Name: NOODLES & Co Q4 2024 Earnings Call
Start: 2025-03-06T21:31:00.000Z

Executive Summary

Q4 2024 revenue was $121.8M, down 2.0% YoY, with diluted EPS of -$0.21; system-wide comps turned positive at +0.8% while restaurant contribution margin compressed to 11.2% from 14.7% YoY .
Management cited improved sales trends versus Q3, driven by new menu items, promotional activity, and a rebound in third‑party delivery; Q1 2025 to date comps are “over 3%” with positive traffic, ahead of the full brand/menu relaunch in March .
FY 2025 guidance introduced: revenue $503–$512M, restaurant contribution margin 12.5%–14.0%, G&A $49–$52M, D&A $27–$29M, interest expense $8–$10M, two new company-owned openings, 12–15 closures, capex $11–$13M; includes a ~100 bps food cost investment to support menu quality .
Wall Street consensus estimates via S&P Global were unavailable due to an API limit; no beat/miss analysis versus consensus can be provided at this time (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

New menu items, promotional offers, and improved third‑party delivery supported better Q4 trends versus Q3; comps improved to +0.8% system‑wide and traffic was nearly flat (-0.1%) in company comps, with continued acceleration into Q1 2025 (“over 3%” comps, positive traffic) .
Evidence of operational progress: January saw the “largest single month increase” in guest satisfaction; the company has eliminated ~80% of the gap to fast casual industry average over 12 months, underpinning traffic confidence .
Concrete menu transformation roadmap: nine new dishes launching in March and nearly two‑thirds of the menu to be new or improved by end of Q2, supported by doubled near‑term marketing and a new brand strategy (“We Know Noodles”) .

What Went Wrong

Margin pressure: restaurant contribution margin fell to 11.2% from 14.7% YoY; operating margin declined to -6.0% from -3.7% YoY as COGS rose to 27.2% and other restaurant operating costs increased to 19.7% on higher delivery fees/marketing .
Continued net losses and higher interest burden: Q4 net loss widened to $9.7M and net interest expense rose to $2.3M in Q4 amid debt of ~$103M and low cash ($1.1M) at year‑end .
Ongoing portfolio rationalization: six company‑owned restaurant closures in Q4; management expects 12–15 company closures and four franchise closures in 2025, signaling continued remediation of underperforming units .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024	Consensus
Revenue ($USD Millions)	$124.320	$122.751	$121.774	N/A*
Diluted EPS ($USD)	-$0.14	-$0.15	-$0.21	N/A*
Operating Margin %	(3.7)%	(3.9)%	(6.0)%	N/A*
Restaurant Contribution Margin %	14.7%	12.8%	11.2%	N/A*
Adjusted EBITDA ($USD Millions)	$7.466	$4.896	$4.012	N/A*
Net Loss ($USD Millions)	-$6.137	-$6.755	-$9.693	N/A*

Cost Structure (as % of Sales)	Q4 2023	Q3 2024	Q4 2024
COGS	N/A	25.5%	27.2%
Labor	N/A	32.0%	32.3%
Other Restaurant Operating Costs	N/A	20.1%	19.7%

Revenue Breakdown ($USD Millions)	Q4 2023	Q3 2024	Q4 2024
Restaurant Revenue	$121.819	$120.163	$119.200
Franchise Royalties & Fees, Other	$2.501	$2.588	$2.574

KPIs	Q4 2023	Q3 2024	Q4 2024
System-wide Comparable Sales %	N/A	-3.3%	+0.8%
Company-owned Comparable Sales %	N/A	-3.4%	+0.5%
Franchise Comparable Sales %	N/A	-2.9%	+1.9%
Company Comp Traffic %	N/A	-5.8%	-0.1%
Average Check % (Company)	N/A	N/A	+0.6%
Effective Pricing % (Company)	N/A	+2.2%	+1.3%
Company-owned AUV ($MM)	$1.314	$1.272	$1.310
Franchise AUV ($MM)	$1.232	$1.243	$1.292
Company-owned Digital Sales Growth %	N/A	N/A	+5.6%

*Estimates unavailable due to S&P Global API limit; no consensus comparison provided (S&P Global data unavailable).

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	N/A	$503M–$512M	New
Restaurant Contribution Margin	FY 2025	N/A	12.5%–14.0%	New
G&A	FY 2025	N/A	$49M–$52M	New
Depreciation & Amortization	FY 2025	N/A	$27M–$29M	New
Net Interest Expense	FY 2025	N/A	$8M–$10M	New
Company-owned Openings	FY 2025	N/A	2	New
Closures (Company / Franchise)	FY 2025	N/A	12–15 / 4	New
Capital Expenditures	FY 2025	N/A	$11M–$13M	New
Food Cost Investment	FY 2025	N/A	~100 bps increase for menu launch	New

FY 2024 Guidance Outcome (from Q3 guidance vs actual):

Metric	Prior Guidance (Q3 2024)	Actual FY 2024	Outcome
Revenue	$487M–$495M	$493.271M	In range
Restaurant Contribution Margin	12.7%–13.3%	13.2%	In range
G&A	$51M–$53M	$50.824M	Slightly better
D&A	$28M–$30M	$29.066M	In range
Net Interest Expense	$8M–$9M	$8.381M	In range
Capex	$29M–$31M	$29M	In range

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
Menu transformation	Encouraging test results; foundational to long-term growth	Three new dishes launched nationally; strong uptake; more Mac & Cheese innovation testing	Nine new dishes launching; nearly 2/3 of menu new/improved by end of Q2; brand strategy “We Know Noodles”	Accelerating
Third‑party delivery	N/A	Sudden decline in late July driven by platform algorithm; pricing strategy test underway	Double‑digit traffic growth returning on revised pricing/promo strategy	Improving
Marketing investment	N/A	Increased media support for new dishes	Doubling near‑term marketing for launch; modest full‑year increase	Ramped near‑term
Operations excellence/guest satisfaction	Progress on operations and efficiencies	+10ppt overall satisfaction improvement over six months	Largest monthly increase in January; ~80% gap to industry closed over 12 months	Improving
Macro/weather/tariffs	N/A	Challenging consumer environment and elevated discounting	Weather headwind in Feb; guidance excludes outsized macro/tariff impacts	Mixed headwinds
Catering	Double‑digit trajectory; potential to 4–5% of sales	+27% system-wide in Q3; process improvements (Easycater integration)	Not a primary focus in Q4 remarks	Stable, de‑emphasized

Management Commentary

“Through the first eight weeks of Q1 2025, we have delivered positive traffic and comparable restaurant sales growth over 3%… Next week we will launch the most substantial phase of our comprehensive menu transformation with the addition of nine new dishes… set the stage for a transformational 2025.” – CEO Drew Madsen .
“Creating a foundation of operations excellence remains our top priority… largest single month increase in overall guest satisfaction in January… eliminated almost 80% of our gap to the fast casual industry average over the past 12 months.” – CEO Drew Madsen .
“We are back to double‑digit traffic growth in [third‑party delivery]… driven by a revised pricing and promotion strategy.” – CEO Drew Madsen .
“We guided a margin between 12.5% and 14% [for FY25], which shows mid‑single‑digit comp sales growth overcoming that [~100bps] investment [in food] and achieving flat to growing margin year‑over‑year.” – CFO Michael Hynes .

Q&A Highlights

Near‑term comp trajectory: Management views “over 3%” Q1 comps as sustainable absent weather distortions; expects Easter timing to modestly help Q1 and hurt Q2 by ~50 bps; outsized comp benefit expected in H2 (Q3/Q4) as menu rollout scales .
Margin impacts of menu overhaul: ~100 bps food cost investment is largely permanent to support quality; marketing is significantly higher near launch but more modest for the full year; FY25 restaurant contribution margin guided at 12.5%–14.0% .
Delivery algorithm and pricing: Q3 weakness tied to platform algorithm sensitivity to markups; pricing/promo strategy revised with double‑digit traffic growth returning in the channel .

Estimates Context

S&P Global consensus estimates were not retrievable due to a daily request limit on the API; as a result, we cannot provide quantitative beat/miss analysis versus Wall Street consensus for Q4 2024 (S&P Global data unavailable).
Qualitatively, trajectory suggests potential upward revisions to near‑term comps with the March menu launch and Q1 strength, balanced against a permanent food cost investment and continued delivery fees/marketing headwinds that may cap near‑term margin expansion .

Key Takeaways for Investors

Positive comp inflection: System‑wide comps turned positive in Q4 (+0.8%), with Q1 trending “over 3%” and positive traffic—an early sign the menu strategy is resonating; watch H2 for the bulk of same‑store sales uplift as rollout scales .
Margin trade‑off: FY25 includes a permanent ~100 bps food cost investment; management targets flat to modestly higher restaurant contribution margins (12.5%–14.0%) if comps deliver; monitor COGS and other operating costs (delivery fees, marketing) .
Balance sheet and cash discipline: FY25 capex reduced to $11–$13M (from $29M in FY24); management intends to lower debt in H2 2025; closures (12–15 company units) to improve portfolio quality .
Delivery channel recovery: Double‑digit traffic growth resumed on revised platform strategy; continued improvement here can support throughput and mix as digital remains a material sales component .
Brand relaunch as a catalyst: Nine new dishes and a reimagined menu (nearly two‑thirds updated by end of Q2) supported by increased marketing and “We Know Noodles” branding may be a stock catalyst if sustained comp acceleration materializes .
Operational momentum: Guest satisfaction metrics improving materially; January showed the largest monthly increase, reducing the gap to the fast casual average by ~80%—a leading indicator for traffic/loyalty .
Risks: Macro/tariff uncertainty, weather variability, and algorithmic exposure in third‑party delivery could create quarterly noise; margin recovery depends on delivering mid‑single‑digit comps against higher food cost baseline .

NOODLES & Co (NDLS)·Q4 2024 Earnings Summary