Casual restaurant chain Noodles & Company (NASDAQ:NDLS) reported Q3 CY2025 results topping the market’s revenue expectations, but sales were flat year on year at $122.1 million. The company’s full-year revenue guidance of $493.5 million at the midpoint came in 0.8% above analysts’ estimates. Its non-GAAP loss of $0.10 per share was in line with analysts’ consensus estimates.
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Noodles (NDLS) Q3 CY2025 Highlights:
- Revenue: $122.1 million vs analyst estimates of $119.8 million (flat year on year, 1.9% beat)
- Adjusted EPS: -$0.10 vs analyst estimates of -$0.11 (in line)
- Adjusted EBITDA: $6.50 million vs analyst estimates of $5.78 million (5.3% margin, 12.4% beat)
- The company slightly lifted its revenue guidance for the full year to $493.5 million at the midpoint from $491 million
- Operating Margin: -5.2%, down from -1.8% in the same quarter last year
- Locations: 435 at quarter end, down from 471 in the same quarter last year
- Same-Store Sales rose 4% year on year (-3.3% in the same quarter last year)
- Market Capitalization: $30.62 million
StockStory’s Take
Noodles & Company’s third quarter drew a positive reaction from the market, with management highlighting improving sales momentum and enhanced operational discipline. CEO Joe Christina pointed to the strong performance of new menu items, the success of the Delicious Duos value platform, and improved digital sales channels as key factors. Christina specifically noted, “Comparable sales grew 4% in the third quarter, improving sequentially each month,” attributing this to deliberate investments in menu innovation and targeted marketing. The company also benefited from closing underperforming restaurants, transferring sales volume to higher-performing locations and supporting bottom-line improvement.
Looking ahead, management’s guidance is supported by efforts to strengthen restaurant-level profitability and expand menu appeal. Christina stated that Noodles & Company expects continued growth through cost-saving initiatives, labor model optimization, and ongoing menu and digital innovation. Early fourth quarter trends, including an 8% increase in comparable sales in October, reinforce management’s confidence. Christina emphasized, “We are building a foundation for sustained growth,” with further product launches and an ongoing review of strategic alternatives, such as potential refinancing or other transactions, in progress.
Key Insights from Management’s Remarks
Management attributed third quarter performance to the combination of new menu offerings, the rollout of value-driven platforms, and targeted restaurant closures that improved overall profitability.
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Menu innovation impact: The introduction of new dishes, including Chili Garlic Ramen as a limited-time offer (LTO), generated guest excitement, drove trial, and contributed to sequential sales improvements. Christina described the ramen launch as “capturing guest curiosity and enthusiasm,” with early repeat performance exceeding expectations.
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Value platform traction: The Delicious Duos platform, launched in late July, provided accessible price points and broadened guest appeal. Management reported a “steady 4% to 5% mix,” indicating that the offering resonated beyond promotional periods and successfully attracted both new and existing customers.
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Digital channel growth: Digital sales, particularly through third-party delivery, increased 12% year over year. Management credited targeted promotions and loyalty program engagement—such as early access to new items through NoodlesREWARDS—for reinforcing digital’s contribution to brand relevance and traffic.
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Restaurant closure strategy: The company accelerated the closure of underperforming restaurants, transferring approximately 30% of sales to nearby locations. These closures helped eliminate negative cash flow sites and supported improved restaurant-level margins, with an estimated $300,000 benefit to adjusted EBITDA in Q3 and greater impact expected in the coming quarters.
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Operational improvements: Initiatives like the operations excellence coaching program targeted order accuracy, speed, and hospitality, leading to higher guest satisfaction. Management reported that nearly 200 restaurants have participated, supporting more consistent execution and system-wide performance gains.
Drivers of Future Performance
Management’s outlook for the remainder of the year centers on menu innovation, operational efficiency, and the ongoing impact of restaurant portfolio optimization.
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Menu and marketing initiatives: Christina outlined plans for continued menu evolution, including a holiday-themed collaboration and the return of a fan favorite, designed to maintain guest engagement and incremental traffic. These initiatives are expected to drive both trial and repeat business as management expands the brand’s appeal.
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Cost control and efficiency: The company is on track to deliver more than $5 million in annual cost savings, with further gains anticipated from labor model optimization and reduced food waste. These efforts are intended to offset inflationary pressures and support improved restaurant-level profitability in 2026.
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Portfolio rationalization: The closure of additional underperforming restaurants through year-end is projected to have an outsized impact on profitability by eliminating negative cash flow units and concentrating resources in stronger markets. Management expects the cumulative effect to enhance contribution margins and overall system efficiency.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will be closely tracking (1) the sustained impact of new menu launches and limited-time offerings on both traffic and average check, (2) the execution and financial effects of further restaurant closures as the company optimizes its portfolio, and (3) the effectiveness of cost-saving initiatives, including labor model adjustments and marketing efficiency improvements. Updates on the strategic alternatives review will also be a key area of focus.
Noodles currently trades at $0.74, up from $0.66 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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