Noodles & Company Q1 FY2026 earnings call

• Restaurants: Operating better today than a year ago, with improved service, especially during dinner, and 10% increase in overall guest satisfaction score in the last six months across major sales channels. Teams are more focused and accountable. - Marketing: More disciplined, connected, and effective. New guest active purchases increased 36% year over year, loyalty sign-ups grew 33% in the quarter. Launched Boost Week and Fresh campaigns. - Culinary strategy: Balancing fan-favorite returns, bold global flavors, and cultural partnerships. Steak Stroganoff and Chicken Artichoke and Asparagus Rigatoni as successful limited-time offers. Partnered with Cravings by Christy Teigen for Craveable Bundle. - Portfolio optimization: Closed underperforming restaurants, transferring their sales to nearby locations, improving comp sales and overall profitability.

In the first quarter, total revenue was relatively flat at $123.8 million compared to last year. System-wide comp restaurant sales increased 9.1% during the first quarter, including 9.4% at company-owned restaurants and 8% at franchise restaurants. Company comp traffic increased 4.8%, and average check increased 4.4%. Company average unit volumes in the first quarter increased 13.5% to $1.49 million. Restaurant contribution margin in the first quarter increased 460 basis points to 14.9% from 10.3% in the first quarter of 2025. Adjusted EBITDA in the first quarter more than tripled to $7.7 million compared to $2.4 million in the first quarter of 2025.

Raised full year 2026 guidance to total revenue of $483 to $498 million, including restaurant sales growth 7 to 10 percent, restaurant contribution margin between 15.5 percent and 17 percent, general and administrative expenses of 50 to 53 million dollars, inclusive of stock-based compensation expense of approximately 2.5 million dollars, depreciation and amortization expense of 24 to 25 million dollars, interest expense of 10 to 11 million dollars, adjusted EBITDA between $32.5 and $37.5 million, one to two new franchise restaurant openings, 30 to 35 company-owned restaurant closures and five franchise restaurant closures, and estimated total 2026 capital expenditures at $9.5 to $10.5 million, expecting to be free cash flow positive and reduce debt balance by approximately $10 million in 2026.

Actual events or results could differ from forward-looking statements due to a number of risks and uncertainties, including those referred to in the news release and the cautionary statement in the company's annual report on Form 10-K and subsequent filings with the SEC, such as food cost changes, wage inflation, third-party delivery fees, and marketing expense changes.

Q: Hey, guys. Congratulations, and thanks for taking a few questions here. Appreciate it. Mike, you were... You kind of quantified the same-store sales in Q1 as majority driven by kind of fundamental business improvements and the momentum in the business. I think last quarter you kind of 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 core business?

A: Yeah, 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, you know, most of the benefit was due to core business improvement, which is really encouraging to see.

Q: 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?

A: Just timing between the periods, but overall we feel like it kind of washed out and wasn't a big impact for the quarter.

Q: And then, Joe, you talked about the introduction of a boost week. I was wondering... Is this 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?

A: Yeah, great question, Todd. That's a strategy around 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.

Q: Okay, 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, then, the boost week?

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

Q: And you talked about the second quarter LTO. I know last quarter... You had some additional items when you were running the satay. You added the ramen back in. Are there any other kind of add-ins to this LTO, or is it going to be this dish standing on its own through the quarter?

A: It's the partnership that we are with Cravings with Christy Teigen and getting the benefit of all her followers, as well as a new treat to put it in the bundle. So we are standing on our LTO for this quarter. and with other new news coming up in the remainder of the year.

Q: A final one for me, and thanks for being patient with all the questions. Mike, I think you talked about check being up 4.4%. Can you break that down between price and mix?

A: Yeah, we had about 2% price for the quarter, and that's really our expectation today. for the full year, 2026, with the rest coming from mixed. 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 checkup of it as well.