Noodles & Company Q4 FY2025 earnings call

In 2025, Noodles & Company built meaningful momentum with system-wide comp sales growth. Launched the most comprehensive new menu and craveable limited-time offers. Introduced Delicious Duos for value messaging. Reviewed and closed underperforming restaurants, leading to sales transfer to nearby locations. Launched operational excellence review program. In 2026 first quarter, continued comp sales growth, strong traffic and same-store sales, brought back Steak Stroganoff as LTO with AI-driven campaign. Aligned around four strategic goals: developing winning teams, igniting growth, driving guest satisfaction, and delivering strong financial results.

In the fourth quarter, total revenue increased 0.8% compared to the previous year to $122.8 million. System-wide comp restaurant sales grew 6.6% during the fourth quarter, with 7.3% growth at company-owned restaurants and 3.8% at franchise restaurants. Company comp traffic increased 1.4% in the fourth quarter, and the average check rose 5.8%. Company average unit volumes increased 9.9% to $1.44 million in the fourth quarter. For the first quarter of 2026, company comp sales were up over 9% year-to-date. The restaurant contribution margin in the fourth quarter of 2025 increased to 14.1% from 11.2% in the fourth quarter of 2024. Guidance for 2026 includes total revenue of $478 to $493 million, comp restaurant sales growth of 6 to 9%, restaurant contribution margin between 14.7 and 16%, adjusted EBITDA between $30 and $35 million, etc.

First quarter of 2026 projects comp sales of approximately 9% and adjusted EBITDA of $5.7 to $6.3 million. Full year 2026 guidance: total revenue $478 to $493 million, comp restaurant sales growth 6 to 9%, restaurant contribution margin 14.7 - 16%, G&A expenses 49 to 52 million (inclusive of ~$2.5 million stock-based comp), depreciation and amortization 24 to 25 million, interest expense 10 to 11 million, adjusted EBITDA 30 to 35 million, 1 to 2 new franchise restaurant openings, 2026 capital expenditures $9.5 to $10.5 million, expected free cash flow positive and $5 to $10 million debt reduction in 2026.

Q: Hey, thanks for the questions and congrats on such a strong start to You won after a really great finish to 25, so well done with that. Two questions, if I may. One, is really 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 and 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?

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

Q: And then the second one that I had for you, the strength and the 9% number is pretty amazing concerning 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 will relate 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.

A: Yeah, you know, 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 industry, industry has been hovering at the zero to 1% same-store sales, and we've been consistently beating that, going back to early 26 by over 9 percentage points. So I don't think those things are showing up yet. Yeah, and I think also we've built a menu around what you have and what you're willing to pay. So as we leaned into delicious duos and then had great LTOs, the drive more traffic into the restaurants. I think we have something for everyone, and that should sustain us through the coming months.

Q: And how do delicious duos mix, Joe?

A: They 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.