Noodles & Company

Good afternoon and welcome to today's Noodles and Company's fourth quarter 2025 earnings conference call. All participants are now in a listen-only mode. After the presenters' remarks, there will be a question-and-answer session. As a reminder, this call is being recorded. I would now like to introduce Noodles and Company's chief financial officer, Mike Hines.

Thank you and good afternoon, everyone. Welcome to our fourth quarter 2025 earnings call. Here with me this afternoon is Joe Cristina, our Chief Executive Officer. I'd like to start by going over a few regulatory matters. During the call, we may make forward-looking statements regarding future events or the future financial performance of the company. Any such items should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are only projections, and actual events or results could differ from those projections due to a number of risks and uncertainties, including those referred to in this afternoon's news release and the cautionary statement in the company's annual report on Form 10-K and subsequent filings with the SEC. During the call, we will discuss non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our fourth quarter 2025 earnings release. To the extent that the company provides guidance, it does so only on a non-GAAP basis and does not provide reconciliations of forward-looking non-GAAP measures. Quantitative reconciling information for these measures is unavailable without unreasonable efforts. With that, I'd like to turn the call over to Joe Cristina, our Chief Executive Officer.

Thank you, Mike, and good afternoon. As we reflect on 2025, the story is clear. We have built meaningful and sustained momentum across Noodles & Company, accumulating in system-wide comp sales growth of nearly 7% in fourth quarter of 2025 and further escalating to over 9% in the first quarter of 2026, thus far with only a week remaining in the quarter. And profitability far exceeded the prior year in the fourth quarter of 2025, and as we have guided in the first quarter of 2026. That progress is not accidental. It is the result of disciplined execution and a clear focus on what matters most. 2025 was a pivotal year for the brand. We significantly elevated our food with the launch of our most comprehensive new menu in the history of the company and the introduction of craveable limited-time offers, including Chili Garlic Ramen, one of our strongest LTOs in recent years, which we believe also introduced new customer groups to noodles and company. We leaned into strong value messaging with the launch of delicious duos, giving guests compelling meal combinations at an attractive price point that delivered balance, variety, and everyday affordability without compromising quality, while also raising consumer awareness to our new menu offerings. We initiated a thorough review of our portfolio, resulting in the closing of underperforming restaurants, which has continued into the first quarter of 2026, and, importantly, has resulted in a material transfer of sales to nearby locations, resulting in a set baseline increase of average sales volume at those go-forward restaurants, which also favorably impacted margins, as Mike will discuss in more detail shortly. And we strengthened operational excellence by introducing our operational excellence review program, raising standards, and driving greater consistency and accountability across every restaurant. Underpinning all of this was a renewed focus on the fundamentals. Throughout 2025, we tightened execution in our restaurants, improved food consistency, managed costs with discipline, and sharpened our marketing approach. when you consistently execute the fundamentals at a high level, performance follows. And that is exactly what we began to see in the back half of the year. But before I dive deeper into the progress we made in 2025, I want to highlight our first quarter comp sales performance to date, as the progress we built last year has further accelerated into 2026, delivering sales increases which we believe are the top of the fast casual industry. In the first quarter thus far, we have delivered continued increases in traffic and same-store sales, with system-wide comparable sales growth over 9% and traffic over 4%. March will mark our seventh consecutive period of traffic growth, and notably, period two of 2026 delivered one of the strongest comparable sales performances in the company's 31-year history. We kicked off the year by bringing back Steak Stroganoff as a limited time offer, one of the most requested fan favorites ever. We lean into that fandom with a creative, AI-driven campaign that generated strong engagement and reminded guests why this dish has remained such an enduring classic. The steak stroganoff results exceeded prior launches of this LTO and cemented this great dish as a returning favorite, craveable LTO over the winter months in the coming years. When you pair a comforting favorite like steak stroganoff With stronger restaurant execution and a great guest experience, it becomes even more craveable. The combination of great food and consistent operations is clearly resonating with our guests. We entered this year with clear goals and a sharpened focus, aligning the organization around four strategic goals. Developing winning teams, igniting growth, driving guest satisfaction, and delivering strong financial results. These goals are shaping how we operate, how we invest, and how we measure success. And already, we are seeing that progress continue. With that context, let's recap the progress we made in fiscal 2025 to build the foundation for our strong performance to start the year. Fiscal 2025 was about strengthening the core of our business and restoring consistency across the system. We started with the food. We sharpened our menu, elevated recipe standards, and improved execution at the restaurant level, enhancing training and tightening operational controls to a better consistency bowl after bowl. Our limited-time offers were also more impactful and more focused, bringing energy to the brand and reinforcing our authority in noodles. A great example is chili garlic ramen, which we introduced as a limited-time offer in October. Inspired by trending ramen hacks, this brothless bowl delivered the buttery, spicy, unami-packed flavors guests were already craving. It quickly became one of the strongest LTOs in our history. A new ramen dish not only resonated with our loyalty members, but also, we believe, Introduced our brand to a new consumer who desired a ramen dish in a fast, casual environment. We have just recently brought the ramen back along with a previous fan favorite, Indonesian peanut chicken saute, as we raise awareness to our Asian noodle collections of our menu. Furthermore, we are currently evaluating additional ramen recipes as we believe a ramen section of our menu could be as equally successful as our collection of Macs. Together, these improvements strengthen guest confidence in our food and help drive stronger engagement with the brand throughout the year. Operational excellence follows. The launch of our Operational Excellence Review, or OER, program introduced a more structured coaching and accountability model across our restaurants. Area managers and regional leaders now use OERs to focus on root causes, develop clear action plans, and reinforce consistent execution across our teams. This approach has strengthened leadership alignment, improved training accountability, and raised operational standards across the system. We are seeing the results of that work in our guest experience. Over the course of the year, our OSAP scores improved, as measured by SMG, meaningfully, and we have steadily closed the gap with the fast casual category average. In January, our overall satisfaction reached 72%, the closest we have been to fast casual benchmark since launching the program in early 2024. These improvements reflect stronger execution across the fundamentals of the guest experience, from cleaner restaurants and better hospitality to more consistent food quality and stronger dinner operations. Just as importantly, our teams are now operating with clearer expectations, stronger coaching, and a shared focus on continuous improvement across people, operations, guests, and financial performance. We also established a more thoughtful and sustainable approach to value. As we listened closely to our guests, it became clear that value is not simply about the price. Our guests want to feel good about the amount of food they receive relative to what they pay for, Value means balance, feeling satisfied, and leaving with the sense that you had a great dining experience. In addition, in the current macroeconomic environment, today's consumer has become more value conscious, which we wanted to be able to address in our menu offerings, not through a temporary discount, but rather in an ongoing value-oriented option for our guests. That insight informed the launch of Delicious Duos. Rather than introducing a discount, we focused on elevating our value proposition by offering craveable combinations that deliver both variety and satisfaction at an accessible price point. The platform has resonated with guests, supporting traffic and frequency while maintaining the integrity of our margins. It also raised awareness of our new menu due to the combinations Delicious Duo offers and the marketing of that offering which showcase those various menu offerings. Our marketing approaches become more disciplined, more data-driven, and more focused on the core of who we are as a brand. We return to the foundation of our business, noodles. Our messaging leaned into craveability, variety, and the comforting shareable occasions that define the noodles and company experience. As we often say internally, we know noodles, and our marketing is, once again, centered on celebrating that authority. At the same time, we evolved how we plan and manage marketing investments. We moved away from static annual plans towards an always-on, performance-optimized marketing engine. Using AI-supported data, and channel-level performance input, our teams dynamically adjust investments based on return, incrementality, and audience response, allowing us to balance brand building with demand generation. As a result, we are managing media investment more actively across channels, reallocating dollars towards the highest return opportunity while refining audience targeting and leaning into markets where guest response is strongest. Combined with improvements in food operations and value, these efforts contributed to steady improvement in comparable sales trends, traffic stabilization, and eventual growth and expansion in restaurant-level margins. At the same time, we strengthened the financial foundation of the business. We improved labor productivity through better scheduling and tightening operational management. We manage food costs with greater precision, and we increase efficiency in our marketing deployment. These actions, combined with leveraging the significant same-store sales increases, expanded restaurant-level margins in the fourth quarter of 2025 to 14.1%, an improvement of 290 basis points year over year. Our guidance for 2026 that Mike will discuss calls for improved margins for the full year of 2026 over 2025 due to all that I have mentioned. The result is a healthier system with stronger unit level economics and a more resilient operating model. What gives me confidence today is the consistency we are seeing across the business. Food is better, execution is stronger, standards are clearer, and the results are following. The work we did in 2025 created a solid foundation. We are now building on that foundation as we move through 2026. Before I turn it over to Mike, I'd like to provide an update on the status of our previously announced review of strategic alternatives. As previously shared, our Board of Directors initiated a review of strategic alternatives to explore ways to maximize shareholder value. The process may include a range of potential options, such as refinancing existing debt or other strategic or financial transactions. No decisions have yet been made, and there is no set timetable for completion. Until the review is completed, we will not provide additional commentary. With that, I will turn it over to Micah to walk through the financial details.