Noodles & Company Q2 2025: Unpacking Contradictions in Menu Impact, Marketing Strategy, and Margin Expectations

Menu launch impact on traffic and sales, marketing investment and its impact on sales, marketing spending impact on margins are the key contradictions discussed in Noodles & Company's latest 2025Q2 earnings call.



Same-Store Sales and Traffic Trends:
- Noodles & Company reported same-store sales up 1.5%, with a 4% increase in check size and a 2.5% decrease in traffic, adjusting for Easter impact.
- The decline in traffic was due to an unexpected drop in guest value perception following a menu launch and increased consumer demand for affordability.

Menu Transformation Impact:
- The new Signature Mac & Cheese menu saw significant sales growth, with dishes like Garlic Bacon Crunch Mac and Buffalo Chicken Ranch Mac performing well.
- Challenges were faced with existing dishes like Basil Pesto Cavatappi, which experienced a more extended J-curve in guest adoption due to increased value demand and industry-wide promotions.

Digital and Rewards Program Engagement:
- Owned digital web and app platforms saw a 2% year-over-year increase in traffic, and rewards member check-ins increased by 4%.
- This growth was driven by promotional efforts like the taste tour, boosting trial of the new menu.

Financial Performance and Cost Management:
- Total revenue decreased 0.7% to $126.4 million, impacted by a 1.8% increase in COGS and a 50 basis point rise in labor costs.
- The company worked to reduce food costs and improve operational execution, closing underperforming restaurants to enhance profitability.