• Total Revenue: Decreased 2% to $121.8 million in Q4 2024.
• System-wide Comparable Sales: Increased 0.8% in Q4 2024.
• Company-Owned Restaurant Sales: Increased 0.5% in Q4 2024.
• Franchise Restaurant Sales: Increased 1.9% in Q4 2024.
• Net Loss: $9.7 million or $0.21 per diluted share in Q4 2024.
• Adjusted EBITDA: $4 million in Q4 2024, down from $7.5 million in Q4 2023.
• Restaurant Level Contribution Margin: 11.2%, down from 14.7% in Q4 2023.
• Labor Costs: 32.3% of sales, up 30 basis points from the prior year.
• G&A Expenses: $11.3 million in Q4 2024, down from $13.9 million in Q4 2023.
• Capital Expenditures: $29 million in 2024, down from $52 million in 2023.
• Debt Balance: $103 million at the end of 2024.
• Store Closures: 6 company-owned and 3 franchise restaurants closed in Q4 2024.
• 2025 Revenue Guidance: Expected between $503 million to $512 million.
• 2025 Restaurant Contribution Margin Guidance: Between 12.5% and 14.0%.
• 2025 Capital Expenditures Guidance: Estimated between $11 million to $13 million.

• Warning! GuruFocus has detected 5 Warning Signs with NDLS.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Noodles & Co (NASDAQ:NDLS) experienced a significant improvement in sales during Q4 2024, driven by improved traffic and new menu items.
• System-wide comparable sales increased by 0.8%, with traffic nearly flat at minus 0.1%, indicating stabilization.
• The company saw a strong start to Q1 2025 with over 3% comp sales growth, including positive traffic.
• Noodles & Co (NASDAQ:NDLS) achieved its largest single-month increase in overall guest satisfaction in January.
• The company is undergoing a major menu transformation, introducing 9 new dishes, which has shown increased guest satisfaction in test markets.

Negative Points

• Total revenue for Q4 2024 decreased by 2% compared to the previous year, reaching $121.8 million.
• The restaurant level contribution margin decreased to 11.2% from 14.7% in Q4 2023.
• Net loss for Q4 2024 was $9.7 million, compared to a net loss of $6.1 million in the previous year.
• Labor costs increased by 30 basis points to 32.3% of sales, driven by traffic de-leverage and discounting.
• The company plans to close 12 to 15 company-owned and four franchise restaurants in 2025, indicating ongoing challenges in certain locations.

Q & A Highlights

Q: What areas are seeing the most improvement in guest satisfaction scores, and how is this influencing upcoming decisions? A: Andrew Madsen, CEO, highlighted significant improvements in areas directly related to traffic growth, such as overall satisfaction, taste of food, and accuracy. These improvements are crucial as they drive traffic growth and are informing strategic decisions moving forward.

Q: How should we think about achieving mid-single-digit sales growth for the full year, given the current quarter's start and upcoming menu changes? A: Michael Hynes, CFO, explained that the first quarter is tracking over 3% growth, and while the second quarter will face tough comparisons, the majority of growth is expected in Q3 and Q4. The Easter shift will also impact Q1 positively and Q2 negatively by about 50 basis points.

Q: Can you quantify the impact of weather on current sales trends and your confidence in the sustainability of the 3% growth rate? A: Michael Hynes stated that while February weather had a negative impact, the 3% growth rate is sustainable and not permanently affected by weather. The non-weather weeks reflect this growth rate accurately.

Q: What will be the impact on margins due to the operational and menu changes in 2025? A: Andrew Madsen noted a significant increase in marketing investment during the launch phase, but for the full year, the increase is more modest. Michael Hynes added that the 100 basis point investment in food costs is a permanent quality improvement, with margins expected to remain flat or grow year-over-year.

Q: Is the 100 basis point investment in food costs a permanent change, and what is its purpose? A: Andrew Madsen confirmed that the investment is permanent, aimed at improving food quality. This is seen as a crucial investment to enhance guest satisfaction, loyalty, and business growth sustainably.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.