NOODLES & Co
For the period ended Sep 30, 2025. Filed Nov 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 6, 2025
NDLS$14.05-6.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-07-01; filed 2025-08-14.
0001275158-25-000090
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001275158-25-000102
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 126 previous paragraphs and 125 current paragraphs.
86 unchanged; 36 reworded; 3 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
Strategic Review. On September 3, 2025, we announced that our Board of Directors had initiated a review of strategic alternatives in order to explore ways to maximize stockholder value. The review includes a range of potential strategic alternatives, including a refinancing of existing indebtedness, refranchising or sale of all or part of the business, and/or other strategic or financial transactions. Such review remains in process.
Current report
Near-term sales growth remains constrained by macroeconomic uncertainty and current consumer sentiment. Our comparable restaurant sales have been positive since the introduction of our new menu, and have accelerated in the third quarter and further into the fourth quarter, aided by the introduction of Delicious Duos in late July and the introduction of Chili Garlic Ramen in October.
Current report
General and administrative expense decreased by $0.6 million, or 4.8%, in the third quarter of 2025 compared to the third quarter of 2024, primarily due to a $0.6 million decrease in expenses related to our annual summit and a $0.4 million decline in obsolete inventory costs, partially offset by a $0.3 million increase in stock based compensation. As a percentage of revenue, general and administrative expense decreased to 10.1% in the third quarter of 2025 from 10.5% in the third quarter of 2024.
Removed paragraphs (4)
Previous report
Near-term sales growth remains constrained by macroeconomic uncertainty and current consumer sentiment. We have responded with a comprehensive menu upgrade that we introduced in March along with increased marketing support and a new brand strategy. We plan to continue launching new menu items, including lower priced value offerings.
Previous report
*Not meaningful.
Previous report
General and administrative expense decreased by $1.2 million, or 8.6%, in the second quarter of 2025 compared to the second quarter of 2024, primarily due to lower stock based compensation of $0.4 million, a decrease in legal expenses of $0.3 million and lower compensation of $0.3 million. As a percentage of revenue, general and administrative expense decreased to 9.8% in the second quarter of 2025 from 10.7% in the second quarter of 2024.
Previous report
*Not meaningful.
Reworded paragraphs (36)
Previous wording
In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties such as the number of restaurants we intend to open, projected capital expenditures and estimates of our effective tax rates. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “design,” “estimate,” “predict,” “potential,” “plan” or the negative of these terms and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on currently available operating, financial and competitive information. Examples of forward-looking statements include all matters that are not historical facts, such as statements regarding expectations with respect to unit growth and planned restaurant openings, projected capital expenditures and our financial condition and liquidity needs. Our actual results may differ materially from those anticipated in these forward-looking statements due to reasons including, but not limited to, current performance trends and our expectations for future performance and ability to obtain financing on acceptable terms, if at all, and comply with our covenants under the A&R Credit Agreement, our ability to sustain our overall growth, including, our digital sales growth; our ability to open new restaurants, if any, and cause those newly opened restaurants to be successful; our ability to effectively optimize our restaurant portfolio including closures; our ability to achieve and maintain increases in comparable restaurant sales and to successfully execute our business strategy, including operational strategies to improve the performance of our restaurant portfolio; the success of our brand strategy and marketing efforts, including our ability to successfully introduce new menu items, including limited time offerings and the success of our promotions; economic conditions, including inflation, an economic recession, an elevated interest rate environment, or tariffs and trade restrictions; price and availability of commodities and other supply chain challenges; our ability to adequately staff our restaurants; changes in labor costs; other conditions beyond our control such as domestic or global conflicts, wars, terrorist activity, weather, natural disasters, disease outbreaks, epidemics or pandemics impacting our customers or food supplies; and consumer reaction to industry related public health issues and health pandemics, including perceptions of food safety and those discussed in “Special Note Regarding Forward-Looking Statements” and “Risk Factors” as filed in our Annual Report on Form 10-K for our fiscal year ended December 31, 2024 and as updated by Item 1A. Risk Factors of this 10-Q Report.
Current wording
In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties such as the number of restaurants we intend to open, projected capital expenditures and estimates of our effective tax rates. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “design,” “estimate,” “predict,” “potential,” “plan” or the negative of these terms and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on currently available operating, financial and competitive information. Examples of forward-looking statements include all matters that are not historical facts, such as statements regarding expectations with respect to unit growth and planned restaurant openings, projected capital expenditures and our financial condition and liquidity needs. Our actual results may differ materially from those anticipated in these forward-looking statements due to reasons including, but not limited to, uncertainties as to the availability, suitability, structure, terms, and timing of any strategic transaction resulting from the strategic review and whether any such transaction will be completed, the impact of any such strategic transaction on Noodles & Company, whether the strategic benefits of any such strategic transaction can be achieved; current performance trends and our expectations for future performance and ability to obtain financing on acceptable terms, if at all, and comply with our covenants under the A&R Credit Agreement, our ability to sustain our overall growth, including, our digital sales growth; our ability to effectively optimize our restaurant portfolio including closures; our ability to achieve and maintain increases in comparable restaurant sales and to successfully execute our business strategy, including operational strategies to improve the performance of our restaurant portfolio; the success of our brand strategy and marketing efforts, including our ability to successfully introduce new menu items, including limited time offerings and the success of our promotions; our pricing strategies; economic conditions, including inflation, an economic recession, an elevated interest rate environment, tariffs and trade restrictions and any impact of government shutdowns on overall economic conditions and consumer spending; price and availability of commodities and other supply chain challenges; our ability to adequately staff our restaurants; changes in labor costs; our ability to maintain compliance with requirements for continued listing on the Nasdaq Global Select Market; other conditions beyond our control such as domestic or global conflicts, wars, terrorist activity, weather, natural disaste…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Revenue. In the second quarter we saw an increase in system-wide comparable restaurant sales, and correspondingly in total revenue. System-wide comparable restaurant sales increased 1.5% in the second quarter of 2025 compared to the same period of 2024, comprised of a 1.5% increase at company-owned restaurants and a 1.6% increase at franchise-owned restaurants.
Current wording
Revenue. In the third quarter, we saw a decrease in revenue as a result of permanent restaurant closures, which was mostly offset by revenue growth from an increase in system-wide comparable restaurant sales. System-wide comparable restaurant sales increased 4.0% in the third quarter of 2025 compared to the same period of 2024, comprised of a 4.0% increase at company-owned restaurants and a 4.3% increase at franchise-owned restaurants.
Previous wording
Cost of Sales. Our first two quarters of 2025 cost of sales were impacted by our comprehensive menu upgrade as some new menu items had a higher cost than the items that were replaced. We continue to monitor commodity inflation and throughout periods of volatility, we will continue to work with our suppliers to identify ongoing supply chain efficiencies, including adding additional suppliers as necessary.
Current wording
Cost of Sales. Our first three quarters of 2025 cost of sales were impacted by our comprehensive menu upgrade as some new menu items had a higher cost than the items that were replaced. We continue to monitor commodity inflation and, throughout periods of volatility, we will continue to work with our suppliers to identify ongoing supply chain efficiencies, including adding additional suppliers as necessary.
Previous wording
We have evaluated and will continue to evaluate the impact of import laws and tariffs on our operations as some of our food items are imported from Mexico and other countries. As of July 1, 2025, there was no material impact on our business, financial condition, results of operations or cash flows. However, we expect tariffs may impact our operations in certain areas, such as food and beverage costs, construction and equipment costs and other restaurant operating costs, for the remainder of fiscal 2025. We will continue to utilize fixed price contracts for certain key items to mitigate risk.
Current wording
We have evaluated and will continue to evaluate the impact of import laws and tariffs on our operations as some of our food items are imported from India, Mexico and other countries. As of September 30, 2025, there was no material impact on our business, financial condition, results of operations or cash flows. However, we expect tariffs may impact our operations in certain areas, such as food and beverage costs, construction and equipment costs and other restaurant operating costs, for the remainder of fiscal 2025 and into 2026. We will continue to utilize fixed price contracts for certain key items to mitigate risk.
Previous wording
Other Restaurant Operating Costs. We have incurred and expect to continue to incur third-party delivery fees resulting from significant and increasing usage of third-party delivery services.
Current wording
Other Restaurant Operating Costs. We have incurred, and expect to continue to incur, increased third-party delivery fees due to significant increased usage of third-party delivery services resulting in a higher mix of third party delivery sales.
Previous wording
Restaurant Development. In the first two quarters of 2025, we opened two new company-owned restaurants, which completes our restaurant development for 2025. As of July 1, 2025, we had 364 company-owned restaurants and 89 franchise restaurants in 31 states.
Current wording
Restaurant Development. In the first three quarters of 2025, we opened two new company-owned restaurants, which completes our restaurant development for 2025. As of September 30, 2025, we had 349 company-owned restaurants and 86 franchise restaurants in 31 states.
Previous wording
Impair ments and Certain Restaurant Closures. We impaired fixed assets related to 15 restaurants in the first two quarters of 2025. In the first two quarters of 2025, we wrote down lease-related assets for 11 restaurants. We permanently closed nine company-owned restaurants in the first two quarters of 2025 and we anticipate closing an additional 19 to 23 restaurants in 2025. We continue to analyze our restaurant portfolio and expect to close certain restaurants that are either generating low or negative cash flows, at or are approaching the expiration of their leases or in trade areas that are not as well positioned for current consumer trends.
Current wording
Impair ments and Certain Restaurant Closures. We impaired fixed assets related to 24 restaurants in the first three quarters of 2025 primarily related to closure decisions on underperforming restaurants. In the first three quarters of 2025, we wrote down lease-related assets for 20 restaurants. We permanently closed 24 company-owned restaurants in the first three quarters of 2025 and we anticipate closing an additional six to eight restaurants in 2025. We continue to analyze our restaurant portfolio and expect to close certain restaurants that are either generating low or negative cash flows, at or are approaching the expiration of their leases or in trade areas that are not as well positioned for current consumer trends.
Previous wording
Second Quarter Ended July 1, 2025 Compared to Second Quarter Ended July 2, 2024
Current wording
Third Quarter Ended September 30, 2025 Compared to Third Quarter Ended October 1, 2024
Previous wording
The table below presents our unaudited operating results for the second quarters of 2025 and 2024, and the related quarter-over-quarter changes.
Current wording
The table below presents our unaudited operating results for the third quarters of 2025 and 2024, and the related quarter-over-quarter changes.
Previous wording
Total revenue decreased $0.9 million in the second quarter of 2025, or 0.7%, to $126.4 million, compared to $127.4 million in the second quarter of 2024. This decrease was primarily due to a reduction of $3.6 million in sales from permanent restaurant closures, mostly offset by an increase of $1.6 million in comparable sales and a $1.4 million increase in new restaurant revenue. System-wide comparable restaurant sales increased 1.5% in the second quarter of 2025 compared to the same period of 2024, comprised of a 1.5% increase at company-owned restaurants and a 1.6% increase at franchise-owned restaurants.
Current wording
Total revenue decreased $0.7 million in the third quarter of 2025, or 0.5%, to $122.1 million, compared to $122.8 million in the third quarter of 2024. The decrease was primarily due to lower revenue of $5.0 million from permanent closures partially offset by $3.9 million of revenue growth in company comparable restaurant sales and a $0.4 million increase in new restaurant revenue. System-wide comparable restaurant sales increased 4.0% in the third quarter of 2025 compared to the same period of 2024, comprised of a 4.0% increase at company-owned restaurants and a 4.3% increase at franchise-owned restaurants.
Previous wording
Cost of sales increased by $2.0 million, or 6.5%, in the second quarter of 2025 compared to the same period of 2024. As a percentage of restaurant revenue, cost of sales increased to 26.5% in the second quarter of 2025 compared to 24.7% in second quarter of 2024, primarily due to a 2.2% impact from a combination of menu investments, mix shifts, and inflation, which were partially offset by a 0.4% menu price benefit.
Current wording
Cost of sales increased by 0.1%, in the third quarter of 2025 compared to the same period of 2024. As a percentage of restaurant revenue, cost of sales increased to 25.7% in the third quarter of 2025 compared to 25.5% in third quarter of 2024, primarily due to a 1.2% impact from a combination of menu investments, mix shifts, and inflation, which was mostly offset by a 0.5% menu price benefit and a 0.5% benefit from vendor rebates.
Previous wording
Labor costs increased by $0.3 million, or 0.8%, in the second quarter of 2025 compared to the same period of 2024. As a percentage of restaurant revenue, labor costs increased to 31.7% in the second quarter of 2025 compared to 31.2% in the second quarter of 2024 primarily due to 0.7% of wage inflation and 0.5% increase in labor hours related to the new menu rollout, partially offset by a 0.2% benefit from sales leverage and a 0.5% benefit from lower incentive pay and benefits.
Current wording
Labor costs decreased by $0.9 million, or 2.4%, in the third quarter of 2025 compared to the same period of 2024. As a percentage of restaurant revenue, labor costs decreased to 31.4% in the third quarter of 2025 compared to 32.0% in the third quarter of 2024, primarily due to a 1.3% benefit from sales leverage partially offset by 0.7% of wage inflation.
Previous wording
Occupancy costs decreased by $0.2 million in the second quarter of 2025 compared to the second quarter of 2024. As a percentage of restaurant revenue, occupancy costs decreased to 9.2% in the second quarter of 2025, compared to 9.3% in the second quarter of 2024 primarily due to sales leverage.
Current wording
Occupancy costs decreased by $0.5 million or 4.0% in the third quarter of 2025 compared to the third quarter of 2024, primarily due to permanent restaurant closures. As a percentage of restaurant revenue, occupancy costs decreased to 9.3% in the third quarter of 2025 compared to 9.6% in the third quarter of 2024, primarily due to sales leverage.
Previous wording
Other restaurant operating costs increased by $0.5 million, or 2.0%, in the second quarter of 2025 compared to the second quarter of 2024. As a percentage of restaurant revenue, other restaurant operating costs increased to 19.7% in the second quarter of 2025 compared to 19.2% in the second quarter of 2024 primarily due to a 0.4% impact from higher delivery fees driven by higher delivery sales and 0.4% from the new menu rollout which includes increased marketing spend, partially offset by 0.3% of sales leverage.
Current wording
Other restaurant operating costs increased by $0.4 million, or 1.8%, in the third quarter of 2025 compared to the third quarter of 2024. As a percentage of restaurant revenue, other restaurant operating costs increased to 20.5% in the third quarter of 2025 compared to 20.1% in the third quarter of 2024, primarily due to a 0.4% impact from higher delivery fees driven by higher delivery sales, 0.3% from higher utility costs and 0.2% from increased marketing spend, partially offset by 0.5% of sales leverage.
Previous wording
Depreciation and amortization decreased by $0.2 million, or 3.1%, in the second quarter of 2025 compared to the second quarter of 2024, due primarily to restaurant closures since the second quarter of 2024.
Current wording
Depreciation and amortization decreased by $0.6 million, or 8.9%, in the third quarter of 2025 compared to the third quarter of 2024, primarily due to restaurant closures since the third quarter of 2024.
Previous wording
Restaurant impairments, closure costs and asset disposals increased $1.6 million to $13.7 million in the second quarter of 2025 and the second quarter of 2024. We recorded fixed asset impairment on 15 restaurants and wrote down lease related assets onten restaurants during the second quarter of 2025. We recorded fixed asset impairment on 12 restaurants and wrote down lease related assets on three restaurants during the second quarter of 2024.
Current wording
Restaurant impairments, closure costs and asset disposals increased $3.5 million to $5.7 million in the third quarter of 2025 compared to$2.2 million the third quarter of 2024. We recorded fixed asset impairment on nine restaurants and wrote down lease related assets on nine restaurants during the third quarter of 2025. In the third quarter of 2024, we did not record any fixed asset impairment. In the third quarter of 2024, we wrote down lease related assets on one restaurant.
Previous wording
Interest expense, net increased $0.8 million in the second quarter of 2025 compared to the second quarter of 2024, due primarily to higher average debt balances in the second quarter of 2025 as compared to the second quarter of 2024.
Current wording
Interest expense, net increased $0.7 million in the third quarter of 2025 compared to the third quarter of 2024, primarily due to higher average debt balances in the third quarter of 2025 as compared to the third quarter of 2024.
Previous wording
The effective tax rate for the second quarter of 2025 and for the second quarter of 2024 reflect the impact of the previously recorded valuation allowance. The primary components of the provision for income tax (for both quarters) are related to state tax and the change in our valuation allowance. For the remainder of fiscal 2025, we do not anticipate material income tax expense or benefit as a result of the valuation allowance recorded. We will maintain a valuation allowance against deferred tax assets until there is sufficient evidence to support a full or partial reversal. The reversal of a previously recorded valuation allowance will generally result in a benefit from income tax.
Current wording
The effective tax rate for the third quarter of 2025 and for the third quarter of 2024 reflect the impact of the previously recorded valuation allowance. The primary components of the provision for income tax (for both quarters) are related to state tax and the change in our valuation allowance. For the remainder of fiscal 2025, we do not anticipate material income tax expense or benefit as a result of the valuation allowance recorded. We will maintain a valuation allowance against deferred tax assets until there is sufficient evidence to support a full or partial reversal. The reversal of a previously recorded valuation allowance will generally result in a benefit from income tax.
Previous wording
Two Quarters Ended July 1, 2025 Compared to Two Quarters Ended July 2, 2024
Current wording
Three Quarters Ended September 30, 2025 Compared to Three Quarters Ended October 1, 2024
Previous wording
The table below presents our unaudited operating results for the first two quarters of 2025 and 2024, and the related period-over-period changes.
Current wording
The table below presents our unaudited operating results for the first three quarters of 2025 and 2024, and the related period-over-period changes.
Previous wording
Total revenue increased by $1.5 million, or 0.6%, in the first two quarters of 2025, to $250.2 million compared to $248.7 million in the same period of 2024. The increase was primarily due to a $6.9 million increase in company same store sales and a $3.5 million increase from new restaurant revenue partially offset by reduced revenue of $6.3 million from permanent restaurant closures and $2.5 million from refranchising the six company-owned restaurants in the Oregon market as part of the DND Sale. Comparable restaurant sales increased 2.9% system-wide in the first two quarters of 2025 compared to the first two quarters of 2024 comprised of a 3.0% increase at company-owned restaurants and a 2.3% increase at franchise-owned restaurants.
Current wording
Total revenue increased by $0.8 million, or 0.2%, in the first three quarters of 2025 to $372.3 million compared to $371.5 million in the same period of 2024. The increase was primarily due to a $10.7 million increase in company comparable restaurant sales and a $3.9 million increase from new restaurant revenue, mostly offset by $11.3 million from permanent restaurant closures and $2.5 million from refranchising the six company-owned restaurants in the Oregon market as part of the DND Sale. Comparable restaurant sales increased 3.3% system-wide in the first three quarters of 2025 compared to the first three quarters of 2024, comprised of a 3.3% increase at company-owned restaurants and a 2.9% increase at franchise-owned restaurants.
Previous wording
Cost of sales increased by $4.6 million, or 7.6%, in the first two quarters of 2025 compared to the same period of 2024. As a percentage of restaurant revenue, cost of sales increasedto 26.6% in the first two quarters of 2025 compared to 24.8% in the first two quarters of 2024 primarily due to a 1.9% impact from a combination of menu investments, menu mix shifts and inflation.
Current wording
Cost of sales increased by $4.6 million, or 5.1%, in the first three quarters of 2025 compared to the same period of 2024. As a percentage of restaurant revenue, cost of sales increasedto 26.3% in the first three quarters of 2025 compared to 25.1% in the first three quarters of 2024, primarily due to 1.7% impact from a combination of menu investments, mix shifts, and inflation, which was partially offset by a 0.5% benefit from a combination of menu price benefit and vendor rebates.
Previous wording
Labor costs increased by $1.3 million, or 1.7%, in the first two quarters of 2025 compared to the same period of 2024. As a percentage of restaurant revenue, labor costs increased to 32.1% in the first two quarters of 2025 compared to 31.7% in the first two quarters of 2024 primarily due to 0.8% of wage inflation and 0.5% increase in labor hours related to new menu rollout, partially offset by a 0.6% benefit from sales leverage and a 0.5% benefit from lower incentive pay and benefits.
Current wording
Labor costs increased by $0.4 million, or 0.3%, in the first three quarters of 2025 compared to the same period of 2024. As a percentage of restaurant revenue, labor costs increased to 31.9% in the first three quarters of 2025 compared to 31.8% in the first three quarters of 2024, primarily due to 0.7% of wage inflation and 0.4% from an increase in labor hours related to the new menu rollout, partially offset by a 0.7% benefit from sales leverage and a 0.3% benefit from lower incentive pay and benefits.
Previous wording
Occupancy costs decreasedby $0.6 million, or 2.4%, in the first two quarters of 2025 compared to the first two quarters of 2024. As a percentage of restaurant revenue, occupancy costs decreased to 9.3% in the first two quarters of 2025 compared to 9.6% in the first two quarters of 2024 primarily due to sales leverage.
Current wording
Occupancy costs decreasedby $1.0 million, or 2.9%, in the first three quarters of 2025 compared to the first three quarters of 2024, primarily due to permanent restaurant closures. As a percentage of restaurant revenue, occupancy costs decreased to 9.3% in the first three quarters of 2025 compared to 9.6% in the first three quarters of 2024, primarily due to sales leverage.
Previous wording
Other restaurant operating costs increased by $2.7 million, or 5.7%, in the first two quarters of 2025 compared to the first two quarters of 2024. As a percentage of restaurant revenue, other restaurant operating costs increased to 20.4% in the first two quarters of 2025, compared to 19.4% in the first two quarters of 2024, primarily due to 0.65% impact from higher delivery fees driven by higher delivery sales, 0.5% from the new menu rollout which includes increased marketing spend, 0.3% from increased facility and utilities costs, partially offset by 0.4% of sales leverage.
Current wording
Other restaurant operating costs increased by $3.1 million, or 4.4%, in the first three quarters of 2025 compared to the first three quarters of 2024. As a percentage of restaurant revenue, other restaurant operating costs increased to 20.5% in the first three quarters of 2025 compared to 19.7% in the first three quarters of 2024, primarily due to 0.6% impact from higher delivery fees driven by higher delivery sales, 0.2% from increased marketing spend, 0.2% from higher energy costs and 0.1% from the new menu roll out, partially offset by 0.4% of sales leverage.
Previous wording
General and administrative expense decreased by $1.4 million, or 5.2%, in the first two quarters of 2025 compared to the first two quarters of 2024, due primarily to lower incentive pay of $0.9 million, lower stock based compensation of $0.6 million and a decrease in legal expenses of $0.3 million, partially offset by higher marketing expenses of $0.5 million. As a percentage of revenue, general and administrative expense decreased to 10.1% in the first two quarters of 2025 from 10.7% in the first two quarters of 2024.
Current wording
General and administrative expense decreased by $2.0 million, or 5.1%, in the first three quarters of 2025 compared to the first three quarters of 2024, primarily due to lower wage and incentive pay of $1.0 million, lower stock based compensation of $0.7 million, a $0.6 million decrease in expenses related to our annual summit and a $0.6 million decrease in professional fees, partially offset by higher marketing expenses of $0.6 million. As a percentage of revenue, general and administrative expense decreased to 10.1% in the first three quarters of 2025 from 10.6% in the first three quarters of 2024.
Previous wording
Depreciation and amortization decreased by $0.5 million, or 3.4%, in the first two quarters of 2025 compared to the first two quarters of 2024, primarily due to restaurant closures.
Current wording
Depreciation and amortization decreased by $1.2 million, or 5.2%, in the first three quarters of 2025 compared to the first three quarters of 2024, primarily due to restaurant closures.
Previous wording
Restaurant impairments, closure costs and asset disposals increased $1.7 million to $14.9 million in the first two quarters of 2025 and the first two quarters of 2024. We recorded fixed asset impairment on 15 restaurants and wrote down lease related assets on 11 restaurants in the first two quarters of 2025. We recorded fixed asset impairment on 12 restaurants and wrote down lease related assets onfour restaurants in the first two quarters of 2024.
Current wording
Restaurant impairments, closure costs and asset disposals increased $5.1 million to $20.6 million in the first three quarters of 2025 compared to the first three quarters of 2024. We recorded fixed asset impairment on 24 restaurants and wrote down lease related assets on 20 restaurants in the first three quarters of 2025. We recorded fixed asset impairment on 12 restaurants and wrote down lease related assets onfive restaurants in the first three quarters of 2024.
Previous wording
Interest expense increased by $1.4 million in the first two quarters of 2025 compared to the same period of 2024. The increase was primarily due to higher average borrowings and higher interest rates in the first two quarters of 2025 compared to the first two quarters of 2024.
Current wording
Interest expense increased by $2.2 million in the first three quarters of 2025 compared to the same period of 2024. The increase was primarily due to higher average borrowings in the first three quarters of 2025 compared to the first three quarters of 2024.
Previous wording
The effective tax rate for the first two quarters of 2025 and for the first two quarters of 2024 reflect the impact of the previously recorded valuation allowance. The primary components of the provision for income tax (for both quarters) are related to state tax and the change in our valuation allowance. For the remainder of fiscal 2025, we do not anticipate material income tax expense or benefit as a result of the valuation allowance recorded. We will maintain a valuation allowance against deferred tax assets until there is sufficient evidence to support a full or partial reversal. The reversal of a previously recorded valuation allowance will generally result in a benefit from income tax. We estimate the annual effective tax rate for 2025 to be between (1.0%) and (0%).
Current wording
The effective tax rate for the first three quarters of 2025 and for the first three quarters of 2024 reflect the impact of the previously recorded valuation allowance. The primary components of the provision for income tax (for all quarters) are related to state tax and the change in our valuation allowance. For the remainder of fiscal 2025, we do not anticipate material income tax expense or benefit as a result of the valuation allowance recorded. We will maintain a valuation allowance against deferred tax assets until there is sufficient evidence to support a full or partial reversal. The reversal of a previously recorded valuation allowance will generally result in a benefit from income tax. We estimate the annual effective tax rate for 2025 to be between (1.0%) and (0%).
Previous wording
Net cash provided by operating activities was $3.2 million in the first two quarters of 2025 compared to net cash provided by operating activities of $11.7 million in the first two quarters of 2024. The decrease in operating cash flow resulted primarily from a decrease in net income as adjusted for non cash items including depreciation and impairments, as well as changes in working capital related to the timing of accounts payable, payroll and accrued liabilities.
Current wording
Net cash provided by operating activities was $8.4 million in the first three quarters of 2025 compared to net cash provided by operating activities of $17.5 million in the first three quarters of 2024. The decrease in operating cash flow resulted primarily from a decrease in net income as adjusted for non cash items including depreciation and impairments, as well as changes in working capital related to the timing of accounts payable, payroll and accrued liabilities.
Previous wording
Net cash used in investing activities decreased $9.5 million to $6.3 million in the first two quarters of 2025 from $15.8 million in the first two quarters of 2024. This decrease was primarily due to decreased investment in new restaurants and restaurant technology.
Current wording
Net cash used in investing activities decreased $12.9 million to $10.1 million in the first three quarters of 2025 from $22.9 million in the first three quarters of 2024. This decrease was primarily due to decreased investment in new restaurants and restaurant technology in 2025.
Previous wording
Net cash provided by financing activities was $4.3 million in the first two quarters of 2025, compared to $2.8 million in the first two quarters of 2024. The increase from the first two quarters of 2024 was primarily due to borrowings on the revolver as a result of the decrease in cash provided by operating activities, partially offset by repayments on the swingline.
Current wording
Net cash provided by financing activities was $5.2 million in the first three quarters of 2025, compared to $5.7 million in the first two quarters of 2024. The decrease from the first three quarters of 2024 was primarily due to less net borrowings from our revolving credit facility.
Previous wording
We estimate capital expenditures will be approximately $12.0 million to $13.0 million for fiscal year 2025, including $5.0 million to $6.0 million for the remainder of the year, primarily for the reinvestment in existing restaurants and investments in technology. We expect such capital expenditures to be funded by currently available cashand cash equivalents, cash flows from operations and if necessary, undrawn capacity under our revolving credit line.
Current wording
We estimate capital expenditures will be approximately $12.0 million to $13.0 million for fiscal year 2025, including $2.0 million to $3.0 million for the remainder of the year, primarily for the reinvestment in existing restaurants and investments in technology. We expect such capital expenditures to be funded by currently available cashand cash equivalents, cash flows from operations and if necessary, undrawn capacity under our revolving credit line.
Previous wording
Liquidity. As of July 1, 2025, we had a cash balance of $2.3 million compared to $1.1 million asof December 31, 2024. The amount available for future borrowings under our A&R Credit Agreement (defined below) was $13.7 million as of July 1, 2025. We believe that our current cash and cash equivalents, the expected cash flows from company-owned restaurant operations, the expected franchise fees and royalties and available borrowings under the revolving credit facility will be sufficient to fund our cash requirements for working capital needs and capital improvements and maintenance of existing restaurants for at least the next twelve months.
Current wording
Liquidity. As of September 30, 2025, we had a cash balance of $4.7 million compared to $1.1 million asof December 31, 2024. The amount available for future borrowings under our A&R Credit Agreement (defined below) was $12.2 million as of September 30, 2025. We believe that our current cash and cash equivalents, the expected cash flows from company-owned restaurant operations, the expected franchise fees and royalties and available borrowings under the revolving credit facility will be sufficient to fund our cash requirements for working capital needs and capital improvements and maintenance of existing restaurants for at least the next twelve months.
Previous wording
As of July 1, 2025, we had $108.3 million of indebtedness (excluding $1.8 million of unamortized debt issuance costs) and $3.0 million of letters of credit outstanding under our A&R Credit Agreement.
Current wording
As of September 30, 2025, we had $109.8 million of indebtedness (excluding $1.6 million of unamortized debt issuance costs) and $3.0 million of letters of credit outstanding under our A&R Credit Agreement.