10-Q: Noodles & Company Q2 2026 Earnings: Revenue Up, Losses Narrow

Noodles & Company reported a narrower net loss for the second quarter of 2026, with total revenue slightly increasing year-over-year, driven by strong comparable restaurant sales growth.

Summary

• Total revenue for the second quarter of 2026 was $127.0 million, a 0.5% increase from $126.4 million in the second quarter of 2025.
• System-wide comparable restaurant sales increased by 10.3% in Q2 2026 compared to Q2 2025.
• Company-owned comparable restaurant sales increased by 11.4%, and franchise-owned comparable restaurant sales increased by 5.5%.
• The net loss for the second quarter of 2026 was $3.95 million, a significant improvement from a net loss of $17.55 million in the same period of 2025.
• Loss per share improved to ($0.67) in Q2 2026 from ($3.04) in Q2 2025.
• The company closed 22 company-owned restaurants in the first two quarters of 2026 and anticipates closing an additional 8 to 13 restaurants in 2026.
• Adjusted EBITDA increased to $10.77 million in Q2 2026 from $6.02 million in Q2 2025.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as moderately positive, with significant improvements in profitability and comparable sales, but ongoing concerns about debt maturity and the need for future financing.

Positives

• Revenue increased by 0.5% to $127.0 million in Q2 2026.
• System-wide comparable restaurant sales grew by 10.3% in Q2 2026.
• Company-owned comparable restaurant sales saw a strong 11.4% increase.
• Net loss significantly narrowed to $3.95 million from $17.55 million in the prior year's quarter.
• Loss per share improved to ($0.67) from ($3.04).
• Average unit volumes (AUVs) for company-owned restaurants increased by 15.9% to $1.57 million.
• Cost of sales as a percentage of restaurant revenue decreased due to menu pricing, mix shifts, and reduced food waste.
• Labor costs as a percentage of restaurant revenue decreased due to sales leverage, menu price, and efficiencies.

Negatives

• Franchising royalties and fees decreased by 15.7% in Q2 2026.
• Total revenue increase was partially offset by 52 permanent company-owned closures and 13 franchise restaurant closures over the last twelve months.
• Other restaurant operating costs increased by 3.9% due to higher delivery fees.
• General and administrative expenses increased by 11.7% due to higher incentive-based compensation.
• The company has a significant amount of long-term debt ($105.4 million outstanding) maturing in July 2027, requiring new financing or refinancing.

Risks

• The company requires new financing or refinancing for its A&R Credit Agreement maturing on July 27, 2027, with no assurance of obtaining it.
• Continued inflation in food costs, labor, energy, and materials could impact operations.
• Tariffs and trade restrictions may continue to impact food and beverage costs, construction, and equipment costs.
• Increased reliance on third-party delivery services leads to higher delivery fees.
• The company is subject to legal proceedings, although it believes an unfavorable outcome is remote or not material.
• The company's ability to sustain overall growth and optimize its restaurant portfolio, including closures, is subject to various uncertainties.
• Economic conditions, including inflation, recession, and interest rate environment, could impact consumer spending.
• The company's ability to maintain compliance with Nasdaq Global Select Market continued listing requirements.

Future Outlook

The company expects to continue to analyze its restaurant portfolio for closures of underperforming locations. Capital expenditures for fiscal year 2026 are estimated to be between $9.0 million and $10.0 million, primarily for reinvestment in existing restaurants and technology. The company anticipates that inflation may continue to affect its results in the near future. The company does not anticipate material income tax expense or benefit for the remainder of fiscal 2026 due to a valuation allowance.

Management Comments

• Comparable restaurant sales continue to be positively aided by menu innovation including the introduction of Delicious Duos and the recent successful limited time offerings.
• We continue to monitor commodity inflation and, throughout periods of volatility, we will continue to work with our suppliers to identify ongoing supply chain efficiencies.
• We have evaluated and will continue to evaluate the impact of import laws and tariffs... As of June 30, 2026, there was no material impact on our business, financial condition, results of operations or cash flows. However, we expect tariffs may impact our operations in certain areas... for the remainder of fiscal 2026.
• Similar to much of the restaurant industry, our base labor costs have risen in recent years. We have been able to partially mitigate the impact of these market factors through a continued focus on maximizing efficiencies of labor hour usage per restaurant and wage inflation has stabilized to less than 3%.
• We believe that restaurant contribution and restaurant contribution margin are important tools for investors and other interested parties because they are widely-used metrics within the restaurant industry to evaluate restaurant-level productivity, efficiency and performance.

Industry Context

StockSavvy.ai notes that Noodles & Company's performance in comparable sales aligns with a broader industry trend of recovery driven by menu innovation and strategic pricing, though challenges like rising delivery fees and inflation persist.

Comparison to Industry Standards

• Noodles & Company's system-wide comparable restaurant sales growth of 10.3% in Q2 2026 outpaced the average for many casual dining and fast-casual chains in the current economic climate, which often see single-digit growth.
• The improvement in restaurant contribution margin to 17.2% in Q2 2026 from 12.8% in Q2 2025 indicates effective cost management, a key focus for many restaurant operators like Chipotle Mexican Grill and Panera Bread.
• The company's Adjusted EBITDA of $10.77 million in Q2 2026 shows a positive trend, but direct comparison to competitors like Yum! Brands or McDonald's is difficult due to differing business models and scale.

Legal Proceedings

• The company is currently not a party to any material legal proceedings.
• The company is subject to proceedings, lawsuits, and claims in the ordinary course of business, but believes an unfavorable outcome is remote or not material.

Stakeholder Impact

• Shareholders may benefit from improved financial performance and a narrowed net loss, but face uncertainty regarding future financing needs and debt maturity.
• Employees may see stability due to improved operational performance, but potential restaurant closures could impact employment.
• Suppliers may experience consistent demand from ongoing operations, but potential financial strain on the company could pose a risk.
• Creditors face the upcoming maturity of the A&R Credit Agreement in July 2027, with the company actively seeking refinancing or alternative capital.

Next Steps

• Continue to analyze the restaurant portfolio and close underperforming restaurants.
• Estimate capital expenditures of $9.0 million to $10.0 million for fiscal year 2026, primarily for reinvestment in existing restaurants and technology.
• Continue to monitor commodity inflation and work with suppliers for supply chain efficiencies.
• Continue to review options for refinancing or extending the A&R Credit Agreement maturing in July 2027.

Key Dates

Recommendation

The company shows positive operational trends with strong comparable sales growth and a significantly narrowed net loss. However, the upcoming debt maturity in July 2027 and the uncertainty surrounding refinancing efforts introduce considerable risk, warranting a hold position until more clarity is provided.

Keywords

Noodles & Company, Quarterly Report, 10-Q, Restaurant Industry, Comparable Sales, Net Loss, EBITDA, Financial Results