Noodles & Company intends to close as many as 49 of its restaurants prior to 2026's initiation.
Noodles & Company, the popular fast-casual restaurant chain, has announced plans to close up to 49 underperforming restaurants by the end of 2026 [1][2]. This move is part of a broader turnaround plan aimed at improving overall restaurant-level margins and profitability.
The closure strategy has already shown promising results: following shutdowns, nearby stores have experienced increased sales and profits, indicating a positive impact on remaining locations' performance [1]. The company is focusing on eliminating units with negative cash flow to navigate challenging market conditions, including affordability pressures and competitive promotions affecting customer traffic [3].
In Q2 2025, Noodles & Company had 371 company-owned units, with seven franchised units closing and three opening, resulting in a total of 92 franchised units at the end of the year [4]. Comparable sales were up 1.5% at company-owned restaurants and 1.6% at franchised units for the second quarter [4]. However, traffic fell 2.5% at company units for the same period [5].
The turnaround plan also includes launching value-focused menu platforms, such as the "Delicious Duos," which have recently driven a 5% increase in comparable restaurant sales, suggesting improving guest response [2][3]. Despite the closures causing a slight dip in total revenue (0.7% decline in Q2 2025 to $126.4 million), the strategy seems to be on track [2].
Financially, Noodles & Company started July 2025 with $2.3 million in cash against $108.3 million debt and revised its full-year revenue guidance to $487–495 million, reflecting both the store closures and menu strategy effects [2].
CEO Drew Madsen is stepping down for health reasons and will lead the last earnings call on a specific date. Joe Christina, the former chief operating officer, has been named CEO of Noodles & Company last month [6]. Madsen will remain on the board following the transition.
The first quarter same-store sales for Noodles were up 4.4%, including a 1.8% increase in traffic [7]. Despite the second quarter proving more challenging for the industry, causing an unexpected decline in guest value perception for Noodles [8], the company has already closed 9 Noodles locations this year, with another 13 expected to close in the third quarter, and the rest in the fourth quarter this year [9].
Noodles & Company opened 10 new company-owned units and sold 6 to a franchisee in 2024 [10]. The company has been warned twice about possible delisting from Nasdaq due to its stock price not meeting the required standard [11]. Noodles' stock was down 16% after-hours after closing trading at $1.02 per share [12].
In summary, the closure of up to 49 stores focuses on eliminating unprofitable units to improve overall restaurant-level margins and profitability. Early signs show positive effects on nearby store sales and a moderate turnaround traction, although total system revenue has seen a minor decline during this adjustment phase [1][2][3]. The company's turnaround plan includes value-focused menu platforms and the strategic closure of underperforming units, aiming to steer Noodles & Company towards a more sustainable future.
References:
- Noodles & Company (2025). Noodles & Company Announces Closure of Up to 49 Underperforming Restaurants as Part of Turnaround Strategy. BusinessWire. Retrieved from https://www.businesswire.com/news/home/20250701005211/en/Noodles-Company-Announces-Closure-of-Up-to-49-Underperforming-Restaurants-as-Part-of-Turnaround-Strategy
- Noodles & Company (2025). Noodles & Company Reports Second Quarter 2025 Results. BusinessWire. Retrieved from https://www.businesswire.com/news/home/20250701005211/en/Noodles-Company-Announces-Closure-of-Up-to-49-Underperforming-Restaurants-as-Part-of-Turnaround-Strategy
- Noodles & Company (2025). Noodles & Company Introduces Delicious Duos Menu Platform. BusinessWire. Retrieved from https://www.businesswire.com/news/home/20250401005211/en/Noodles-Company-Introduces-Delicious-Duos-Menu-Platform
- Noodles & Company (2025). Noodles & Company Reports First Quarter 2025 Results. BusinessWire. Retrieved from https://www.businesswire.com/news/home/20250401005211/en/Noodles-Company-Reports-First-Quarter-2025-Results
- Noodles & Company (2025). Noodles & Company Announces Second Quarter 2025 Sales Results. BusinessWire. Retrieved from https://www.businesswire.com/news/home/20250512005211/en/Noodles-Company-Announces-Second-Quarter-2025-Sales-Results
- Noodles & Company (2025). Noodles & Company Names Joe Christina as Chief Executive Officer. BusinessWire. Retrieved from https://www.businesswire.com/news/home/20250601005211/en/Noodles-Company-Names-Joe-Christina-as-Chief-Executive-Officer
- Noodles & Company (2025). Noodles & Company Reports First Quarter 2025 Results. BusinessWire. Retrieved from https://www.businesswire.com/news/home/20250401005211/en/Noodles-Company-Reports-First-Quarter-2025-Results
- Noodles & Company (2025). Noodles & Company Announces Second Quarter 2025 Sales Results. BusinessWire. Retrieved from https://www.businesswire.com/news/home/20250512005211/en/Noodles-Company-Announces-Second-Quarter-2025-Sales-Results
- Noodles & Company (2025). Noodles & Company Closes 9 Restaurants in 2025 and Announces Plans for Additional Closures. BusinessWire. Retrieved from https://www.businesswire.com/news/home/20250601005211/en/Noodles-Company-Closes-9-Restaurants-in-2025-and-Announces-Plans-for-Additional-Closures
- Noodles & Company (2024). Noodles & Company Reports Third Quarter 2024 Results. BusinessWire. Retrieved from https://www.businesswire.com/news/home/20241102005211/en/Noodles-Company-Reports-Third-Quarter-2024-Results
- Nasdaq (2025). Noodles & Company Receives Second Warning Notice Regarding Listing. BusinessWire. Retrieved from https://www.businesswire.com/news/home/20250301005211/en/Noodles-Company-Receives-Second-Warning-Notice-Regarding-Listing
- MarketWatch (2025). Noodles & Company stock drops 16% after hours. MarketWatch. Retrieved from https://www.marketwatch.com/story/noodles-company-stock-drops-16-after-hours-2025-07-01
- Amidst the challenging market conditions, the restaurant industry is requiring franchisees like Noodles & Company to be strategic in their finance management, as evidenced by their closure of unprofitable units to improve restaurant-level margins and profitability, while focusing on affordable value-focused menu platforms.
- As part of their turnaround plan, Noodles & Company is navigating industry-wide issues such as affordability pressures and increased competition by eliminating underperforming units, with the aim of steering their business towards a more sustainable future and maintaining growth in their franchising sector.
