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What factors drove the changes in Noodles's revenue and profit?

- **Sales Surge**: Q3 comp sales +4%, October +8%, driven by Delicious Duos and Chili Garlic Ramen LTO. Digital sales +12%.
- **Margin Expansion**: Adjusted EBITDA +33% to $6.5M, restaurant margin 13.2% (vs. 12.8% prior year). Labor costs down 60bps.
- **Cost Efficiency**: $5M cost savings plan on track; 30% sales retention from closed restaurants boosts nearby units.
- **Strategic Closures**: 31-34 closures by year-end, saving $2M in 2026. Q3 closures contributed $300k to EBITDA.
- **Digital Growth**: Third-party delivery +12%, NoodlesREWARDS engagement up with 30th anniversary promotions.

**【CEO Summary Section】**
- **Revenue Growth and Sales Momentum**: Total revenue decreased 0.5% to $122.1 million, but system-wide comparable sales increased 4.0% in Q3, accelerating to 8% in October. Digital sales grew 12%, driven by third-party delivery.
- **Menu Innovation Success**: The Delicious Duos platform contributed 4-5% of sales, with guests upselling to other menu items. The Chili Garlic Ramen LTO drove traffic and repeat purchases, with sales transfers from closed restaurants boosting nearby units by 30%.
- **Strategic Closures and Margin Improvement**: 15 company-owned restaurants closed in Q3, contributing $300k to Q3 EBITDA and expected to save $2 million in 2026. Restaurant contribution margins improved 40bps to 13.2%, with labor costs down 60bps due to sales leverage.
- **Cost Savings and Efficiency**: A $5 million cost savings plan is on track for 2025, with further optimizations planned for 2026. Digital marketing ROI improved through targeted media spend.

**【CFO Financial Commentary】**
- **Financial Highlights**: Adjusted EBITDA rose 33% to $6.5 million, driven by sales growth and cost controls. Food inflation was 2%, offset by menu pricing and vendor rebates. G&A expenses decreased $0.6 million due to reduced summit costs.
- **Liquidity and Debt**: $4.7 million cash on hand, $109.8 million debt, and $12 million available on revolving credit. Capital expenditures were $3.7 million, down from $7.1 million in 2024.
- **Full Year Guidance**: Revenue $492-495 million, comp sales 3.6-4.2%, restaurant margin 12.3-12.7%, and $12-13 million capex.

**【Q&A Key Highlights】**
- **Duos Platform Impact**: 4-5% sales mix, with guests trading up to full menu items. Repeat frequency shows both new and existing customers.
- **Traffic Contribution**: 1.5% organic traffic growth in Q3, with 1% lift from sales transfers. October check average up 6% vs. discounted 2024 comps.
- **Ramen LTO Extension**: Trial and repeat strong, with potential for future LTOs or permanent menu addition.
- **Promotion Impact**: Q4 check growth to normalize post-Thanksgiving, with no repeat of 2024 heavy discounts.

Noodles & Company (NDLS) Q3 2025 Earnings Call Transcript

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NDLS

NDLS fundamentals

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