Dive Brief:
- Noodles & Company has initiated a review of strategic alternatives to maximize shareholder value, the company said in a Wednesday press release.
- The company will consider a range of options, such as refinancing existing debt, refranchising units, or a sale of all or a portion of its business among other possible transactions.
- Despite growing comparable sales by 1.5% system wide, Noodles & Company posted a 0.7% decline in revenue, negative operating margins and net losses of $17.2 million during the second quarter significantly worse than its $13.6 million net loss in the year ago quarter, according to an earnings release.
Dive Insight:
Noodles & Company President and CEO Joe Christina said the company has been working to optimize its recent menu transformation and boost its value proposition with products like its Delicious Duos platform that helped grow comparable sales by 4.5% during August. Delicious Duos offer a choice of a small noodle bowl, choice of protein and choice of side for $9.95.
“Now is the appropriate time to consider strategic options for our brand that could allow us to more effectively maximize value for our shareholders,” Christina said in a statement. “As the Board conducts its review, our team will remain focused on executing our strategic priorities.”
Noodles & Company expects to close 28 to 32 company-owned restaurants this year with another 12 to 17 likely to shutter next year. As of August, the chain closed nine units and plans to close another 13 during the third quarter, with the remainder to close in the fourth quarter.
It closed 20 units last year following an initial review of its portfolio. The closures helped the chain improve its cash flow and the overall performance of Noodles’ system.
The fast casual chain has been trying to grow its franchisee base and is several years into an effort to attract multi-unit franchisees. However, franchised restaurant growth has largely stalled: its franchised unit count fell from 94 in July 2024 to 89 in July 2025, according to an earnings release.
The company currently owns 364 units and refranchising them would shift it towards an asset-light business. Franchised units have had average unit volumes on par or close to company-owned units. As of July, both company-owned and franchised AUVs were around $1.3 million, according to the earnings release.
Despite the chain’s work to improve its operations, Noodles & Company’s stock price has frequently fallen below $1 over the last year.
In December, the company received a warning for possible delisting from the Nasdaq because of its low stock prices. While regaining compliance in February, the chain faced possible delisting again in June, and, as of Sept. 4, Noodles & Company’s stock price remains below the $1 mark.
Noodles & Company said it hasn’t set a deadline or created a timeline for completing the strategic alternatives review process, and there is no guarantee that the review will result in a transaction.
