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.
Is now the time to buy NDLS? Find out in our full research report (it’s free for active Edge members).
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: -0.5%, up 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: $35.11 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Noodles’s Q3 Earnings Call
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Todd Brooks (The Benchmark Company) asked about the effectiveness and repeat rates of the Delicious Duos platform. CEO Joseph Christina explained that the platform is attracting both new and existing guests, and that a steady mix of 4% to 5% supports menu upselling opportunities.
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Todd Brooks (The Benchmark Company) inquired about traffic growth excluding the benefit from closed store sales transfers. CFO Michael Hynes clarified that organic traffic remained positive even after accounting for the approximately 1% lift from transferred sales.
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Todd Brooks (The Benchmark Company) questioned the potential for Chili Garlic Ramen to become a permanent menu item. Christina responded that while it’s too early to commit, the dish is performing well and its future status will be evaluated after the promotion ends.
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Ivan Yu (Jefferies Group) asked about the margin benefit from closures in the third quarter. Hynes reported a $300,000 adjusted EBITDA benefit in Q3, with more substantial impact expected as closures accelerate.
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Ivan Yu (Jefferies Group) sought details on the fourth quarter’s check benefit as the company laps last year’s heavy discounts. Hynes noted that the majority of the check increase would normalize post-Thanksgiving, leading to more typical year-over-year comparisons in December.
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 $0.72, up from $0.66 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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