Noodles & Company plans to shutter up to 49 underperforming company-owned units by the end of 2026, the company said Wednesday.
In what will be the last earnings call led by CEO Drew Madsen, who is stepping down for health reasons later this month, the Broomfield, Colorado-based chain said it plans to close between 28 and 32 restaurants this year. And, in 2026, the chain plans to close another 12 to 17 restaurants.
That’s a potential 13% reduction from the 371 company-owned units the chain had at the end of 2024. Noodles stock was down 16% after-hours after closing trading at $1.02 per share.
The announcement comes amid an attempted turnaround, including an overhaul of the fast-casual chain’s menu, launched in March.
For the second quarter, Noodles’ systemwide same-store sales were up 1.5%, with comparable sales up 1.5% at company-owned restaurants, and up 1.6% at franchised units.
But that increase was largely due to menu price increases tied to the new menu launch. Traffic fell 2.5% at company units, Madsen said, adding that he was not happy with the results.
Nine Noodles locations have already closed so far this year, with another 13 expected to close in the third quarter, and the rest in the fourth quarter this year.
Last year, the company identified about 20 underperforming restaurants that were at or near their lease end dates, but the announcement this week is a significant expansion of that target.
Mike Hynes, Noodles’ chief financial officer, said, “We’re very pleased with the results from closing underperforming restaurants. The closures have removed restaurants with negative cash flow from our system, and post closure, we’ve seen nearby Noodles restaurants experience an increase in sales and profits.”
At the end of the fourth quarter last year, the chain said it had closed 13 restaurants, but Noodles also opened 10 new company-owned units through the year. Another six company units were sold to a franchisee.
Seven franchised units also closed in 2024, while three were opened. Noodles ended 2024 with 371 company-owned and 92 franchised units.
Madsen is turning the helm to Joe Christina, the chain’s former chief operating officer, who was named CEO last month. Madsen will remain on the board following the transition.
Noodles has also struggled to keep its stock price above the required standard for Nasdaq, and has been twice warned about possible delisting.
Earlier this year, Noodles was showing signs that the menu work was taking hold. First quarter same-store sales were up 4.4%, including a 1.8% increase in traffic.
But the second quarter has proved to be more challenging for the industry overall, as consumers cut their spending. Madsen said Noodles saw an unexpected decline in guest value perception during the quarter, which was a shift from how consumers rated the new menu in tests last year.
Noodles revised its guidance for the year, saying same-store sales are expected to increase between 2.5% to 4%. Earlier, the company had projected same-store sales increase in the mid-single digits.
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