Business Context and Reporting Period
Company: Noodles & Company (NDLS)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 30, 2025 (52 weeks)
Business Overview: A fast-casual restaurant chain operating 423 locations (340 company-owned, 83 franchised) across 31 states. The company focuses on globally-inspired noodle and pasta dishes.
Key Corporate Action: On February 18, 2026, the company effectuated a 1-for-8 reverse stock split to regain compliance with Nasdaq listing requirements. All share and per-share data in this filing are retroactively adjusted.
Key Financial Metrics
| Metric (in thousands, except per share) | Fiscal 2025 | Fiscal 2024 |
|---|---|---|
| Total Revenue | $495,089 | $493,271 |
| Net Loss | $(42,568) | $(36,213) |
| Loss Per Share (Diluted) | $(7.36) | $(6.37) |
| Adjusted EBITDA | $22,484 | $23,599 |
| Operating Cash Flow | $7,284 | $7,561 |
| Cash and Cash Equivalents (Ending) | $1,265 | $1,149 |
| Total Debt Outstanding | $110,200 | $100,742 (net) |
| Available Credit Facility Capacity | $11,900 | N/A |
Margins: Operating loss margin was 6.4% in 2025 compared to 5.6% in 2024. Cost of sales increased to 26.2% of restaurant revenue from 25.6% in the prior year.
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 0.4% to $495.1 million, driven by a 4.3% increase in company-owned comparable restaurant sales, partially offset by the closure of 33 underperforming locations.
- Profitability Decline: Net loss widened by 17.5% to $42.6 million. Operating loss increased by $3.8 million primarily due to higher impairment charges and interest expense.
- Impairments: Restaurant impairments, closure costs, and asset disposals rose 29.6% to $26.3 million, reflecting write-downs on 25 restaurants compared to 16 in 2024.
- Interest Expense: Net interest expense increased 30.2% to $10.9 million due to higher average borrowings and variable interest rates (SOFR + margin).
- Restaurant Count: Net decrease of 40 total restaurants (2 openings, 33 company closures, 9 franchise closures).
Guidance, Outlook, and Risks
Strategic Review: The Board initiated a review of strategic alternatives in September 2025 to maximize stockholder value, including potential refinancing or sale of the business. This process remains ongoing.
2026 Outlook:
- Expansion: The company has paused new company-owned restaurant openings for 2026 due to lower-than-expected returns on recent openings and high construction costs.
- Closures: Management expects to close approximately 30 to 35 company-owned restaurants in 2026 to optimize the portfolio.
- Capital Expenditures: Expected to range between $9.5 million and $10.5 million, focused on reinvestment in existing locations.
Key Risks:
- Liquidity and Covenants: The company is currently in compliance with debt covenants but faces tightening leverage ratios in 2026. Failure to meet covenants could require waivers or amendments.
- Stock Listing: The company recently regained Nasdaq compliance via a reverse stock split after failing to meet the $1.00 minimum bid price requirement.
- Cost Inflation: Ongoing pressures from labor costs, food commodity prices (specifically beef), and potential tariff impacts on imported ingredients.
Investor Verification Checklist
- Debt Covenant Compliance: Verify the company's ability to meet the stepped-down Consolidated Total Lease Adjusted Leverage Ratio (5.00:1.00 in Q1/Q2 2026) and stepped-up Fixed Charge Coverage Ratio (1.15:1.00 in Q1 2026).
- Impairment Trajectory: Monitor the pace of restaurant closures and associated impairment charges, which significantly impacted 2025 earnings.
- Strategic Review Outcome: Track progress of the strategic alternatives review initiated in September 2025 for potential M&A or refinancing activity.
- Comparable Sales Sustainability: Assess whether the 4.3% comparable sales growth can be sustained given the aggressive closure of underperforming units and the pause on new openings.
- Liquidity Position: Confirm cash burn rates and reliance on the revolving credit facility, given the low cash balance of $1.3 million at year-end.