NOODLES & Co Q1 FY2025 earnings call

Key Sales Performance - Q1 same-store sales were strong: company-owned up 4.7%, system-wide 4.4%. Traffic +1.8%, check +2.9%. April same-store sales up ~5% since mid-March menu rollout. - Operations Excellence: Implemented a 4-week comprehensive training program for new menu, 95% completion rate. - Menu Transformation: Launched new menu on March 12th with 5 new dishes and 4 reimagined favorites. Replaced takeout packaging and updated digital menus. - Brand Positioning: New campaign 'We Know Noodles', new commercials scored top quartile, increased paid media and PR efforts.

In the first quarter, total revenue increased 2% to $123.8 million. System-wide comp restaurant sales saw a 4.4% increase, with company-owned restaurants up 4.7%. Traffic increased 1.8% and check rose 2.9%. Restaurant contribution margin was 10.3%, down from 13.1% in Q1 2024. Food costs were up due to new menu offerings, labor costs 32.5% of sales, occupancy costs decreased, and other operating costs rose due to higher delivery fees and marketing.

Full-Year Guidance - Total revenue expected $503M-$512M. - Restaurant contribution margin 12%-14%. - G&A $49M-$52M, D&A $27M-$29M, interest $8M-$10M. - Expect to open 2 company-owned restaurants, close 13-17 company-owned and 4 franchise restaurants. - Capital expenditures $11M-$13M, with debt reduction anticipated in the back half of 2025.

• Macro-economic challenges impacting consumer sentiment. - Tariff exposure on certain produce and shrimp. - Dependence on continued success of menu rollout and marketing efforts.

Q: How does the marketing investment for the new menu taper over the year and how do loyalty customers respond?

A: We've doubled media investment initially, will update media mix based on response. Loyalty members show double-digit transaction growth, positive response to recent loyalty promotion.

Q: How has traffic trended since menu launch and plans to maintain momentum?

A: Traffic has remained strong, up 1.8%, with sales up ~5% since March launch. Will continue executing at high level.

Q: About free cash flow and balance sheet?

A: Slightly free cash flow positive in Q1, expecting Q3 and Q4 to be positive, with debt reduction in back half of 2025.