Executive Summary

Q1 delivered modest top-line growth with accelerating comps but softer profitability: revenue rose 2.0% to $123.8M, system comps +4.4% (company +4.7%), while net loss widened to $9.1M ($0.20) and restaurant contribution margin fell to 10.3% on higher food, marketing, and training costs tied to the March 12 menu relaunch .
Versus S&P Global consensus, revenue was a slight beat ($123.79M actual vs $123.32M est), but EPS missed (-$0.20 vs -$0.11). Adjusted EBITDA of $2.4M was well below consensus EBITDA ($5.35M est)*, reflecting elevated launch costs and COGS mix; management quantified ~60 bps one-time COGS from the rollout and ~$0.5M higher marketing YoY .
2025 outlook largely reiterated; lower end of restaurant contribution margin cut by 50 bps to 12.0% (from 12.5%) to account for tariffs; planned company-owned closures increased to 13–17 (from 12–15). Other guidance points unchanged (revenue $503–$512M; G&A $49–$52M; capex $11–$13M) .
Post-launch comps have held ~5% through April despite tough comparisons, supported by doubled media, broadened channels, and loyalty momentum—key catalysts if sustained and if margin rebuilds as one-time launch costs subside .

Note: Asterisked values from S&P Global consensus and actuals; see Estimates Context.

What Went Well and What Went Wrong

What Went Well
- Sales momentum accelerated: system comps +4.4% (company +4.7%); traffic +1.8% and check +2.9% drove the lift; post–menu launch comps up ~5% through April .
- Menu/brand relaunch resonated: “We Know Noodles” campaign scored top quartile in Kantar testing; loyalty sign-ups and transactions increased; Taste Tour transactions more than doubled expectations .
- Management confident on foundation and balance sheet trajectory amid lower capex and cost savings: “well-positioned to strengthen our balance sheet this year,” with free cash flow expected positive in Q3 and Q4 .
What Went Wrong
- Profitability pressure: restaurant contribution margin fell to 10.3% (from 13.1% LY); Adjusted EBITDA dropped to $2.4M (from $5.5M LY), with COGS +160 bps (new items), higher other op costs (delivery fees, marketing), and training spend .
- Net loss widened to $9.1M and diluted EPS to -$0.20 as interest expense and operating deleverage offset sales gains .
- Guidance lower bound trimmed for margins and closures increased, reflecting tariff risk and continued portfolio pruning; liquidity remains tight (cash $1.4M; debt $102.7M) .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Total Revenue ($M)	122.75	121.77	123.79
Net Income (Loss) ($M)	(6.76)	(9.69)	(9.06)
Diluted EPS ($)	(0.15)	(0.21)	(0.20)
Operating Margin (%)	(3.9)%	(6.0)%	(5.2)%
EBITDA ($M)	2.45	(0.28)	0.70
Adjusted EBITDA ($M)	4.90	4.01	2.40
Restaurant Contribution Margin (%)	12.8%	11.2%	10.3%

Revenue vs estimates (Q1 2025):

Metric	Q1 2025 Consensus	Q1 2025 Actual
Revenue ($M)	123.32*	123.79
Primary EPS ($)	(0.11)*	(0.20)
EBITDA ($M)	5.35*	1.99* / 0.70 (company EBITDA)

Note: Asterisked values retrieved from S&P Global; S&P EBITDA “actual” may reflect a different definition than company-reported EBITDA/Adjusted EBITDA.

Segment/revenue mix (Q1 2025 vs Q1 2024):

Revenue Component ($M)	Q1 2024	Q1 2025
Restaurant Revenue	119.00	121.33
Franchising Royalties & Fees, and Other	2.39	2.47
Total Revenue	121.40	123.79

Key KPIs and drivers:

KPI	Q3 2024	Q4 2024	Q1 2025
System Comps (%)	(3.3)	0.8	4.4
Company Comps (%)	(3.4)	0.5	4.7
Franchise Comps (%)	(2.9)	1.9	2.9
Company AUV ($M)	1.272	1.310	1.314
Traffic (Company, YoY)	(5.8)%	(0.1)%	+1.8%
Average Check (Company, YoY)	+? (mix/pricing noted)	+0.6% (pricing 1.3%)	+2.9% (pricing 1.3%)
Company-owned Units (EOP)	377	371	369
Franchise Units (EOP)	94	92	91

Margin components (company-owned restaurants):

Cost Line (% of Sales)	Q3 2024	Q4 2024	Q1 2025
Cost of Goods Sold	25.5%	27.2%	26.6%
Labor	32.0%	32.3%	32.5%
Other Restaurant Operating Costs	20.1%	19.7%	21.1%

Liquidity (Q1 2025): Cash $1.4M; Debt $102.7M; RCF availability $19.3M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue	FY 2025	$503–$512M	$503–$512M	Maintained
Restaurant Level Contribution Margin	FY 2025	12.5%–14.0%	12.0%–14.0%	Lowered (low end -50 bps); tariff-related
G&A Expense	FY 2025	$49–$52M	$49–$52M	Maintained
D&A	FY 2025	$27–$29M	$27–$29M	Maintained
Net Interest	FY 2025	$8–$10M	$8–$10M	Maintained
Company-Owned Openings	FY 2025	2	2	Maintained
Company-Owned Closures	FY 2025	12–15	13–17	Increased closures
Franchise Closures	FY 2025	4	4	Maintained
Capital Expenditures	FY 2025	$11–$13M	$11–$13M	Maintained

Earnings Call Themes & Trends

Topic	Q3 2024 (two quarters back)	Q4 2024 (prior quarter)	Q1 2025 (current)	Trend
Menu transformation	3 dishes launched; Mac lineup planned; test-market traction	Next phase: 9 dishes coming; foundation for 2025 relaunch	Full relaunch on Mar 12; strong guest response; Mac dishes exceeded expectations	Strengthening
Marketing & brand	Increased media; “Taste the Start…” BOGO and loyalty promos	Doubling marketing for launch months; broader channels	Doubled media; connected TV, DOOH, audio; updated creative; Kantar top quartile	Elevated spend near-term
Third-party delivery	Sudden drop; pricing/markup algorithm issue identified -	Renewed momentum; revised strategies	Delivery fees contributed to other op cost increase; third-party traffic remained strong	Improving from trough
Tariffs/macro	Consumer softness; promo-heavy landscape	Challenging macro; weather volatility	Margin guide low end widened 50 bps for tariffs; exposure limited by U.S. sourcing and fixed-price coverage	Managed risk
Operations & training	Focus on basics; biweekly training; guest satisfaction improved	Added 4 weeks training around rollout	95% training module completion; certification visits; new plateware, menu boards -	Execution focus
Digital/loyalty	55% digital; loyalty 26% of sales; CDP personalization	—	Double-digit increases in brand search and app sessions; loyalty sign-ups and transactions up; Taste Tour overdelivered	Positive momentum
FCF/capex/debt	Expect positive FCF in 2025; lower capex < $15M	Capex $11–$13M; debt ~$103M	Slightly FCF positive in Q1; FCF positive in Q3 and Q4 expected	Improving H2 profile

Management Commentary

“We are very pleased with the strong comparable restaurant sales and traffic performance we achieved during the first quarter... Since the new menu introduction, comparable sales have increased by approximately 5% through April.” — CEO Drew Madsen .
“Our COGS in the first quarter were 26.6% of sales… primarily driven by higher food costs associated with our new menu offerings… Hourly wage inflation in the first quarter was 2.7%.” — CFO Mike Hynes .
“We’re widening the lower end of our restaurant contribution margin range by 50 basis points to capture an estimated impact from tariffs… we believe our 2025 tariff exposure is limited.” — CFO Mike Hynes .

Q&A Highlights

Marketing cadence: Media investment was roughly doubled around the launch and may be recalibrated as results warrant; creative broadened beyond LTOs to brand storytelling; strong response across channels .
Loyalty and new guest response: Double-digit growth in loyalty sign-ups and transactions; 14-day Taste Tour significantly outperformed expectations .
Margin puts/takes: ~$0.5M YoY increase in marketing, ~$1M of other one-time rollout costs (incl. ~60 bps COGS); COGS expected ~26% for remainder of year as launch obsolescence fades .
Free cash flow: Slightly FCF positive in Q1; working capital headwinds in Q2; FCF positive in Q3 and Q4 expected .

Estimates Context

Q1 2025 vs S&P Global consensus: revenue beat by ~$0.48M ($123.79M vs $123.32M est); EPS missed by $0.09 (-$0.20 vs -$0.11 est); EBITDA meaningfully below consensus ($1.99M vs $5.35M est)*. Launch-related COGS mix, higher marketing, and training drove the shortfall despite stronger comps .
Forward quarters (S&P Global): limited coverage; consensus EPS and revenue for 2H show small losses and low single-digit growth backdrop*.
Values retrieved from S&P Global.
Note: EBITDA definitions may differ versus company-reported EBITDA/Adjusted EBITDA; investors should compare like-for-like where possible.

Q1 2025 S&P Global consensus and actuals:

Revenue: $123.32M est vs $123.79M actual*
Primary EPS: -$0.11 est vs -$0.20 actual*
EBITDA: $5.35M est vs $1.99M actual* / company EBITDA $0.70M; Adjusted EBITDA $2.40M

Key Takeaways for Investors

The sales engine is reaccelerating post-relaunch (comps ~5% through April), aided by doubled media and a refreshed brand; durability of traffic gains is the key stock driver into 2H .
Profitability recovery is the swing factor: as one-time rollout costs subside and COGS normalizes to ~26%, watch restaurant contribution margin progression vs the 12–14% FY guide .
Tariff risk acknowledged but contained; margin guide lower bound widened by 50 bps—monitor produce/shrimp cost trends and any additional macro pricing actions .
Balance sheet/leverage requires execution: cash is low and debt elevated; positive FCF in H2 and capex discipline ($11–$13M) are critical milestones .
Third-party delivery dynamics improving from a Q3 algorithm-related trough; channel mix and fees impact “other op costs” and margin—pricing/markup strategy remains a lever - .
Near-term trading setup: potential for upward revisions on revenue if comps sustain, but EPS risk persists until margin rebuild is evident; guidance credibility will hinge on Q2–Q3 flow-through and cost control .
Medium-term thesis: if brand/menu strategy sustains demand and restaurant-level margins rebase within (or above) guidance, deleveraging could accelerate; unit closures should improve portfolio quality mix over time .

Sources: Q1 2025 8‑K and press release - -; Q1 2025 earnings call transcript -; Q4 2024 and Q3 2024 releases/calls - - - -.
Asterisked estimate values from S&P Global via GetEstimates.

NOODLES & Co (NDLS)·Q1 2025 Earnings Summary