Dive Brief:
- Noodles & Company received a delisting notice from the Nasdaq stock exchange on Dec. 24 indicating that its closing share price is not in compliance with Nasdaq’s Listing Rule 5450, the company said in a Securities and Exchange Commission filing this week.
- In 2024, the company’s stock price traded at $3 per share, but dropped below $1 following the release of its Q3 earnings report in early November. The company has 180 calendar days, or until June 23, to reach $1 per share.
- Noodles reported overall declines in its financial results during the third quarter of 2024, with comparable sales down 3.3% systemwide and growing losses. Net loss was at $6.8 million compared to net income of $0.7 million in Q3 2023. Revenue decreased and Noodles’ operating margins were negative 3.9%.
Dive Insight:
Heavy promotional and discounting activity and an unexpected decline in third-party sales impacted Noodles & Company’s third-quarter results, CEO Drew Madsen said in a statement. In the fall, the chain began increasing promotions and evaluating new third-party pricing strategies, he said. The chain has also been in the middle of a menu overhaul; the first of its new dishes rolled out in October.
Madsen said these strategies have helped near-term results and traffic, but the company’s outlook for 2024 predicted a 1.5% to 3% decline in comparable sales for the whole year.
The chain’s leadership is also in flux, with Madsen joining in March, followed by a new chief concept officer in June. The company brought on a new executive vice president of marketing in late 2024. The company’s strategies and new executives have yet to create renewed shareholder faith in the company. The chain’s stock price has been under $1 for at least 30 days, which brought it out of compliance with Nasdaq.
Noodles & Company said in the filing that it will monitor the closing bid price of its common stock and consider all options to regain compliance with the Nasdaq Listing Rule, including a reverse stock split, which would require shareholder approval, per the SEC filing. However, the company gave no assurance that it will be able to regain compliance by June 23 or during any extension period.
Nasdaq previously issued a delinquency notice to BurgerFi after it failed to file quarterly results on time. The chain later declared bankruptcy and has since been sold to private owners. Nasdaq delistings aren’t common in the restaurant industry, but hundreds of companies annually are delisted from the stock exchanges. Companies can also choose to delist by going private or entering an acquisition with another company.
