Executive Summary

Q2 2025 results missed Street on revenue and EPS; revenue was $126.4M vs $131.6M consensus (–3.9%), and Primary/adjusted EPS was –$0.12 vs –$0.06 consensus; GAAP EPS was –$0.38, reflecting higher impairments and rollout costs . Revenue/EPS consensus from S&P Global: $131.62M and –$0.055*.
Comp sales were +1.5% system-wide despite a value-driven promotional environment; traffic –2.5% and check +4% (incl. ~2.6% price). Post–July 30 “Delicious Duos” value launch, comps averaged +5% over the last two weeks, suggesting traction into Q3 .
FY25 guidance was lowered: revenue to $487–$495M (from $503–$512M), restaurant-level margin to 11.8%–12.6% (from 12.0%–14.0%), net interest raised to $10.5–$11.5M, and closures increased to 28–32 company-owned (from 13–17) .
Strategic pivot focuses on value perception (Delicious Duos), operational discipline (portioning, coaching), and portfolio optimization (accelerated closures). CFO no longer expects positive FCF in 2025; targeting 2026, a key stock narrative catalyst as investors assess liquidity and path to breakeven .

What Went Well and What Went Wrong

What Went Well
- Value-led recovery signs: after launching Delicious Duos (from $9.95) on July 30, comps averaged +5% over two weeks; traffic improved to flat-to-slightly positive on several days .
- Digital/Royalty engagement: owned web/app traffic +2% YoY; rewards check-ins +4% YoY; rewards 27% of transactions, aided by the Taste Tour promotion .
- Cost discipline: G&A fell to $12.4M from $13.6M YoY; selective menu simplification (e.g., removing Green Goddess salad) and coaching programs target execution and food cost control .
- Quote: “Comparable restaurant sales have increased to an average of positive 5% over the past two weeks, demonstrating that our value-focused initiatives are resonating with guests.” – CEO Drew Madsen .
What Went Wrong
- Revenue/EPS miss vs Street; restaurant contribution margin fell YoY to 12.8% (15.5% prior year) on higher COGS and rollout-related costs; adjusted EBITDA declined to $6.0M from $9.2M .
- Value perception headwinds post menu transformation led to traffic softness (–2.5%); stronger industry discounting extended the adoption “J-curve” for upgraded dishes .
- Guidance reset and liquidity: FY25 revenue and margin cut; net interest raised; company-owned closures accelerated; cash was $2.3M with $108.3M debt at Q2-end, and management no longer expects positive FCF in 2025 .

Financial Results

Key P&L and margin metrics

Metric	Q2 2024	Q1 2025	Q2 2025
Total Revenue ($USD Millions)	$127.4	$123.8	$126.4
GAAP Diluted EPS ($)	–$0.30	–$0.20	–$0.38
Adjusted EPS ($)	–$0.05	–$0.20	–$0.12
Restaurant Contribution Margin %	15.5%	10.3%	12.8%
Adjusted EBITDA ($USD Millions)	$9.20	$2.40	$6.02

Estimates comparison (S&P Global)

Metric	Q1 2025 Consensus	Q1 2025 Actual	Q2 2025 Consensus	Q2 2025 Actual
Revenue ($USD Millions)	123.3*	123.8	131.6*	126.4
Primary EPS ($)	–0.11*	–0.20	–0.055*	–0.12
EBITDA/Adj. EBITDA ($USD Millions)	5.35*	2.40	7.61*	6.01

Note: S&P Global’s EBITDA “actual” aligns with company-reported Adjusted EBITDA. Values with asterisks retrieved from S&P Global.

Revenue components

Revenue Component ($USD Millions)	Q2 2024	Q1 2025	Q2 2025
Restaurant Revenue	124.7	121.3	123.8
Franchising Royalties & Fees, and Other	2.62	2.47	2.65
Total Revenue	127.4	123.8	126.4

KPIs and operating data

KPI	Q2 2024	Q1 2025	Q2 2025
System-wide Comp Sales %	+2.0%	+4.4%	+1.5%
Company-owned Comp Sales %	+1.3%	+4.7%	+1.5%
Franchise Comp Sales %	+4.7%	+2.9%	+1.6%
Company-owned AUV ($ ‘000)	1,322	1,314	1,353
Company-owned Units (EOP)	379	369	364
Franchise Units (EOP)	94	91	89
Traffic (Company-owned)	—	—	–2.5% (check +4%)

Drivers this quarter (COGS 26.5% of sales, +180 bps YoY; labor 31.7%, +50 bps) included menu-related food costs, wage inflation and rollout complexity; one-time rollout costs totaled ~$1.7M (food, labor, marketing) .

Guidance Changes

Metric	Period	Previous Guidance (Q1 2025)	Current Guidance (Q2 2025)	Change
Total Revenue	FY 2025	$503–$512M	$487–$495M	Lowered
Comp Restaurant Sales	FY 2025	Mid-single digit	2.5%–4.0%	Lowered
Restaurant-Level Contribution Margin	FY 2025	12.0%–14.0% (rev. from 12.5%–14.0%)	11.8%–12.6%	Lowered
G&A	FY 2025	$49–$52M	$48–$50M	Lowered
D&A	FY 2025	$27–$29M	$27–$29M	Maintained
Net Interest Expense	FY 2025	$8–$10M	$10.5–$11.5M	Raised
Company-owned Openings	FY 2025	2	2	Maintained
Company-owned Closures	FY 2025	13–17	28–32	Raised (more closures)
Capex	FY 2025	$11–$13M	$12–$13M	Slightly higher midpoint
Free Cash Flow	FY 2025/26	Positive in 2025 implied previously	No longer positive 2025; targeting 2026	Lowered trajectory

Earnings Call Themes & Trends

Topic	Q4 2024 (Q–2)	Q1 2025 (Q–1)	Q2 2025 (Current)	Trend
Consumer value & promotions	Elevated industry discounting; pivoted to more promos late Q3/early Q4; delivery momentum returned	New menu momentum; comps >3% through first 8 weeks; planned brand strategy and marketing ramp	Value perception headwind post-national rollout; Delicious Duos launched 7/30 driving +5% two-week comps	Improving post-value launch
Menu transformation	First dishes rolled out nationally in early Oct; Q4 improved vs Q3	Major relaunch set for Mar 12; nine new dishes; “transformational 2025” expected	Some upgraded legacy dishes faced extended adoption “J-curve”; recipe simplification underway	Mixed execution; corrective actions
Operations execution	—	Emphasis on ops excellence; training for rollout	Addressed over-portioning; launched ops excellence coaching; team redesign	Improving
Third-party delivery	Momentum returned in Q4	—	Strong channel QoQ but slowed late Q2; recent recovery	Stabilizing
Digital & loyalty	—	—	Owned digital +2% YoY; rewards check-ins +4%; 27% of transactions	Improving
Portfolio optimization	—	—	Accelerated closures (28–32 in FY25; 12–17 more in FY26) to remove negative cash flow stores	More aggressive
Leadership	—	—	CEO transition to Joe Christina; Madsen remains on Board	Transition underway
Capex/FCF	—	FY25 capex $11–$13M guide	FY25 capex $12–$13M; FCF not positive in 2025; targeting 2026	Pushout of FCF

Management Commentary

“We are encouraged to have delivered positive comparable restaurant sales of 1.5% in the second quarter despite a challenging consumer environment… Our new Delicious Duos value-focused platform… is off to a great start. Comparable restaurant sales have increased to an average of positive 5% over the past two weeks.” – CEO Drew Madsen .
“Company comp traffic during the second quarter decreased 2.5% and average check increased 4%, inclusive of 2.6% effective pricing… second quarter was also impacted by one-time costs related to our menu rollout totaling $1.7 million.” – CFO Mike Hynes .
“We believe we are past the temporary J curve… we rolled out a new operations excellence coaching program… strengthen our value offers… Delicious Duos starting at $9.95… initial response… has been strong.” – CEO Drew Madsen .
“We’re revising our expectations… total revenue of $487–$495M… restaurant contribution margin 11.8–12.6%… no longer expect to be free cash flow positive in 2025… working toward 2026.” – CFO Mike Hynes .
“I am focused on enhancing the guest experience, strengthening operational execution, driving increased traffic and expanding unit level margins.” – Incoming CEO Joe Christina .

Q&A Highlights

The provided transcript contained prepared remarks and closing without a published Q&A session; guidance clarifications (closures increased; FCF timing) were delivered in prepared commentary by the CFO .

Estimates Context

Q2 2025 vs S&P Global consensus: revenue $126.4M vs $131.6M (miss ~3.9%); Primary/adjusted EPS –$0.12 vs –$0.055 (miss); EBITDA/Adj. EBITDA $6.0M vs $7.6M (miss). GAAP EPS was –$0.38, reflecting higher impairments . Consensus values from S&P Global*.
Q1 2025 vs S&P Global: revenue $123.8M vs $123.3M (slight beat); EPS –$0.20 vs –$0.11 (miss); Adj. EBITDA $2.4M vs $5.35M (miss) . Consensus values from S&P Global*.
FY25 outlook vs S&P Global: revenue guide $487–$495M vs $494.1M consensus; midpoint ~$491M suggests in-line to slightly below Street; investors likely lower EBITDA/EPS given reduced margin and higher interest . Consensus value from S&P Global*.

Key Takeaways for Investors

Value is the near-term catalyst: early data post-Delicious Duos (+5% two-week comps) suggests regained momentum; watch sustainability into September/October and whether traffic turns decisively positive .
Profitability compression persists: COGS +180 bps and labor +50 bps YoY drove restaurant margin down to 12.8%; execution fixes (portioning, menu simplification) are critical to defend margins in a promotional market .
Guidance reset lowers bar: FY25 revenue/margin/interest outlooks were cut; more closures should lift mix/margins medium-term but weigh near-term optics; monitor cadence and the Q3 closure wave (13 in Q3) .
Liquidity/FCF is a watch item: $2.3M cash, $108.3M debt, RCF availability $13.7M; no positive FCF in 2025—path to 2026 FCF key for equity risk-reward .
Leadership transition: Incoming CEO Joe Christina brings operating focus; execution on ops excellence and value positioning will define 2H25 trajectory .
Digital/loyalty strength provides levered demand channel; continued mix shift could help traffic and marketing efficiency without deep discounting .
Near-term setup: Expect estimate cuts and heightened volatility post-guide-down; stabilization evidence from value platform and closure execution could set up a recovery trade if comps and restaurant margins inflect in Q3/Q4 .

Footnote on estimates: Values marked with an asterisk (*) are retrieved from S&P Global.

NOODLES & Co (NDLS)·Q2 2025 Earnings Summary