SCHEDULE: Galloway Capital Urges Noodles & Co. Asset Sales

Activist investor Galloway Capital Partners, holding a 6.01% stake, urges Noodles & Co. to sell 200 restaurants to reduce high-cost debt and boost shareholder value.

Summary

• Galloway Capital Partners, LLC, Galloway Capital, LP, and Bruce Galloway (collectively, the "Reporting Persons") have acquired an aggregate of 2,809,600 shares of Noodles & Co. common stock.
• This stake represents approximately 6.01% of the Issuer's outstanding common stock, based on 46,724,702 shares outstanding as of October 31, 2025.
• The Reporting Persons acquired these shares through open market purchases from December 2024 through November 2025, at an approximate average price of $0.715 per share.
• Galloway Capital believes Noodles & Co.'s shares are materially undervalued and that management and the Board must take decisive action to enhance shareholder value.
• A key recommendation is the sale of approximately 200 company-owned restaurants, estimated to generate roughly $60 million in proceeds.
• These proceeds would be used to retire a substantial portion of the company's high-cost debt, which currently carries interest rates in the 9-10% range.
• This strategy aims to strengthen cash flow, eliminate perceived bankruptcy risk, reduce interest expense, and improve earnings per share.
• Galloway Capital intends to engage the Board and management to discuss these proposals and may consider further actions regarding its investment.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the intervention of an activist investor with a clear, actionable plan to address significant financial challenges (undervaluation, high debt, bankruptcy risk). While the current situation is negative, the proposed strategy offers a path to substantial improvement, drawing on past success.

Positives

• An activist investor has taken a significant 6.01% stake, signaling potential for strategic changes and value creation.
• A clear, actionable plan has been proposed to sell approximately 200 company-owned restaurants to generate $60 million.
• The proposed plan aims to materially strengthen cash flow and eliminate perceived bankruptcy risk by retiring high-cost debt (9-10% interest rates).
• Successful execution of the plan is expected to reduce interest expense and improve earnings per share.
• Galloway Capital cites a successful turnaround investment in Regis Corporation (Nasdaq: RGS) using a similar deleveraging strategy, suggesting a proven approach.

Negatives

• The company's shares are believed to be materially undervalued, indicating current market dissatisfaction or underperformance.
• Noodles & Co. is burdened with high-cost debt, carrying interest rates in the 9-10% range, which negatively impacts profitability.
• There is a "perceived bankruptcy risk" associated with the company's current financial structure, which needs to be addressed.
• The need for "decisive action" implies that the current management and Board strategies are not adequately addressing the company's challenges.

Risks

• The company's shares are materially undervalued.
• Noodles & Co. carries high-cost debt with interest rates in the 9-10% range.
• There is a perceived bankruptcy risk associated with the company's capital structure.
• The success of the proposed restaurant sales and debt reduction strategy is not guaranteed and depends on market conditions and execution.
• Management and the Board may not agree to or successfully implement the proposed strategic changes.

Future Outlook

Galloway Capital's future outlook for Noodles & Co. is contingent on the implementation of its proposed strategic plan. It anticipates that selling approximately 200 company-owned restaurants to generate $60 million for debt reduction will materially strengthen cash flow, eliminate perceived bankruptcy risk, reduce interest expense, and significantly improve earnings per share, ultimately leading to a substantial increase in equity value.

Management Comments

• Galloway Capital believes Noodles & Co.'s shares are materially undervalued and that management and the Board must take decisive action to enhance shareholder value.
• Galloway Capital recommends the sale of approximately 200 company-owned restaurants to generate roughly $60 million in proceeds.
• Galloway Capital urges the use of these proceeds to retire a substantial portion of the company's high-cost debt, which currently carries interest rates in the 9-10% range.
• Galloway Capital states that reducing leverage would materially strengthen cash flow, eliminate perceived bankruptcy risk, reduce interest expense, and improve earnings per share.
• Galloway Capital sees Noodles & Co. at a decisive turning point and acknowledges management has been proactive and transparent in reviewing all options.
• Galloway Capital strongly urges the Board to pursue its recommendations and to evaluate all options for maximizing shareholder value, citing its successful turnaround investment in Regis Corporation (Nasdaq: RGS) as a precedent.

Industry Context

This filing highlights a trend of activist investors targeting undervalued companies, particularly in the restaurant sector, to drive strategic changes. Galloway Capital's approach, focusing on asset divestiture for debt reduction, mirrors strategies seen in other industries, such as the turnaround of Regis Corporation (Nasdaq: RGS), suggesting a broader application of deleveraging tactics to unlock shareholder value in companies facing high debt and perceived undervaluation.

Comparison to Industry Standards

• Galloway Capital explicitly compares its proposed strategy for Noodles & Co. to its successful turnaround investment in Regis Corporation (Nasdaq: RGS).
• In the Regis Corporation case, a similar deleveraging strategy, attributed to activist involvement, led to a dramatic improvement in equity value.
• This suggests that the proposed asset sales and debt reduction for Noodles & Co. align with a proven model for enhancing shareholder value in distressed or undervalued companies within the broader retail/service industry.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for significant increase in equity value if the proposed deleveraging strategy is successfully implemented, addressing the current undervaluation.
• Creditors: Reduced risk due to the proposed retirement of high-cost debt, which would strengthen the company's balance sheet and improve its ability to meet obligations.
• Employees: Potential impact on employees at the approximately 200 company-owned restaurants proposed for sale, which could involve changes in ownership or operational structure.
• Management and Board: Increased scrutiny and pressure to evaluate and potentially adopt the activist investor's strategic recommendations.

Next Steps

• Galloway Capital intends to engage the Board and management of Noodles & Co. to discuss its proposals.
• The Reporting Persons may, from time to time, acquire additional securities of the Issuer or retain or sell all or a portion of their current holdings.
• Galloway Capital may consider, explore, and/or develop plans and/or make proposals regarding the Issuer's performance, operations, management, governance (including potential changes to the Board), conflicted party transactions, capital allocation policies, and strategy.

Key Dates

Recommendation

The filing indicates that Noodles & Co. is materially undervalued and faces significant financial challenges, including high-cost debt and perceived bankruptcy risk. However, a prominent activist investor, Galloway Capital, has taken a substantial stake and proposed a clear, actionable strategy involving asset sales to deleverage the company. This strategy has a precedent for success in similar situations (Regis Corporation). If management and the Board engage constructively and execute this plan, there is a strong potential for significant shareholder value creation, making it an attractive 'buy' for investors willing to take on the execution risk.

Keywords

Noodles & Co, NDLS, Galloway Capital, activist investor, Schedule 13D, restaurant industry, debt reduction, shareholder value, corporate governance, asset sales, deleveraging