NOODLES & Co
For the period ended Mar 31, 2026. Filed May 7, 2026.
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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.
Mar 31, 2026 · Filed May 7, 2026
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 2025-09-30; filed 2025-11-06.
0001275158-25-000102
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001275158-26-000037
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 125 previous paragraphs and 105 current paragraphs.
64 unchanged; 34 reworded; 7 added; 24 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 6 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 (7)
Current report
Reverse Stock Split. On February 18, 2026, the amendment to our Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) took effect to implement the Reverse Stock Split of our issued and outstanding shares of Class A common stock, par value $0.01 per share, at a ratio of 1-for-8.
Current report
No fractional shares were issued as a result of the Reverse Stock Split and it did not impact the par value of our common stock. Neither the Reverse Stock Split nor the related amendment to the Certificate of Incorporation had any impact on the number of shares of common stock or preferred stock we are authorized to issue under the Certificate of Incorporation or the number of issued and outstanding shares of our preferred stock (of which there are currently none).
Current report
All shares of common stock, stock-based compensation awards and per share amounts for the prior periods included in the Consolidated Financial Statements and applicable notes of this 10-Q and elsewhere in this 10-Q have been adjusted retroactively to reflect the effect of the Reverse Stock Split and related amendment to the Certificate of Incorporation.
Current report
•abnormal weather patterns;
Current report
•trade area dynamics;
Current report
Total revenue was flat at $123.8 million in the first quarters of 2026 and 2025. During the first quarter of 2026, significant increases in comparable restaurant sales were mostly offset by a decline in revenue related to 50 permanent company-owned closures and a decline in franchise revenue from 11 franchise restaurant closures. Average unit volumes increased 13.5% to$1.49 million in the first quarter of 2026 compared to$1.31 million in the first quarter of 2025 primarily due to increases in same store sales and the closure of underperforming restaurants. System-wide comparable restaurant sales increased 9.1% in the first quarter of 2026 compared to the same period of 2025, comprised of a 9.4% increase at company-owned restaurants and an 8.0% increase at franchise-owned restaurants.
Current report
Cost of sales decreased by 4.3%, in the first quarter of 2026 compared to the same period of 2025. As a percentage of restaurant revenue, cost of sales decreased to 25.4% in the first quarter of 2026 compared to 26.6% in first quarter of 2025, primarily due to 0.8% benefit from reduced food waste related to new menu items, a 0.6% benefit from menu price and a 0.2% benefit from lower discounts, partially offset by a 0.4% impact from a combination of menu investments and inflation.
Removed paragraphs (24)
Previous 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.
Previous report
•weather patterns;
Previous report
(1) Represents six company-owned restaurants sold to a franchisee in 2024.
Previous report
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 report
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 report
Three Quarters Ended September 30, 2025 Compared to Three Quarters Ended October 1, 2024
Previous report
Revenue
Previous report
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 report
Cost of Sales
Previous report
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 report
Labor Costs
Previous report
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 report
Occupancy Costs
Previous report
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 report
Other Restaurant Operating Costs
Previous report
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 report
General and Administrative Expense
Previous report
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 report
Depreciation and Amortization
Previous report
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 report
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 report
Interest Expense
Previous report
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 report
Provision for Income Taxes
Reworded paragraphs (34)
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, 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.
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 projected capital expenditures and our financial results, 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, and 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 disasters, disease outbreaks, epidemics…
Excerpt shortened here; the source contains the full paragraph.
Previous 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.
Current wording
Revenue. In the first quarter, we saw an increase in revenue as a result of an increase in comparable restaurant sales, mostly offset by permanent restaurant closures. System-wide comparable restaurant sales increased 9.1% in the first quarter of 2026 compared to the same period of 2025, comprised of a 9.4% increase at company-owned restaurants and an 8.0% increase at franchise-owned restaurants. Our comparable restaurant sales have been positive since the introduction of our new menu aided by the introduction of Delicious Duos in late July, the introduction of recent successful limited time offerings, like Chili Garlic Ramen and Steak Stroganoff, and the benefit of sales transferring from restaurants that we closed to our nearby restaurants.
Previous 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.
Current wording
Cost of Sales. Our first quarter 2026 cost of sales benefited from an increase in menu prices and reduced food waste related to new menu items, which offset the impact of inflation. 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 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.
Current wording
We have evaluated and will continue to evaluate the impact of import laws and tariffs, including the potential for any refunds, on our operations as some of our food items are imported from India, Mexico and other countries. As of March 31, 2026, 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 2026. We will continue to utilize fixed price contracts for certain key items to mitigate risk.
Previous 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.
Current wording
Restaurant Development. We did not open any new company-owned restaurants in the first quarter of 2026 and do not plan to open any company-owned restaurants in 2026. As of March 31, 2026, we had 320 company-owned restaurants and 80 franchise restaurants in 31 states.
Previous 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.
Current wording
Impairments and Certain Restaurant Closures. We impaired fixed assets related to three restaurants in the first quarter of 2026 primarily related to closure decisions on underperforming restaurants. In the first quarter of 2026, we wrote down lease-related assets for ten restaurants. We permanently closed 20 company-owned restaurants in the first quarter of 2026 and we anticipate closing an additional 10 to 15 restaurants in 2026. We continue to analyze our restaurant portfolio and expect to close certain restaurants that are either generating low or negative cash flows, approaching the expiration of their leases, in trade areas that are not as well positioned for current consumer trends and or there is a potential for a significant amount of sales transfer to nearby restaurants given strong off premise sales.
Previous wording
Seasonal factors cause our revenue to fluctuate from quarter to quarter. Our revenue per restaurant is typically lower in the first and fourth quarters, due to reduced winter and holiday traffic, and is typically higher in the second and third quarters. As a result of these factors, our quarterly operating results and restaurant sales may fluctuate significantly.
Current wording
Seasonal factors cause our revenue to fluctuate from quarter to quarter. Our revenue per restaurant is typically lower in the first and fourth quarters, due to reduced winter and holiday traffic, and is typically higher in the second and third quarters. As a result of these factors, our quarterly operating results and comparable restaurant sales may fluctuate.
Previous wording
Comparable restaurant sales refer to year-over-year sales comparisons for the comparable restaurant base. We define the comparable restaurant base to include restaurants open for at least 18 full periods. This measure highlights the performance of existing restaurants, as the impact of new restaurant openings is excluded. Changes in comparable restaurant sales are generated by changes in traffic, which we calculate as the number of entrées sold, and changes in per-person spend, calculated as sales divided by traffic. Per-person spend can be influenced by changes in menu prices and the mix and number of items sold per person. Restaurants that were temporarily closed or operating at reduced hours remained in comparable restaurant sales.
Current wording
Comparable restaurant sales refer to year-over-year sales comparisons for the comparable restaurant base. We define the comparable restaurant base to include restaurants open for at least 18 full periods. This measure highlights the performance of existing restaurants, as the impact of new restaurant openings is excluded. Changes in comparable restaurant sales are generated by changes in traffic, which we calculate as the number of entrées sold, and changes in per-person spend, calculated as sales divided by traffic. Per-person spend can be influenced by changes in menu prices and the mix and number of items sold per person.
Previous wording
•overall economic trends, particularly those that impact consumer sentiment, financial health and spending;
Current wording
•overall economic trends, particularly those related to consumer spending;
Previous wording
•trade area dynamics, including tariffs or trade restrictions; and
Current wording
•tariffs or trade restrictions; and
Previous wording
Consistent with common industry practice, we present comparable restaurant sales on a calendar-adjusted basis that aligns current year sales weeks with comparable periods in the prior year, regardless of whether they belong to the same fiscal period or not. Since opening new company-owned and franchise restaurants is a part of our long-term growth strategy and we anticipate new restaurants will be a component of our long-term revenue growth, comparable restaurant sales is only one measure of how we evaluate our performance.
Current wording
Consistent with common industry practice, we present comparable restaurant sales on a calendar-adjusted basis that aligns current year sales weeks with comparable periods in the prior year, regardless of whether they belong to the same fiscal period or not. Comparable restaurant sales is only one measure of how we evaluate our performance.
Previous wording
AUVs consist of the average annualized sales of all company-owned restaurants for a given time period. AUVs are calculated by dividing restaurant revenue by the number of operating days within each time period and multiplying by the number of operating days we have in a typical year. Based on this calculation, temporarily closed restaurants are excluded from the definition of AUV, however, restaurants with temporarily reduced operating hours are included. This measurement allows management to assess changes inconsumer traffic and per person spending patterns at our restaurants. In addition to the factors that impact comparable restaurant sales, AUVs can be further impacted by effective real estate site selection and maturity and trends within new markets.
Current wording
AUVs consist of the average annualized sales of all company-owned restaurants for a given time period. AUVs are calculated by dividing restaurant revenue by the number of operating days within each time period and multiplying by the number of operating days we have in a typical year. This measurement allows management to assess changes inconsumer traffic and per person spending patterns at our restaurants. In addition to the factors that impact comparable restaurant sales, AUVs can be further impacted by effective real estate site selection and maturity and trends within new markets.
Previous wording
We define EBITDA as net income (loss) before net interest expense, provision (benefit) for income taxes and depreciation and amortization. We define adjusted EBITDA as net income (loss) before net interest expense, provision (benefit) for income taxes, depreciation and amortization, restaurant impairments, loss on disposal of assets, net lease exit costs (benefits), (gain) loss on sale of restaurants, severance and executive transition costs and stock-based compensation.
Current wording
We define EBITDA as net income (loss) before net interest expense, provision (benefit) for income taxes and depreciation and amortization. We define adjusted EBITDA as net income (loss) before net interest expense, provision (benefit) for income taxes, depreciation and amortization, restaurant impairments, loss on disposal of assets, net lease exit costs (benefits), severance, executive transition costs, corporate transaction costs and stock-based compensation.
Previous wording
We believe that EBITDA and adjusted EBITDA provide clear pictures of our operating results by eliminating non-cash expenses and certain other expenses that may vary widely from period to period and we believe are not reflective of the underlying business performance.
Current wording
We believe that EBITDA and adjusted EBITDA provide clear pictures of our operating results by eliminating certain non-recurring and non-cash expenses that may vary widely from period to period and are not reflective of the underlying business performance.
Previous wording
Third Quarter Ended September 30, 2025 Compared to Third Quarter Ended October 1, 2024
Current wording
First Quarter Ended March 31, 2026 Compared to First Quarter Ended April 1, 2025
Previous wording
The table below presents our unaudited operating results for the third quarters of 2025 and 2024, and the related quarter-over-quarter changes.
Current wording
The table below presents our unaudited operating results for the first quarters of 2026 and 2025, and the related quarter-over-quarter changes.
Previous 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.
Current wording
Labor costs decreased by $3.0 million, or 7.6%, in the first quarter of 2026 compared to the same period of 2025. As a percentage of restaurant revenue, labor costs decreased to 30.0% in the first quarter of 2026 compared to 32.5% in the first quarter of 2025, primarily due to a 1.5% benefit from sales volume leverage, a 1.1% benefit from menu price and a 0.6% benefit from labor efficiencies, partially offset by a 0.7% impact from wage inflation.
Previous 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.
Current wording
Occupancy costs decreased by $1.1 million or 9.9% in the first quarter of 2026 compared to the first quarter of 2025, primarily due to permanent restaurant closures. As a percentage of restaurant revenue, occupancy costs decreased to 8.5% in the first quarter of 2026 compared to 9.5% in the first quarter of 2025, primarily due to sales leverage.
Previous 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.
Current wording
Other restaurant operating costs increased by $0.1 million, or 0.2%, in the first quarter of 2026 compared to the first quarter of 2025. As a percentage of restaurant revenue, other restaurant operating costs increased to 21.2% in the first quarter of 2026 compared to 21.1% in the first quarter of 2025, primarily due to a 0.4% impact from increased marketing spend and a 0.3% impact from an increase in delivery fees from higher third-party delivery sales, mostly offset by a 0.3% benefit from sales volume leverage and a 0.3% benefit from lower repairs and maintenance costs.
Previous wording
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.
Current wording
General and administrative expense decreased by $0.3 million, or 2.3%, in the first quarter of 2026 compared to the first quarter of 2025, primarily due to decreases in wages, executive transition costs, software maintenance and consulting fees partially offset by increases in incentive pay. As a percentage of revenue, general and administrative expense decreased to 10.1% in the first quarter of 2026 from 10.3% in the first quarter of 2025.
Previous 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.
Current wording
Depreciation and amortization decreased by $1.1 million, or 15.6%, in the first quarter of 2026 compared to the first quarter of 2025, primarily due to restaurant closures since the first quarter of 2025.
Previous 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.
Current wording
Restaurant impairments, closure costs and asset disposals increased $1.4 million to $2.7 million in the first quarter of 2026 compared to$1.3 million the first quarter of 2025. We recorded fixed asset impairment on three restaurants and wrote down lease related assets on ten restaurants during the first quarter of 2026. In the first quarter of 2025, we did not record any fixed asset impairment. In the first quarter of 2025, we wrote down lease related assets on one restaurant.
Previous 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.
Current wording
Interest expense, net decreased slightly in the first quarter of 2026 compared to the first quarter of 2025, primarily due to lower average interest rates in the first quarter of 2026 as compared to the first quarter of 2025, partially offset by higher debt balances in 2026.
Previous 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.
Current wording
The effective tax rate for the first quarter of 2026 and for the first quarter of 2025 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 2026, 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
We believe that we will have sufficient sources of cash to meet our liquidity needs and capital resource requirements for at least the next twelve months, through currently available cash and cash equivalents, availability under our revolving credit facility and cash flows from operations. We were in compliance with our covenants as of September 30, 2025, and expect to continue to be in compliance for the next twelve months. The required Consolidated Total Lease Adjusted Leverage Ratio (as defined in the A&R Credit Agreement) steps down from the current requirement of 5.50 to 1.00 to 5.25 to 1.00 for the fourth quarter of fiscal year 2025, and then further steps down to 5:00 to 1.00 for the first two quarters of fiscal 2026. The required Minimum Consolidated Fixed Charge Coverage Ratio (as defined in the A&R Credit Agreement) steps up from the current requirement of 1.05 to 1.00 to 1.15 to 1.00 for the fourth quarter of fiscal year 2025 and the first quarter of fiscal 2026, and then further steps up to 1.25 to 1.00 for the second quarter of fiscal 2026.
Current wording
We believe that we will have sufficient sources of cash to meet our liquidity needs and capital resource requirements for at least the next twelve months, through currently available cash and cash equivalents, availability under our revolving credit facility and cash flows from operations. We were in compliance with our covenants as of March 31, 2026, and expect to continue to be in compliance for at least the next twelve months.
Previous 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.
Current wording
Net cash provided by operating activities was $6.0 million in the first quarter of 2026 compared to net cash provided by operating activities of $4.0 million in the first quarter of 2025. The increase in operating cash flow resulted primarily from a decrease in net loss 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 $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.
Current wording
Net cash used in investing activities decreased $0.8 million to $2.1 million in the first quarter of 2026 from $2.9 million in the first quarter of 2025. This decrease was primarily due to decreased investment in new restaurants and restaurant technology in 2026.
Previous 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.
Current wording
Net cash used in financing activities was $3.8 million in the first quarter of 2026, compared to $0.9 million in the first quarter of 2025. The increase from the first quarter of 2025 was primarily due to payments on our revolving credit facility.
Previous wording
Our long-term obligations consist primarily of certain lease and other contractual commitments related to our operations and payment of our outstanding debt obligations. We are obligated under non-cancelable leases for our restaurants, administrative offices and equipment. In addition, our target for new store development will require capital each year which is expected to be funded by currently available cash and cash equivalents, cash flows from operations and our revolving credit facility. Our capital expenditure requirements are primarily dependent upon the pace of our real estate development program and resulting new restaurant openings, costs for maintenance and remodeling of our existing restaurants as well as information technology expenses and other general corporate capital expenditures.
Current wording
Our long-term obligations consist primarily of certain lease and other contractual commitments related to our operations and payment of our outstanding debt obligations. We are obligated under non-cancelable leases for our restaurants, administrative offices and equipment. In addition, when we have atarget for new store development this will require capital for such year, which is expected to be funded by currently available cash and cash equivalents, cash flows from operations and our revolving credit facility. Our capital expenditure requirements are primarily dependent upon the pace of our real estate development program and any resulting new restaurant openings, costs for maintenance and remodeling of our existing restaurants as well as information technology expenses and other general corporate capital expenditures. We currently do not plan to open any company-owned restaurants in 2026.
Previous 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.
Current wording
We estimate capital expenditures will be approximately $9.5 million to $10.5 million for fiscal year 2026, including $7.0 million to $8.0 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 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.
Current wording
Liquidity. As of March 31, 2026, we had a cash balance of $1.4 million compared to $1.3 million asof December 30, 2025. The amount available for future borrowings under our A&R Credit Agreement (defined below) was $15.2 million as of March 31, 2026. 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
On July 27, 2022, we entered intothe Amended and Restated Credit Agreement as further amended, restated, extended, supplemented, modified and otherwise in effect from time to time, the (“A&R Credit Agreement”), with each other Loan Party (as defined in the A&R Credit Agreement) party thereto, each lender from time to time party thereto, and U.S. Bank National Association, as Administrative Agent, L/C Issuer and Swing Line Lender (each as defined in the A&R Credit Agreement). The A&R Credit Agreement matures on July 27, 2027. Among other things, the A&R Credit Agreement: (i) increased the credit facility from $100.0 million to $125.0 million; (ii) eliminated the term loan and principal amortization components of the credit facility; (iii) removed the capital expenditure covenant; (iv) enhanced flexibility for certain covenants and restrictions; and (v) lowered the spread of our cost of borrowing and transitioned from LIBOR to SOFR plus a margin of 1.50% to 2.50% per annum, based upon the consolidated total lease-adjusted leverage ratio. The A&R Credit Agreement is secured by a pledge of stock of substantially all of our subsidiaries and a lien on substantially all of our and our subsidiaries’ personal property assets. The A&R Credit Agreement was subsequently amended on December 21, 2023.
Current wording
On July 27, 2022, we amended and restated our Credit Agreement by entering intothe Amended and Restated Credit Agreement as further amended, restated, extended, supplemented, modified and otherwise in effect from time to time, the (“A&R Credit Agreement”), with each other Loan Party (as defined in the A&R Credit Agreement) party thereto, each lender from time to time party thereto, and U.S. Bank National Association, as Administrative Agent, L/C Issuer and Swing Line Lender (each as defined in the A&R Credit Agreement). The A&R Credit Agreement matures on July 27, 2027. Among other things, the A&R Credit Agreement: (i) increased the credit facility from $100.0 million to $125.0 million; (ii) eliminated the term loan and principal amortization components of the credit facility; (iii) removed the Company’s capital expenditure covenant; (iv) enhanced flexibility for certain covenants and restrictions; and (v) lowered the spread of the Company’s cost of borrowing and transitioned from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) plus a margin of 1.50% to 2.50% per annum, based upon the consolidated total lease-adjusted leverage ratio. The A&R Credit Agreement is secured by a pledge of stock of substantially all of the Company’s subsidiaries and a lien on substantially all of the personal property assets of the Company and its subsidiaries. The A&R Credit Agreement was subsequently amended on December 21, 2023.
Previous wording
On October 29, 2024, we amended our A&R Credit Agreement, by entering into that certain Second Amendment to Amended and Restated Credit Agreement (the “Second Amendment”). Among the modifications, the Second Amendment: (i) increased the maximum applicable rate ranges (A) with respect to SOFR loans, from 1.75% - 3.00% to 1.75% - 3.75% per annum and (B) with respect to base rate loans, from 0.75% - 2.00% to 0.75% - 2.75% per annum, in each case as determined by the Consolidated Total Lease Adjusted Leverage Ratio (as defined in the A&R Credit Agreement), (ii) conditioned the use of the general restricted payment basket on satisfaction of a Consolidated Total Lease Adjusted Leverage Ratio (as defined in the A&R Credit Agreement) of less than or equal to 4.00 to 1.00 and a Consolidated Fixed Charge Coverage Ratio (as defined in the A&R Credit Agreement) of greater than or equal to 1.25 to 1.00, (iii) restricted entry into new lease agreements so long as the Consolidated Total Lease Adjusted Leverage Ratio (as defined in the A&R Credit Agreement) in Section 7.11(a) of the A&R Credit Agreement is greater than or equal to 4.50 to 1.00, (iv) increased the Consolidated Total Lease Adjusted Leverage Ratio (as defined in the A&R Credit Agreement) in Section 7.11(a) of the A&R Credit Agreement to be no greater than (x) 5.50 to 1.00 for the fiscal quarter ending on October 1, 2024 until and including the last day of the fiscal quarter ending September 30, 2025 and (y) stepping down to (1) 5.25 to 1.00 for the fiscal quarter ending December 30, 2025, (2) 5.00 to 1.00 for the fiscal quarters ending March 31, 2026 and June 30, 2026, (3) 4.75 to 1.00 for the fiscal quarters ending September 29, 2026 and December 29, 2026 and (4) 4.50 to 1.00 for the fiscal quarter ended March 30, 2027 and thereafter and (v) amended the Consolidated Fixed Charge Coverage Ratio (as defined in the A&R Credit Agreement) in Section 7.11(b) of the A&R Credit Agreement to be no less than (x) 1.05 to 1.00 for the fiscal quarter ending on October 1, 2024 until and including the last day of the fiscal quarter ending September 30, 2025 and (y) stepping up to (1) 1.15 to 1.00 for the fiscal quarters ending December 30, 2025 and March 31, 2026 and (2) 1.25 to 1.00 for the fiscal quarter ending June 30, 2026 and thereafter.
Current wording
On October 29, 2024, we amended our A&R Credit Agreement, by entering into that certain Second Amendment to Amended and Restated Credit Agreement (the “Second Amendment”). Among the modifications, the Second Amendment: (i) increased the maximum applicable rate ranges (A) with respect to SOFR loans, from 1.75% - 3.00% to 1.75% - 3.75% per annum and (B) with respect to base rate loans, from 0.75% - 2.00% to 0.75% - 2.75% per annum, in each case as determined by the Consolidated Total Lease Adjusted Leverage Ratio (as defined in the A&R Credit Agreement), (ii) conditioned the use of the general restricted payment basket on satisfaction of a Consolidated Total Lease Adjusted Leverage Ratio (as defined in the A&R Credit Agreement) of less than or equal to 4.00 to 1.00 and a Consolidated Fixed Charge Coverage Ratio (as defined in the A&R Credit Agreement) of greater than or equal to 1.25 to 1.00, (iii) restricted entry into new lease agreements so long as the Consolidated Total Lease Adjusted Leverage Ratio (as defined in the A&R Credit Agreement) in Section 7.11(a) of the A&R Credit Agreement is greater than or equal to 4.50 to 1.00, (iv) increased the Consolidated Total Lease Adjusted Leverage Ratio (as defined in the A&R Credit Agreement) in Section 7.11(a) of the A&R Credit Agreement to be no greater than (1) 5.00 to 1.00 for the fiscal quarters ending March 31, 2026 and June 30, 2026, (2) 4.75 to 1.00 for the fiscal quarters ending September 29, 2026 and December 29, 2026 and (3) 4.50 to 1.00 for the fiscal quarter ended March 30, 2027 and thereafter and (v) amended the Consolidated Fixed Charge Coverage Ratio (as defined in the A&R Credit Agreement) in Section 7.11(b) of the A&R Credit Agreement to be no less than (1) 1.15 to 1.00 for the fiscal quarters ending December 30, 2025 and March 31, 2026 and (2) 1.25 to 1.00 for the fiscal quarter ending June 30, 2026 and thereafter.
Previous 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.
Current wording
As of March 31, 2026, we had $106.8 million of indebtedness (excluding $1.2 million of unamortized debt issuance costs) and $3.0 million of letters of credit outstanding under our A&R Credit Agreement.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
Restaurant Impairments, Closure Costs and Asset Disposals
Previous report — wording carried elsewhere
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%).