditures totaled $2.1 million compared to $2.9 million in 2025.

At the end of the first quarter, we had $1.4 million of available cash, and our debt balance was $106.8 million, which was a reduction of $3.4 million from our debt balance at the end of 2025, as we were able to pay down debt in a seasonally low quarter. 

In the first quarter, we closed 20 company-owned restaurants and 3 franchise restaurants.

The 20 company-owned restaurants were closed as part of our restaurant portfolio optimization project, which continues to yield a significant transfer of sales to nearby locations given our high mix of off-premise sales, contributing to improvement in our comp sales and overall profitability.

That said, a majority of the comp restaurant sales increase in the first quarter was driven by the improvement in our underlying business fundamentals, with our portfolio optimization providing an added benefit. 

Overall, we are extremely pleased with our first quarter results, which exceeded our expectations, as our restaurant contribution margin and adjusted EBITDA improvements were driven by our double-digit average unit volume increases, paired with effective cost management. 

As we reflect on the first quarter results and look forward to the rest of the year, we're raising our full-year 2026 guidance to the following: total revenue of $483 million to $498 million, including comp restaurant sales growth of 7% to 10%.

Restaurant contribution margin between 15.5% and 17%, general and administrative expenses of $50 million to $53 million, inclusive of stock-based compensation expense of approximately $2.5 million, depreciation and amortization expense of $24 million to $25 million, and interest expense of $10 million to $11 million.

Adjusted EBITDA between $32.5 million and $37.5 million, 1 to 2 new franchise restaurant openings, restaurant closures, 30 to 35 company-owned restaurants, and 5 franchise restaurants.

 And we estimate total 2026 capital expenditures of $9.5 million to $10.5 million. 

We continue to expect to be free cash flow positive and have the opportunity to reduce our debt balance in 2026 by approximately $10 million, including the $3.4 million reduction in the first quarter.

For further information regarding our 2026 expectations, please see the Business Outlook section of our press release.

With that, I'd like to turn the call back over to Joseph for final remarks.

Thanks, Mike. We are very pleased with our first quarter results, reflecting continued strong momentum at Noodles & Company, which continues into the second quarter.

We are very encouraged by this momentum and remain focused on executing the fundamentals every day that are delivering a better overall guest experience, as evidenced by sequential improvement in our guest satisfaction scores, sustained traffic growth, increased engagement with our guests, and more consistent in-restaurant performance.

Thank you for your time today, and I'll now turn the call back over to the operator.

[Operator instructions]

The first question that we have comes from Todd Brooks of Benchmark Company.

Congratulations. Mike, you quantified the same-store sales in Q1 as majority driven by fundamental business improvements and the momentum in the business.

I think last quarter, you parsed out the sales transfer contribution versus the contribution from the fundamental improvements. Is that something you'll do this quarter as well?

You mean for the second quarter? Is that the same message for the second quarter?

Well, no, for same-store sales, I'm just wondering what came from the contribution from closed locations versus just the core business?

Yes. We talked about 200 to 300 basis points a few weeks ago during our Q4 call, and that's about where we landed, right in the middle of that, about 250 basis points attributable to the closed locations.

So, most of the benefit was due to core business improvement, which is really encouraging to see.

And then it sounds silly because the same-store sales are so strong, but did you guys have any winter weather-related impact that muted results in the first quarter that you would call out?

Just timing between the periods. But overall, we feel like it washed out and didn't have a big impact for the quarter.

And then, Joe, you talked about the introduction of a boost week. I was wondering if this is something you're going to tease for customers ahead of time? Or is it something you're going to drop on them? What's the strategy for how this rolls out quarter after quarter?

Yes. Great question, Todd. That's a strategy for our reward members. So, it's offered to them, and it's also offered to other guests once they sign up for our reward activity.

So, it's something that attracts new guests to our app, as well as our existing guests, to give them a great promotion. And with the results we saw, it's something that we're going to continue throughout the year.

And I assume that you would stagger that with the new LTO rolling out today. It wouldn't be something we would see until later in the quarter than the boost week.

Correct. It's specific weeks of the year outside of our existing LTOs.

And you talked about the second quarter LTO. I know last quarter, you had some additional items when you were running the Sartori, you added the Raman back in.

Are there any other add-ins to this LTO? Or is it going to be the dish standing on its own through the quarter?

It's a partnership that we are with Cravings, with Chrissy Teigen, and getting the benefit of all her followers, as well as a new tree to put in the bundle.

So, we are standing on our LTO for this quarter, and with other news coming up in the remainder of the year.

Final one for me, and thanks all. Mike, I think you talked about the check being up 4.4%. Can you break that down between price and mix?

Yes. We had about 2% price for the quarter, and that's really our expectation for the full year 2026, with the rest coming from mix.

And the mixed benefit we've been seeing for a couple of quarters now as we've had the new menu items, which have a little higher price point. And then also the strength of our delivery channel is pushing the check up a bit as well.

Thank you. Ladies and gentlemen, that then concludes today's conference call. Thank you for joining us. You may now disconnect your lines.

Good afternoon, and welcome to today's Noodles & Company's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] After the presenters' remarks, there will be a question-and-answer session. As a reminder, this call is being recorded. I would now like to introduce Noodles & Company's Chief Financial Officer, Mike Hynes.

Thank you, and good afternoon, everyone. Welcome to our Fourth Quarter 2025 Earnings Call. Here with me this afternoon is Joe Christina, our Chief Executive Officer. I'd like to start by going over a few regulatory matters.

During the call, we may make forward-looking statements regarding future events or the future financial performance of the company. Any such items should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act.

Such statements are only projections, and actual events or results could differ from those projections due to a number of risks and uncertainties, including those referred to in this afternoon's news release and the cautionary statement in the company's annual report on Form 10-K and subsequent filings with the SEC.

During the call, we will discuss non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our fourth quarter 2025 earnings release.

To the extent that the company provides guidance, it does only on a non-GAAP basis and does not provide reconciliations of forward-looking non-GAAP measures. Quantitative reconciling information for these measures is unavailable without unreasonable efforts.

With that, I'd like to turn the call over to Joe Christina, our Chief Executive Officer.

Thank you, Mike, and good afternoon. As we reflect on 2025, the story is clear. We have built meaningful and sustained momentum across Noodles & Company accumulating a system-wide comp sales growth of nearly 7% in fourth quarter of 2025 and further escalating to over 9% in the first quarter of 2026, thus far, with only a week remaining in the quarter, and profitability far exceeded the prior year in the fourth quarter of 2025 and as we have guided in the first quarter of 2026. That progress is not accidental. It is the result of disciplined execution and a clear focus on what matters most.

2025 was a pivotal year for the brand. We significantly elevated our food with the launch of our most comprehensive new menu in the history of the company and the introduction of craveable limited time offers including Chili Garlic Ramen, one of our strongest LTOs in recent years, which we believe also introduced new customer groups to new within company.

We leaned into strong value messaging with the launch of Delicious Duos, giving guests compelling meal combinations at an attractive price point that delivered balance, variety and everyday affordability without compromising quality while also raising consumer awareness to our new menu offerings. We initiated a thorough review of our portfolio, resulting in the closing of underperforming restaurants, which has continued into the first quarter of 2026 and importantly, has resulted in a material transfer of sales to nearby locations, resulting in a step baseline increase of average sales volume at those go-forward restaurants, which also favorably impacted margins, as Mike will discuss in more detail shortly.

And we strengthened operational excellence by introducing our operational excellence review program, raising standards and driving greater consistency and accountability across every restaurant. Underpinning all of this was a renewed focus on the fundamentals.

Throughout 2025, we tightened execution in our restaurants, improved food consistency, managed costs with discipline and sharpened our marketing approach. When you consistently execute the fundamentals at a high level, performance follows, and that is exactly what we began to see in the back half of the year. But before I dive deeper into the progress we made in 2025, I want to highlight our first quarter comp sales performance to date as the progress we built last year has further accelerated into 2026, delivering sales increases, which we believe are the top of the fast casual industry.

In the first quarter thus far, we have delivered continued increases in traffic and same-store sales with system-wide comparable sales growth over 9% and traffic over 4%. March will mark our seventh consecutive period of traffic growth and notably, period 2 of 2026 delivered one of the strongest comparable sales performances in the company's 31-year history.

We kicked off the year by bringing back Steak Stroganoff as a limited time offer, one of the most requested fan favorites ever. We leaned into that fandom with a creative AI-driven campaign that generated strong engagement and reminded guests why this dish has remained such an enduring classic.

The Steak Stroganoff results exceeded prior launches of this LTO and cemented this great dish as a returning favorite, craveable LTO over the winter months in the coming years. When you pair a comforting favorite like Steak Stroganoff with stronger restaurant execution and a great guest experience, it becomes even more craveable. The combination of great food and consistent operations is clearly resonating with our guests.

We entered this year with clear goals and a sharpened focus, aligning the organization around four strategic goals: developing winning teams, igniting growth, driving guest satisfaction and delivering strong financial results. These goals are shaping how we operate, how we invest and how we measure success. And already, we are seeing that progress continue. With that context, let's recap the progress we made in fiscal 2025 to build the foundation for our strong performance to start the year.

Fiscal 2025 was about strengthening the core of our business and restoring consistency across the system. We started with the food. We sharpened our menu, elevated recipe standards and improved execution at the restaurant level. Enhancing training and tightening operational controls drove better consistency bowl after bowl. Our limited time offers were also more impactful and more focused, bringing energy to the brand and reinforcing our authority in noodles. A great example is Chili Garlic Ramen, which we introduced as a limited time offer in October.

Inspired by trending Ramen Hacks, this broth-less bowl delivered the buttery, spicy Umami-pack flavors guests were already craving. It quickly became one of the strongest LTOs in our history. A new Ramen dish not only resonated with our loyalty members, but also, we believe, introduced our brand to a new consumer who desired a Ramen dish in a fast casual environment.

We have just recently brought the Ramen back along with a previous fan favorite Indonesian Peanut Chicken Saute as we raise awareness to our Asian noodle collections of our menu. Furthermore, we are currently evaluating additional Ramen recipe as we believe a Ramen section of our menu could be as equally successful as our collection of max.

Together, these improvements strengthen guest confidence in our food and help drive stronger engagement with the brand throughout the year. Operational excellence followed. The launch of our Operational Excellence Review, or OER program introduced a more structured coaching and accountability model across our restaurants. Area managers and regional leaders now use OERs to focus on root causes, develop clear action plans and reinforce consistent execution across our teams. This approach has strengthened leadership alignment, improved training accountability and raised operational standards across the system.

We are seeing the results of that work in our guest experience. Over the course of the year, our OSAT scores improved as measured by SMG meaningfully, and we have steadily closed the gap with the fast casual category average. In January, our overall satisfaction reached 72%, the closest we have been to fast casual benchmark since launching the program in early 2024.

These improvements reflect stronger execution across the fundamentals of the guest experience from cleaner restaurants and better hospitality to more consistent food quality and stronger dinner operations. Just as importantly, our teams are now operating with clearer expectations, stronger coaching and a shared focus on continuous improvement across people, operations, guests and financial performance.

We also established a more thoughtful and sustainable approach to value. As we listen closely to our guests, it became clear that value is not simply about price. Our guests want to feel good about the amount of food they receive relative to what they pay for. Value means balance, feeling satisfied and leaving with the sense that you had a great dining experience.

In addition, in the current macroeconomic environment, today's consumer has become more value conscious, which we wanted to be able to address in our menu offerings, not through a temporary discount, but rather in an ongoing value-oriented option for our guests. That insight informed the launch of Delicious Duos. Rather than introducing a discount, we focused on elevating our value proposition by offering craveable combinations that deliver both variety and satisfaction at an accessible price point.

The platform has resonated with guests, supporting traffic and frequency while maintaining the integrity of our margins. It also raised awareness of our new menu due to the combination of Delicious Duos offers and the marketing of that offering, which showcased those various menu offerings. Our marketing approach has become more disciplined, more data-driven and more focused on the core of who we are as a brand.

We returned to the foundation of our business, noodles. Our messaging leaned into craveability, variety and the comforting shareable occasions that define the Noodles & Company experience. As we often say internally, we know noodles, and our marketing is once again centered on celebrating that authority. At the same time, we evolved how we plan and manage marketing investments. We moved away from static annual plans towards an always-on performance optimized marketing engine.

Using AI-supported data and channel level performance input, our teams dynamically adjust investment based on return, incrementality and audience response, allowing us to balance brand building with demand generation. As a result, we are managing media investment more actively across channels, reallocating dollars towards the highest return opportunities while refining audience targeting and leaning into markets where guest response is strongest. Combined with improvements in food, operations and value, these efforts contributed to steady improvement in comparable sales trends, traffic stabilization and eventual growth and expansion in restaurant-level margins.

At the same time, we strengthened the financial foundation of the business. We improved labor productivity through better scheduling and tightening operational management. We managed food costs with greater precision, and we increased efficiency in our marketing deployment. These actions, combined with leveraging the significant same-store sales increases, expanded restaurant level margins in the fourth quarter of 2025 to 14.1%, an improvement of 290 basis points year-over-year.

Our guidance for 2026 that Mike will discuss calls for improved margins for the full year of 2026 over 2025 due to all that I have mentioned. The result is a healthier system with stronger unit level economics and a more resilient operating model. What gives me confidence today is the consistency we are seeing across the business. Food is better, execution is stronger, standards are clearer and the results are following.

The work we did in 2025 created a solid foundation. We are now building on that foundation as we move through 2026. Before I turn it over to Mike, I'd like to provide an update on the status of our previously announced review of strategic alternatives. As previously shared, our Board of Directors initiated a review of strategic alternatives to explore ways to maximize shareholder value.

The process may include a range of potential options such as refinancing existing debt or other strategic or financial transactions. No decisions have yet been made, and there is no set timetable for completion. Until the review is completed, we will not provide additional commentary. With that, I will turn it over to Mike to walk through the financial details.

Thank you, Joe. In the fourth quarter, our total revenue increased 0.8% compared to last year to $122.8 million. System-wide comp restaurant sales during the fourth quarter increased 6.6% including an increase of 7.3% at company-owned restaurants and an increase of 3.8% at franchised restaurants.

Company comp traffic during the fourth quarter increased 1.4% and average check increased 5.8%, inclusive of 2% effective pricing during the quarter. Company average unit volumes in the fourth quarter increased 9.9% to $1.44 million. As Joe mentioned, our sales momentum continued to accelerate in the first quarter of 2026.

Our company comp sales in '26 are positive over 9% year-to-date. We're extremely encouraged by the sales acceleration, especially against a tougher comparison in the first quarter of 2025, where comp sales were positive 4.7% and incorporated significant marketing of our new menu rollout in March of 2025. Turning back to the fourth quarter of 2025. Our sales acceleration in the fourth quarter delivered impressive bottom line growth.

Our restaurant contribution margin in the fourth quarter increased to 14.1% from 11.2% in the fourth quarter of 2024. COGS in the fourth quarter were 26.0% of sales, a 120 basis point decrease from last year, which was driven by a combination of menu price, vendor rebates and lower discounting, partially offset by higher food costs associated with our new menu offerings and modest inflation.

Our food inflation in the fourth quarter was approximately 1%. Labor costs for the fourth quarter were 30.9% of sales, which was down 140 basis points to prior year, primarily due to the benefit of sales leverage, partially offset by wage inflation. Hourly wage inflation in the fourth quarter was 2.3%. Occupancy costs in the fourth quarter decreased to $10.7 million compared to $11.4 million in 2024 due to a reduction in our company-owned restaurant count over the last 12 months.

Other restaurant operating costs increased by 40 basis points in the fourth quarter to 20.1%. The increase in other restaurant operating costs was primarily driven by a combination of higher third-party delivery fees from higher third-party delivery channel sales and higher marketing expenses which were mostly offset by sales leverage.

G&A in the fourth quarter was $11.7 million compared to $11.3 million in 2024. Net loss for the fourth quarter was $6.8 million or a loss of $1.16 per diluted share compared to a net loss of $9.7 million or a loss of $1.70 per diluted share last year.

The loss in the fourth quarter of 2025 included a $5.6 million noncash impairment charge primarily related to our decision to close underperforming restaurants. Adjusted EBITDA in the fourth quarter was $7.6 million compared to $4 million in the fourth quarter of 2024 an increase of over 88%.

In the fourth quarter, we closed 9 company-owned restaurants and 3 franchise restaurants. Our fourth quarter capital expenditures totaled $2.3 million compared to $3.8 million in 2024. At the end of the fourth quarter, we had $1.3 million of available cash and our debt balance was $110.2 million, with over $11 million available for future borrowings under our revolving credit facility.

As a part of our restaurant portfolio optimization project, we closed a total of 33 restaurants in 2025 and have closed 20 restaurants year-to-date in 2026. We continue to see great results from this ongoing project. The most meaningful impact is the post-closure transfer of sales to nearby Noodles restaurants, which is driving a significant increase to our company-wide restaurant level profits.

This is attributable in large part to our high mix of off-premise sales. In the fourth quarter of 2025, we estimate that the closures benefited comp sales by approximately 100 to 150 basis points. We forecast that the portfolio optimization project will positively impact the first quarter of 2026 comp sales by 200 to 300 basis points.

We view the sales transfer from closed restaurants to nearby Noodles restaurants as a permanent benefit to our baseline average unit volumes at those go-forward sites. Throughout 2026, we will continue to look for additional opportunities to optimize our portfolio of restaurants in an effort to increase restaurant level profitability, including the benefit of sales transfer trends we have been experiencing.

We currently estimate that we'll close 30 to 35 restaurants in 2026. Turning to guidance. Our forecast for the first quarter of 2026 projects the following: comp sales of approximately 9% and adjusted EBITDA of $5.7 million to $6.3 million, more than doubling prior year results.

For the full year 2026, we are providing the following guidance: Total revenue of $478 million to $493 million, including comp restaurant sales growth of 6% to 9%. Restaurant contribution margin between 14.7% and 16%; general and administrative expenses of $49 million to $52 million inclusive of stock-based compensation expense of approximately $2.5 million. Depreciation and amortization expense of $24 million to $25 million; interest expense of $10 million to $11 million; adjusted EBITDA between $30 million and $35 million, 1 to 2 new franchise restaurant openings and we estimate total 2026 capital expenditures of $9.5 million to $10.5 million.

We expect to be free cash flow positive and have the opportunity to reduce our debt balance in 2026 by $5 million to $10 million. For further information regarding our 2026 expectations, please see the Business Outlook section of our press release. With that, I'd like to turn the call back over to Joe for final remarks.

Thanks, Mike. We've built meaningful momentum by focusing on the fundamentals and executing with discipline that elevate the guest experience. When great food, strong operations and targeting marketing that connects with guests come together, performance follows. And that's what we've been seeing come to fruition.

This is evidenced by the significant year-over-year increase in adjusted EBITDA in the fourth quarter of 2025 and our expectations for significant further growth in adjusted EBITDA in 2026. We are confident that the foundation we built in 2025 and the strong acceleration of sales in early 2026, position us for sustainable growth throughout 2026 and beyond. Thank you for your time today. I'll now turn the call back over to the operator.

We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Todd Brooks with The Benchmark Stone..

Congrats on such a strong start to Q1 after a really great finish to '25. So well done with that. Two questions, if I may. One, is there way -- and maybe it's best looked at through the lens of the '26 guidance? You talked about a Q1 contribution from sales transfer. You talked qualitatively about kind of a margin benefit of the sales transfer. If we can talk maybe, Mike, on the year-over-year improvement in both metrics in the '26 guidance, how much is attributed to the sales transfer versus just the core underlying momentum that you're seeing in the business right now?

If we look at the full year guidance for '26, $30 million to $35 million of adjusted EBITDA, we just take the midpoint there, it suggests about a $10 million EBITDA improvement year-over-year. We think about half -- a little less than half of that is -- will be due to closures just under $5 million with the rest due to core business improvement.

Okay. Great. That's helpful. And we'll just back that up through the income statement for kind of the restaurant level margin thoughts to get at what the improvements are from operational improvements and leverage then. Okay. Perfect. And then the second one that I had for you, the strength in the 9% number is pretty amazing considering the environment we're in. Joe or Mike, do you have any sense of any stimulative benefits from maybe some of the early tax refund activity benefiting the business or kind of to the other side over the last few weeks, any pressure that you've seen from more related activity and gas price increases? I'm just trying to figure out how we get the 9% number to something that reflects where the consumer kind of is at at the baseline level without some of these exogenous pressures and benefits.

Yes, those are two pretty big factors impacting the industry, and they're both fresh -- when we look at our performance year-to-date outside of weather, we see a lot of consistency. It's not like we saw a big change in March when tax refunds would have started coming in or post the conflict.

So we're not seeing an obvious impact on our end. And also, when we look at our performance versus the industry, industry has been hovering at the 0% to 1% same-store sales, and we've been consistently meeting that, going back to early '26 by over 9 percentage points. So I don't think those things are showing up yet.

Yes. And I think Todd also, I think also we've built the menu around what you have and what you're willing to pay. So as we leaned into Delicious Duos, and then had great LTOs to drive more traffic into the restaurants. I think we have something for everyone, and that should sustain us through the coming months.

And how the Delicious Duos mix, Joe?

The mix -- depending on whether there's a strong LTO going on because that gets factored into the Delicious Duos mix, but right around 5%, which is what we expect it to be since its inception back in late July last year.

We have reached the end of the question-and-answer session. And this also concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation. Have a great day.

Good afternoon, and welcome to Noodles & Company's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to introduce your host, Noodles & Company's Chief Financial Officer, Mike Hynes. Thank you. You may begin.

Thank you, and good afternoon, everyone. Welcome to our third quarter 2025 earnings call. Here with me this afternoon is Joe Christina, our Chief Executive Officer. I'd like to start by going over a few regulatory matters. During the call, we may make forward-looking statements regarding future events or the future financial performance of the company. Any such items should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are only projections, and actual events or results could differ from those projections due to a number of risks and uncertainties, including those referred to in this afternoon's news release and the cautionary statement in the company's annual report, on Form 10-K and subsequent filings with the SEC.

During the call, we will discuss non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our third quarter 2025 earnings release.

To the extent that the company provides guidance, it does so only on a non-GAAP basis and does not provide reconciliations of forward-looking non-GAAP measures. Quantitative reconciling information for these measures is unavailable without unreasonable efforts.

With that, I would like to turn the call over to Joe Christina, our Chief Executive Officer.

Thanks, Mike, and good afternoon. I appreciate the opportunity to share our results for the quarter with you and discuss the exciting progress we are making across Noodles & Company, including the accelerated sales we have seen in the third quarter and further in October. I have been in the CEO role for just a couple of months after joining the company earlier this year as President and COO, and I could not be more proud of the work happening across this organization. From our restaurant teams to our support center, everyone has rallied behind our purpose and our commitment to deliver great food and an exceptional guest experience.

I am thrilled with our recent sales trend, which has significantly outperformed the fast casual benchmark in the third quarter and continued in October. Comparable sales grew 4% in the third quarter, improving sequentially each month within the quarter, and that momentum accelerated even further in October to a robust 8% increase in comparable sales, well above the industry average, with traffic up over 1.5%. All of this has been achieved despite a difficult consumer environment. These results are not by chance, but the outcome of deliberate, focused efforts across the business.

The success of our new menu rollout earlier this year, which has delivered noticeable improved food to our guests, the strong value proposition of our Delicious Duos platform introduced in late July, the excitement around our Chili Garlic Ramen limited time offer and the impact of our enhanced marketing and operational execution are all working together to strengthen the relevance of the Noodles brand.

That momentum has driven enthusiasm among our guests and energized our team members. We are building a foundation for sustained growth, and I'm confident in the path ahead. We are seeing meaningful year-over-year improvement in our digital sales channel, driven largely by third-party delivery, which increased 12%. Digital remains a critical growth engine for noodles, strengthening both awareness and accessibility while aligning with our overall sales performance trends.

We have also seen increased enrollment and engagement in our NoodlesREWARDS program, supported by targeted promotions such as our 30th anniversary offer and our early access ramen launch for reward members. These efforts continue to build loyalty and deepen our connection with guests, reinforcing the role digital plays in driving frequency and relevance for the brand.

Another important contributor is the introduction of our Delicious Duos platform in late July. This value offering brings the new menu flavor and quality we are so proud of to our guests at an accessible price point. The early results show the guests view Duos as an everyday option rather than a limited time promotion, allowing them to make noodles a regular part of their dining routine. The platform is expanding our reach and reinforcing our value credibility while maintaining brand equity and profitability.

Our focus on these fundamentals, meeting guests where they are, deliver real value and provide an exceptional experience is driving consistent improvement in same-store sales, and we believe this momentum will continue into the coming quarters. I'm especially encouraged by the momentum we are seeing in our sales trends. As I noted earlier, October was a very strong month with comp sales accelerating to positive 8%, reflecting continued strength of our brand and the appeal of our recent initiatives.

October was particularly strong, thanks to the continuing momentum from our Delicious Duos as well as the success of our new Chili Garlic Ramen dish. This item has resonated with guests who are craving something bold and new, including younger guests visiting Noodles for the first time. The success of our ramen LTO reflects the power of thoughtful menu evolution and flavor innovation working in tandem. 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.

Together, these elements capture guest curiosity and enthusiasm evidenced by strong trial and early repeat performance. Strategically, ramen represents how we continue to push our menu forward, introducing bold differentiated flavors that feel both new and true to our brand. Supported by a distinctive creative platform and well-integrated media plan, this limited time offer translated culinary innovation into cultural relevance, driving excitement, traffic and brand buzz that has extended well beyond the initial launch window.

In the fourth quarter, we are lapping over a period of heavy promotions and discounts that we choose not to repeat this year. As a result, we are seeing an over 6% increase in average check quarter-to-date, a trend we expect to continue through Thanksgiving. Even against discount-heavy comparison, our year-over-year traffic is positive over 1.5% quarter-to-date, extending a positive traffic trend that began midway through the third quarter. This performance speaks to the quality of our offerings, the strength of our value platform and the growing relevance of the Noodles brand.

Turning to earnings and margin growth. We continue to make disciplined decisions that strengthen our business and position us for sustained profitability. One of the most significant levers we can pull is the strategic closing of underperforming restaurants. We are approaching these closures thoughtfully, focusing on locations where we can effectively transfer sales to nearby restaurants given a high mix of off-premise revenue.

For the restaurants we plan to close, we expect to retain approximately 30% of sales through transfer to neighboring units, consistent with the performance of recent closed locations. These actions improve overall sales leverage and enhance restaurant level profitability and efficiency. These closures are never easy, but they are the right ones for the long-term health of the brand. By tightening our portfolio and focusing on high-performing restaurants and markets, we can strengthen operations, elevate the guest experience and focus on innovation that drives continued growth in sales and margins.

Our adjusted EBITDA is expected to meaningfully improve as a result of these initiatives, driven by the elimination of negative earning restaurants, the transfer of approximately 1/3 of their sales to nearby locations and the ability to reduce certain overhead expenses associated with a smaller store base.

In the third quarter, our restaurant contribution margins improved 40 basis points, reflecting not only higher comparable sales and the closure of underperforming restaurants, but also our continued focus on managing costs even as sales improve. Strengthening margin remains critical to the success of our operating model, and we will stay focused on driving additional improvements in the quarters ahead.

Importantly, our third quarter adjusted EBITDA improved by $1.6 million or approximately 33% as a result of the sales improvement I described together with our cost controls. As we look ahead, our focus remains on executing our key priorities to strengthen operations, drive innovation and improve overall profitability.

Since launching our operations excellence coaching program earlier this year, we have made meaningful progress. This program focused on what matters most to our guests, order accuracy, speed of service, taste of food and hospitality. We are addressing each of these areas through targeted training and accountability. To date, our dedicated coaching team has visited nearly 200 restaurants, working side-by-side with operators to identify opportunities, build on each restaurant strength and elevate performance across the system. This investment is already showing results with increased guest satisfaction and helping us deliver a more consistent and elevated guest experience across the brands.

On the culinary front, we are keeping momentum going with exciting new menu and marketing initiatives. In December, we will introduce our newest holiday crispy created in a collaboration with one of America's favorite candy bars. Additionally, early next year, we'll bring back one of the most requested fan favorites, answering the call from guests who can't wait to see it return.

In parallel, we are also seeing continued growth in our digital and third-party channels, which remains powerful drivers of awareness, convenience and incremental sales. These efforts reinforce our position as a brand that offers both variety and innovation, meeting the evolving taste of today's guests while staying true to who we are.

From a financial perspective, we continue to make disciplined decisions that position Noodles for long-term success. In addition to the restaurant closures, we're executing a comprehensive cost savings plan that is on track to deliver more than $5 million in savings across our P&L in 2025. We will build on that progress in 2026 with a focus on optimizing our labor model, reducing food waste and improving efficiencies across every part of our P&L.

At the same time, we are becoming increasingly efficient and effective with our marketing investments, ensuring every dollar works harder to drive business impact. Through insights from our media mix model, we have optimized our media strategy to better balance reach and return, shifting spend towards the channels and tactics that deliver the strongest ROI.

Our refined audience targeting also seeks to ensure we are reaching the right guests with the right message, maximizing both relevance and conversion. Together, these efforts are strengthening profitability for the company and our franchise partners while building a smarter, more agile business ready to capture future growth.

Before I turn it over to Mike, I'd like to provide an update on an announcement we made in September. As previously shared, our Board of Directors has initiated a review of strategic alternatives to explore ways to maximize shareholder value. The process may include a range of potential options such as refinancing existing debt or other strategic or financial transactions. No decisions have yet been made, and there are no set timetables for completion. Until the review is completed, we will not provide additional commentary.

With that, I will turn it over to Mike to review our third quarter financial highlights and full year guidance.

Thank you, Joe. In the third quarter, our total revenue decreased 0.5% compared to last year to $122.1 million. System-wide comp restaurant sales during the third quarter increased 4.0%, including an increase of 4.0% at company-owned restaurants and an increase of 4.3% at franchise restaurants. Company comp traffic during the third quarter decreased slightly by 0.6%, though was positive in the second half of the third quarter and average check increased 4.6%, inclusive of 2% effective pricing during the quarter.

Company average unit volumes in the third quarter increased 5.4% to $1.34 million. As Joe mentioned, we saw comp sales improved sequentially in the third quarter. July was positive 1.6%, August was positive 4.5% and September was positive 5.5%. We're excited to see that momentum accelerate into the fourth quarter with our October comp sales positive 8%.

Turning to profitability. We're especially encouraged that our top line momentum translated into year-over-year restaurant-level margin growth, increasing to 13.2% from 12.8% in the third quarter of 2024. Costs in the third quarter were 25.7% of sales, a 20 basis point increase from last year, which was primarily driven by higher food costs associated with our new menu offerings and inflation, partially offset by the combination of menu price and vendor rebates. Our food inflation in the third quarter was approximately 2%.

Labor costs for the third quarter were 31.4% of sales, which was down 60 basis points to prior year, primarily due to the benefit of sales leverage, partially offset by wage inflation. Hourly wage inflation in the third quarter was 2.5%. Occupancy costs in the third quarter decreased to $11.1 million compared to $11.5 million in 2024 due to a reduction in our company-owned restaurant count over the last 12 months.

Other restaurant operating costs increased by 40 basis points in the third quarter to 20.5%. The increase in other restaurant operating costs was primarily driven by a combination of higher third-party delivery fees from higher third-party delivery channel sales and higher marketing expenses, which were mostly offset by sales leverage.

G&A in the third quarter was $12.3 million compared to $12.9 million in 2024, primarily due to a decrease in expenses related to our annual summit and a decline in obsolete inventory costs. Net loss for the third quarter was $9.2 million or a loss of $0.20 per diluted share compared to a net loss of $6.8 million or a loss of $0.15 per diluted share last year. The loss in the third quarter of 2025 included a $5.3 million noncash impairment charge related to our decision to close underperforming restaurants.

Adjusted EBITDA for the third quarter was $6.5 million compared to $4.9 million in the third quarter of 2024 and an increase of nearly 33%. In the third quarter, we closed 15 company-owned restaurants and 3 franchise restaurants. Our third quarter capital expenditures totaled $3.7 million compared to $7.1 million in 2024. At the end of the third quarter, we had $4.7 million of available cash and our debt balance was $109.8 million with over $12 million available for future borrowings under our revolving credit facility.

In August, we announced an expanded effort to close underperforming restaurants on or before lease end dates. Through October, we've closed 29 company-owned restaurants, and we're on schedule to close a total of 31 to 34 company-owned restaurants by the end of 2025. We continue to be pleased with the results from closing underperforming restaurants. The closures removed restaurants with negative cash flow from our system and post closure, we're seeing nearby Noodles restaurants experience an increase in sales and profits.

We expect the closure of underperforming restaurants in 2025 to positively impact 2026 restaurant level contribution by over $2 million. Based on the positive results we've seen over the last year from closing underperforming restaurants, we will continue to monitor our portfolio of restaurants carefully to optimize our overall financial performance.

Turning to our full year guidance for 2025. We're revising our expectations based on our recent positive trends. For the full year 2025, we are providing the following guidance: Total revenue of $492 million to $495 million, including comp restaurant sales growth of 3.6% to 4.2%, restaurant contribution margin between 12.3% and 12.7%, general and administrative expenses of $48 million to $49 million, inclusive of stock-based compensation expense of approximately $3.3 million, depreciation and amortization expense of $28 million to $29 million, interest expense of approximately $11 million, and we estimate total 2025 capital expenditures of $12 million to $13 million. For further information regarding our 2025 expectations, please see the Business Outlook section of our press release.

With that, I'd like to turn the call back over to Joe for final remarks.

Thanks, Mike. As I look across the business, I am confident that the work we have done this year is paying off. We're building a more relevant brand, providing greater value and a variety for our guests and setting the stage for sustainable growth in the quarters ahead. Thank you for your time today. I now turn the call back over to the operator.

[Operator Instructions] Our first question comes from Todd Brooks with The Benchmark Company.

Congratulations on the momentum in the business. It's great to see. I know there's a lot of work that went into this over the last couple of years. So nice to see that paying off. If I can dig in, first of all, on the Duos, success there. Can we kind of talk through how Duos are mixing or how you look at value on the menu? Just trying to figure out consumers accessing via value platform and then what they do upon repeat.

Todd, it's Joe Christina. Thanks for the question. Yes, Delicious Duos since we launched it at the end of July, certainly filled the void of value that we have with our guests. And we're mixing around 4% to 5% depending on the restaurants. What we're encouraged by is we see that throughout the business, not just during lunch or dinner or on our third-party platforms. So it's a strong mix, and we see that kind of halo effect of the Delicious Duos with our guests, and we continue to get good value scores from our guests that show us that it's working in the value platform against our competition.

Yes, that's great. And then I know it's early with an end of July launch, but what are you seeing for repeat frequency for customers that access the brand originally through Duos? And are they -- do they trade around the menu? Or is a Duo customer typically a Duo customer on first visit?

Well, seeing that our mix has been steady, 4% to 5%, we believe it's bringing in both new and incremental -- I mean, incremental and existing guests. And when we get them in the restaurant, we have seen our teams really upsell to other parts of our menu, including our new menu items, and the guests are trying them also. So I think it's working for us in both ways in driving guests to our brand and then also we're able to elevate to other parts of the menu that we launched earlier in the year.

Okay. And then, Mike, if we look at -- and obviously, that October 8% result is amazing. It's great to see. I think you talked about traffic being 1.5%. How do we get our minds around kind of organic traffic versus the contribution from sales transfer to the same-store sales traffic number from the stores that you have closed and you've seen that kind of sales transfer to existing stores?

Sure. And we are experiencing a lift -- experiencing a sales lift from our closures. And the closures have really been weighted towards the back half. So we're really seeing that accelerate recently. In October, that was about a 1%, 100 basis point lift for us. And hopefully, that will continue as we expand the effort.

That's great. You're still positive traffic outside of the sales transfer, which is excellent to see as well.

Yes. Just as a reminder, October last year, we had heavy discounting going on. And so for us to have positive traffic in October up against those comps is really encouraging.

Okay. Great. And then you talked about the success with the ramen LTO. Learnings from that, thoughts on kind of rotating between ramen, but as a permanent kind of menu category on the menu? Just what are thoughts coming out of the strength of that recent offering?

Yes. Well, it's too early to tell if it's something that we need to have permanently on our menu. It's working. Both trial and repeat business is there. It's a bold dish for us with a bold taste that fits our platform. And we believe there's a future for ramen on our menu, whether that is a permanent item or an LTO in the future. So we're excited about that as well as the price point with ramen has brought the guest in and really got our repeat trial going. So we're very excited about and encouraged by the results of ramen, and we'll continue to monitor it through the rest of the promotion to see where it goes from there.

And what's the window for that LTO, Joe?

It's slated to end by the end of the year.

Okay. And did it start at the start of the quarter or earlier than that?

It started in October.

Our next question comes from the line of Andy Barish with Jefferies Group.

This is actually Ivan on for Andy. I just wanted to maybe follow up on one of Todd's questions and just see if you'd be willing to share what the benefit from the underperforming closures were, particularly on margins for this quarter. And I know you guys talked about the contribution looking ahead, but just curious if you were starting to see some of that in the near term as well.

Yes. Just on the Q3 adjusted EBITDA, the closures did benefit us, but to a limited extent because the closures have been back weighted where a lot were happening in September and October. So it's about $300,000 of benefit to adjusted EBITDA in the quarter.

Got you. And then any way to also unpack sort of your comments about the fourth quarter and sort of the check benefit that you've been seeing as you lap some of the promotions in the prior year. Does that fall off relatively significantly beyond Thanksgiving into December? Just trying to see kind of wrap our heads around the magnitude of that impact.

Yes. Most of the impact of the discounts from last year does fall off post Thanksgiving. So as we get into December, you should see a much more normal year-over-year check increase.

Got you. And just to confirm, that plus the sales transfers are all embedded in the guidance for the full year and fourth quarter implied?

Correct.

We have reached the end of the question-and-answer session, and this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.