This article first appeared on GuruFocus .
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Total Revenue:$127 million, a $600,000 increase compared to last year.
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Comparable Restaurant Sales:Increased 10.3% system-wide; 11.4% at company-owned restaurants, 5.5% at franchise restaurants.
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Restaurant Contribution Margin:Increased 440 basis points to 17.2% from 12.8% last year.
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Adjusted EBITDA:Increased 79% to $10.8 million from $6 million last year.
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Net Loss:$4 million, or $0.67 per diluted share, compared to a net loss of $17.6 million, or $3.04 per diluted share last year.
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Company Average Unit Volumes:Increased 15.9% to $1.57 million.
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Cost of Sales:24.9% of sales, a 160 basis point decrease from last year.
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Labor Costs:29.4% of sales, down 230 basis points from the prior year.
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Cash and Debt:$1.3 million of available cash; debt balance of $105.4 million, reduced by $1.4 million from the previous quarter.
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Restaurant Closures:Closed two company-owned and two franchise restaurants in the second quarter.
Release Date: July 24, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Noodles & Co ( NASDAQ:NDLS ) achieved one of its strongest performances since becoming a publicly traded company, with restaurant level margins expanding by over 400 basis points year over year.
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Adjusted EBITDA increased approximately 80% in the second quarter, and more than doubled in the first half of the year compared to the same period last year.
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Comparable restaurant sales have been positive for the last 18 months, significantly exceeding the fast casual Black Box index.
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The company raised its fiscal 2026 guidance for revenue, margins, and adjusted EBITDA, expecting year-end debt balance to be at or below three times 2026 adjusted EBITDA.
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Noodles & Co ( NASDAQ:NDLS ) has successfully implemented a portfolio optimization plan, resulting in improved profitability and a significant transfer of sales from closed restaurants to nearby locations.
Negative Points
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Net loss for the second quarter was $4 million, or a loss of $0.67 per diluted share, despite improvements in other financial metrics.
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The company closed two company-owned restaurants and two franchise restaurants in the second quarter, indicating ongoing challenges in certain locations.
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Other restaurant operating costs increased by 60 basis points from the prior year, driven by higher third-party delivery fees.
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General and administrative expenses increased to $13.9 million, primarily due to an increase in incentive-based compensation.
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The company is still dealing with variability in franchise group performance, which can create disconnects with company-owned restaurant performance.
Q & A Highlights
Q: Joe, regarding innovation, how much can the Asian-inspired dishes offering be broadened, and is there a point where it becomes a permanent menu item instead of LTO driven? A: Joe Christina, President and CEO: We have a consistent testing process and an 18-month calendar for items that could be relevant, whether as LTOs or permanent items. We are finishing up testing multiple ramen dishes for a Q4 launch, which will be exciting. We haven't decided if they will be LTOs or permanent yet.
Q: Can you remind us about the baked launch in early August and the ramen launch in Q4, and how do these compare to last year's innovation in the second half? A: Joe Christina, President and CEO: We are lapping against last year's Chili Garlic Ramen launch. We are confident in our strong innovation pipeline, and we believe ramen will become a key part of our offerings, enhancing our brand's appeal.
Q: Regarding marketing improvements and Boost Weeks, can you provide details on the loyalty base and how many Boost Weeks are planned compared to previous years? A: Joe Christina, President and CEO: Our rewards program accounts for about 25% of sales, with digital sales at 60%. We leaned into Boost Weeks in the latter half of last year and plan to have more in 2026 due to their success and engagement with rewards members.
Q: There seems to be a significant spread between company and franchisee same-store sales. What drove the strength at the company level, and can you explain the 600 basis point delta? A: Joe Christina, President and CEO: We observe variability in franchise performance, which depends on the market. The franchise group is relatively small, so variability can create a disconnect. However, we see overall health and strength in the system, with some franchise groups outperforming the company average.
Q: Can you elaborate on the financial results and guidance for the rest of 2026? A: Mike Hynes, CFO: We raised our full-year 2026 guidance, expecting total revenue of $485 million to $500 million, with comp restaurant sales growth of 8% to 11%. We anticipate a restaurant contribution margin between 16% and 17% and adjusted EBITDA between $34 million and $38 million. We also plan to reduce our debt balance by approximately $10 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
