Things seem to be improving for Noodles & Company after its relaunch in mid-March. According to the latest reports, after the first quarter of 2025, the company’s overall revenue has risen. Having said that, the brand plans to continue strategic store closures as it remains in a net loss position despite revenue growth.
Highlights
- Noodles & Company increased its revenue in the first quarter of 2025, although it still reported a net loss.
- The company plans to close down more than a dozen of its locations in an effort to improve its balance sheet.
- The growth in revenue has been credited to the revamped menu that was launched in March and a marketing campaign that came along with it.
Rising Revenue Doesn’t Halt Noodles & Company’s Store Closures
Noodles & Company’s Chief Financial Officer, Michael Hynes, discussed the present status and plans of the company while announcing Q1 2025 results in a conference call on May 7. The company has been on an upward growth trajectory, reporting that same-store sales grew 4.7% across all company-operated locations and 4.4% overall. Foot traffic also rose by 1.8%.
Total revenue rose by 2%, to $123.8 million in the first quarter, although the company still reported a net loss. This is due to the company dealing with elevated costs and still having work to do to improve the balance sheet.
As part of the cost-cutting measures that are part of its strategy, the chain will be winding down operations at its most poorly performing locations. Between 13 and 17 company-owned locations and four franchise restaurants will shutter down by the end of this year, according to the company’s CFO.
There are a total of 460 locations of Noodles & Company across the country, out of which 369 are company-owned and 91 are franchises. Since Q1 2024, the company has reduced its overall footprint by 9 locations, as 11 company-owned stores were closed down and two new franchise locations were opened.
What the Future Holds
The CFO also provided an update on the company’s forecast for the year. He said they are adjusting the lower end of the restaurant’s contribution margin by 50 basis points due to expected tariff impacts. He noted that while tariffs could raise some costs, most products are sourced domestically, and over half of food purchases are secured with fixed-rate contracts.
The company expects revenue between $503M and $512M, same-store sales growth in the 7 figures, and a contribution margin of 12% to 14%, he stated.
Menu Makeover Drives Growth
The rise in revenue can be attributed to the reimagined menu that the company rolled out back in March. The effort, representing the company’s largest investment in its menu, followed 18 months of testing and innovation, and now appears to be paying off.
The fast-casual restaurant revamped approximately two-thirds of its menu as part of its new strategy. This update introduced new dishes and new versions of old fan favorites. One of the highlights of the relaunch was the dedicated Mac & Cheese menu. There were new flavors, ingredients, and spins on familiar classics as part of the new offerings.
Comparable sales for the six weeks following the menu launch through the end of April were up approximately 5%, the company’s CEO, Drew Madsen, said.
The CEO also stated, “This sustained and significant improvement in our sales trends demonstrates to us that the execution of our previously announced strategic priorities have gained traction, especially while coming during a period when the industry has been impacted by lower consumer sentiment.”
“We are certainly excited about the guest response to our new menu after seven weeks, including sales of our new mac & cheese dishes, which have significantly exceeded expectations,” he added.
Another factor that contributed to the rise in footfall and increased revenue was the “We Know Noodles” marketing campaign that the company had launched. The company plans to double down on this campaign, as another ad with the same theme will be released. Another ad that highlights the mac & cheese line is also in the pipeline.
