Noodles & Company (NASDAQ:NDLS) shares climbed 5.02% in premarket trading on Friday after the restaurant chain delivered second-quarter results that comfortably exceeded Wall Street expectations, driven by strong comparable sales growth, improving margins and a stronger full-year outlook.
The company also reported a sharp improvement in profitability as customer demand continued to strengthen across both company-owned and franchised restaurants.
Revenue and earnings outperform expectations
Noodles & Company reported adjusted earnings of $0.18 per share for the second quarter, significantly outperforming analysts’ expectations for a loss of $0.08 per share.
Revenue increased 0.5% year-on-year to $127 million, exceeding the consensus forecast of $119.7 million and improving from $126.4 million in the same quarter last year.
System-wide comparable restaurant sales rose 10.3%, led by an 11.4% increase at company-owned restaurants, while franchise locations recorded comparable sales growth of 5.5%.
Profitability continues to improve
The company significantly reduced its quarterly losses while expanding restaurant-level profitability.
Net loss narrowed to $4 million, or $0.67 per diluted share, from $17.6 million, or $3.04 per diluted share, a year earlier.
Restaurant contribution margin improved to 17.2%, compared with 12.8% in the prior-year period, while adjusted EBITDA increased 79% to $10.8 million from $6 million.
“We are extremely pleased with our second quarter results with system-wide comparable restaurant sales increasing over 10%, an equally impressive 440 basis point year over year improvement in restaurant margin to 17.2%, and a near 80% increase in Adjusted EBITDA,” said Joe Christina, President and Chief Executive Officer.
Company lifts fiscal 2026 outlook
Following the stronger quarterly performance, Noodles & Company raised its revenue guidance for fiscal 2026.
The company now expects annual revenue of between $485 million and $500 million, with the midpoint of $492.5 million exceeding analysts’ consensus estimate of $483.3 million.
Management also increased its adjusted EBITDA forecast to a range of $34 million to $38 million and reaffirmed expectations for restaurant-level contribution margins of between 16% and 17%.
Portfolio optimisation remains underway
Alongside its improved financial outlook, Noodles & Company said it plans to close between 30 and 35 company-owned restaurants during fiscal 2026 as part of its ongoing efforts to optimise its restaurant portfolio and improve overall operating performance.
The combination of stronger sales, expanding margins and higher earnings guidance helped boost investor confidence following the earnings release.