Noodles & Company faced significant selling pressure after releasing underwhelming third-quarter 2025 financial results. The restaurant chain’s performance fell substantially short of revenue projections while reporting an expanded net loss, triggering an immediate market reaction that sent shares tumbling nearly 5 percent in Thursday’s trading session.
Strategic Shift: From Expansion to Consolidation
In response to ongoing operational challenges, Noodles management has initiated a dramatic strategic reversal. The company now anticipates full-year revenue between $492 million and $495 million, representing a downward revision from previous guidance. More significantly, the organization plans a substantial portfolio restructuring that prioritizes consolidation over growth.
The transformation plan includes shuttering 31 to 34 company-owned locations alongside 7 to 8 franchised restaurants. With only two new openings scheduled, this marks a decisive departure from the company’s previous expansion-focused strategy.
Quarterly Performance: Revenue Miss and Widening Losses
The third-quarter financial report revealed substantial challenges. Revenue declined 0.5 percent to $122.1 million, significantly missing analyst expectations of $126.24 million. The profitability picture appeared even more concerning, with net losses accelerating to $9.2 million ($0.20 per share) compared to $6.8 million in the same quarter last year.
Operating margins deteriorated from -3.9 percent to -5.2 percent, indicating mounting pressure from elevated operational expenses and intense competition within the casual dining sector.
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Operational Highlights Amid Financial Headwinds
Despite the disappointing bottom-line results, several operational metrics showed promising improvement. System-wide comparable sales increased 4.0 percent across both company-owned and franchised locations. Additionally, adjusted EBITDA demonstrated substantial growth, surging 32.7 percent to reach $6.5 million.
Key operational strengths included:
* System-wide comparable sales growth: +4.0%
* Adjusted EBITDA: $6.5 million, representing 32.7% growth
* Restaurant-level margin improvement to 13.2%
Market Reaction and Investor Sentiment
Financial markets delivered a clear verdict on the quarterly results. Noodles shares declined 3.53 percent in after-hours trading, settling at approximately $0.70 per share. The 24-hour performance showed a nearly 5 percent decrease, leaving the stock trading well below its 52-week high of $1.74.
The dramatic selloff signals investor skepticism about the company’s near-term prospects. While operational improvements provide some encouragement, market participants appear unconvinced that these gains will translate into sustainable profitability amid the current strategic restructuring.
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