Noodles & Company (NDLS) Q2 2024 earnings summary

Executive summary

• System-wide comparable restaurant sales increased 2.0% in Q2 2024, with company-owned up 1.3% and franchise-owned up 4.7%, matching fast-casual industry benchmarks despite a challenging consumer environment.

• Total revenue rose 1.8% year-over-year to $127.4 million in Q2 2024, driven by improved same-store sales and new openings, partially offset by refranchising.

• Net loss widened to $13.6 million ($0.30 per diluted share) from $1.3 million in Q2 2023, primarily due to a $10.9 million non-cash impairment charge related to underperforming restaurants.

• Progress made on strategic priorities including operations excellence, menu transformation, digital ecosystem, catering growth, and financial discipline.

• Five new company-owned restaurants opened, six refranchised, and one franchise closure in Q2; seven new company-owned and one new franchise restaurant opened in the first two quarters of 2024.

Financial highlights

• Restaurant contribution margin improved to 15.5% from 14.8% year-over-year, driven by cost management.

• Adjusted EBITDA was $9.2 million, up from $8.5 million year-over-year.

• Company-owned average unit volume was $1.32 million in Q2 2024, flat year-over-year.

• Food costs were 24.7% of sales (improved by 40 bps); labor costs 31.2% of sales (down 120 bps); occupancy costs flat at 9.3%.

• Cash and equivalents: $1.8 million; total debt: $86.5 million; $35.5 million available under credit facility.

Outlook and guidance

• Full-year 2024 revenue guidance: $495–$505 million, with comparable sales expected between -2% and flat.

• Restaurant contribution margin forecasted at 13.5%–14.5%.

• G&A expenses expected at $50–$53 million; capital expenditures between $28–$32 million.

• Plan to open 10 new company-owned and 3 new franchise restaurants, and close 10–15 underperforming units in 2024.

• Management expects to maintain compliance with debt covenants and sufficient liquidity for at least the next twelve months.