NOODLES & Co
For the period ended Jun 30, 2026. Filed Jul 24, 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.
Jun 30, 2026 · Filed Jul 24, 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 2026-03-31; filed 2026-05-07.
0001275158-26-000037
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-24.
0001275158-26-000049
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 105 previous paragraphs and 127 current paragraphs.
74 unchanged; 30 reworded; 20 added; 1 removed; 0 previous and 3 current paragraphs rearranged.
Tables are not compared: 6 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 (20)
Current report
General and administrative expense increased by $1.5 million, or 11.7%, in the second quarter of 2026 compared to the second quarter of 2025, primarily due to increases in incentive-based compensation, partially offset by decreases in wages and professional fees. As a percentage of revenue, general and administrative expense increased to 10.9% in the second quarter of 2026 from 9.8% in the second quarter of 2025.
Current report
Two Quarters Ended June 30, 2026 Compared to Two Quarters Ended July 1, 2025
Current report
Revenue
Current report
Total revenue increased by $0.6 million, or 0.2%, in the first two quarters of 2026 to $250.8 million compared to $250.2 million in the same period of 2025. The increase was primarily due to increases in company comparable restaurant sales partially offset by a decline in revenue related to 52 permanent company-owned closures and a decline in franchise revenue from 13 franchise restaurant closures over the last twelve months. Comparable restaurant sales increased 9.7% system-wide in the first two quarters of 2026 compared to the first two quarters of 2025, comprised of a 10.4% increase at company-owned restaurants and a 6.7% increase at franchise-owned restaurants.
Current report
Cost of Sales
Current report
Cost of sales decreased by $3.2 million, or 5.0%, in the first two quarters of 2026 compared to the same period of 2025. As a percentage of restaurant revenue, cost of sales decreasedto 25.1% in the first two quarters of 2026 compared to 26.6% in the first two quarters of 2025, primarily due to a 0.7% benefit from lower food waste and a 0.6% benefit from menu price.
Current report
Labor Costs
Current report
Labor costs decreased by $5.5 million, or 7.0%, in the first two quarters of 2026 compared to the same period of 2025. As a percentage of restaurant revenue, labor costs decreased to 29.7% in the first two quarters of 2026 compared to 32.1% in the first two quarters of 2025, primarily due to a 1.6% benefit from sales leverage, a 0.8% benefit from menu price and a 0.3% benefit from labor efficiencies, partially offset by 0.6% of wage inflation.
Current report
Occupancy Costs
Current report
Occupancy costs decreasedby $2.4 million, or 10.3%, in the first two quarters of 2026 compared to the first two quarters of 2025, primarily due to permanent restaurant closures. As a percentage of restaurant revenue, occupancy costs decreased to 8.3% in the first two quarters of 2026 compared to 9.3% in the first two quarters of 2025, primarily due to sales leverage.
Current report
Other Restaurant Operating Costs
Current report
Other restaurant operating costs increased by $1.0 million, or 2.0%, in the first two quarters of 2026 compared to the first two quarters of 2025. As a percentage of restaurant revenue, other restaurant operating costs increased to 20.7% in the first two quarters of 2026 compared to 20.4% in the first two quarters of 2025, primarily due to 0.6% impact from higher delivery fees driven by higher delivery sales, partially offset by 0.4% of sales leverage.
Current report
General and Administrative Expense
Current report
General and administrative expense increased by $1.2 million, or 4.6%, in the first two quarters of 2026 compared to the first two quarters of 2025, primarily due to higher incentive-based compensation, partially offset by lower wages and professional fees. As a percentage of revenue, general and administrative expense increased to 10.5% in the first two quarters of 2026 from 10.1% in the first two quarters of 2025.
Current report
Depreciation and Amortization
Current report
Depreciation and amortization decreased by $2.3 million, or 16.5%, in the first two quarters of 2026 compared to the first two quarters of 2025, primarily due to restaurant closures.
Current report
Restaurant impairments, closure costs and asset disposals decreased $6.7 million to $8.3 million in the first two quarters of 2026 compared to the first two quarters of 2025. We recorded fixed asset impairment on 11 restaurants and wrote down lease related assets on 16 restaurants in the first two quarters of 2026. We recorded fixed asset impairment on 15 restaurants and wrote down lease related assets on 11 restaurants in the first two quarters of 2025.
Current report
Interest Expense
Current report
Interest expense decreased by $0.4 million in the first two quarters of 2026 compared to the same period of 2025. The decrease was primarily due to lower average interest rates in the first two quarters of 2026 compared to the first two quarters of 2025, partially offset by higher average debt balances in 2026.
Current report
Provision for Income Taxes
Removed paragraphs (1)
Previous report
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.
Reworded paragraphs (30)
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 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.
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; our ability to repay, refinance or obtain new financing on acceptable terms, if at all, and comply with our covenants under the A&R Credit Agreement, which matures on July 27, 2027; 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,…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
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 wording
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 that matures on July 27, 2027, refranchising or sale of all or part of the business, and/or other strategic or financial transactions. Such review remains in process.
Previous 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.
Current wording
Revenue. In the second quarter, we saw an increase in revenue as a result of an increase in comparable restaurant sales, partially offset by permanent restaurant closures. System-wide comparable restaurant sales increased 10.3% in the second quarter of 2026 compared to the same period of 2025, comprised of an 11.4% increase at company-owned restaurants and a 5.5% increase at franchise-owned restaurants. Our comparable restaurant sales continue to be positively aided by menu innovation including the introduction of Delicious Duos and the recent successful limited time offerings, like Chili Garlic Ramen, Steak Stroganoff, Indonesian Peanut Chicken Sauté and Chicken Artichoke & Asparagus Rigatoni, and the benefit of sales transferring from restaurants that we closed to our nearby restaurants.
Previous 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.
Current wording
Cost of Sales. Our second 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
Labor Costs. Similar to much of the restaurant industry, our base labor costs have risen in recent years. We have been able to partially mitigate the impact of these market factors through a continued focus on maximizing efficiencies of labor hour usage per restaurant and wage inflation has stabilized to less than 3%.
Current wording
Labor Costs. Similar to much of the restaurant industry, our base labor costs have risen in recent years. We have been able to partially mitigate the impact of these market factors through a continued focus on maximizing efficiencies of labor hour usage per restaurant and wage inflation has stabilized to less than 3%. As a percentage of restaurant sales, labor costs continue to benefit from sales leverage including the benefit of sales transferring from restaurants that have closed to our nearby restaurants.
Previous 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.
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. As a percentage of restaurant sales, other restaurant operating costs continue to benefit from sales leverage including the benefit of sales transferring from restaurants that have closed to our nearby restaurants.
Previous 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.
Current wording
Restaurant Development. We did not open any new company-owned restaurants in the first two quarters of 2026 and do not plan to open any company-owned restaurants in 2026. As of June 30, 2026, we had 318 company-owned restaurants and 78 franchise restaurants in 30 states.
Previous 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.
Current wording
Impairments and Certain Restaurant Closures. We impaired fixed assets related to 11 restaurants in the first two quarters of 2026 primarily related to closure decisions on underperforming restaurants. In the first two quarters of 2026, we wrote down lease-related assets for sixteen restaurants. We permanently closed 22 company-owned restaurants in the first two quarters of 2026 and we anticipate closing an additional 8 to 13 restaurants in 2026, of which six were closed subsequent to the end of the second quarter. 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
First Quarter Ended March 31, 2026 Compared to First Quarter Ended April 1, 2025
Current wording
Second Quarter Ended June 30, 2026 Compared to Second Quarter Ended July 1, 2025
Previous wording
The table below presents our unaudited operating results for the first quarters of 2026 and 2025, and the related quarter-over-quarter changes.
Current wording
The table below presents our unaudited operating results for the second quarters of 2026 and 2025, and the related quarter-over-quarter changes.
Previous wording
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 wording
Total revenue increased by $0.6 million, or 0.5%, to $127.0 million in the second quarter of 2026 compared to $126.4 million in the second quarter of 2025. During the second quarter of 2026, significant increases in comparable restaurant sales were partially offset by a decline in revenue related to 52 permanent company-owned closures and a decline in franchise revenue from 13 franchise restaurant closures over the last twelve months. Average unit volumes increased 15.9% to $1.57 million in the second quarter of 2026 compared to $1.35 million in the second quarter of 2025 primarily due to increases in same store sales and the closure of underperforming restaurants. System-wide comparable restaurant sales increased 10.3% in the second quarter of 2026 compared to the same period of 2025, comprised of an 11.4% increase at company-owned restaurants and a 5.5% increase at franchise-owned restaurants.
Previous wording
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.
Current wording
Cost of sales decreased by 5.6%, in the second quarter of 2026 compared to the same period of 2025. As a percentage of restaurant revenue, cost of sales decreased to 24.9% in the second quarter of 2026 compared to 26.5% in the second quarter of 2025, primarily due to a 0.6% benefit from menu price, a 0.5% benefit from menu mix shifts and a 0.4% benefit from reduced food waste, partially offset by a 0.2% impact from inflation.
Previous 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.
Current wording
Labor costs decreased by $2.5 million, or 6.5%, in the second quarter of 2026 compared to the same period of 2025. As a percentage of restaurant revenue, labor costs decreased to 29.4% in the second quarter of 2026 compared to 31.7% in the second quarter of 2025, primarily due to a 1.7% benefit from sales volume leverage, a 0.6% benefit from menu price and a 0.3% benefit from labor efficiencies, partially offset by a 0.4% impact from wage inflation.
Previous 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.
Current wording
Occupancy costs decreased by $1.2 million or 10.8% in the second quarter of 2026 compared to the second quarter of 2025, primarily due to permanent restaurant closures. As a percentage of restaurant revenue, occupancy costs decreased to 8.1% in the second quarter of 2026 compared to 9.2% in the second quarter of 2025, primarily due to sales leverage.
Previous 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.
Current wording
Other restaurant operating costs increased by $1.0 million, or 3.9%, in the second quarter of 2026 compared to the second quarter of 2025. As a percentage of restaurant revenue, other restaurant operating costs increased to 20.3% in the second quarter of 2026 compared to 19.7% in the second quarter of 2025, primarily due to a 0.9% impact from an increase in delivery fees from higher third-party delivery sales, partially offset by a 0.2% impact from decreased marketing spend.
Previous 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.
Current wording
Depreciation and amortization decreased by $1.2 million, or 17.4%, in the second quarter of 2026 compared to the second quarter of 2025, primarily due to restaurant closures since the second quarter of 2025.
Previous 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.
Current wording
Restaurant impairments, closure costs and asset disposals decreased $8.1 million to $5.5 million in the second quarter of 2026 compared to$13.7 million the second quarter of 2025. We recorded fixed asset impairment on eight restaurants and wrote down lease related assets on six restaurants during the second quarter of 2026. In the second quarter of 2025, we recorded fixed asset impairment on 15 restaurants and we wrote down lease related assets on ten restaurants.
Previous 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.
Current wording
Interest expense, net decreased $0.4 million in the second quarter of 2026 compared to the second quarter of 2025, primarily due to lower average interest rates in the second quarter of 2026 as compared to the second quarter of 2025, partially offset by slightly higher average debt balances in 2026.
Previous 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.
Current wording
The effective tax rate for the second quarter of 2026 and for the second 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 have historically used cash and our revolving credit facility to fund capital expenditures for new restaurant openings, reinvest in our existing restaurants, invest in infrastructure and information technology and maintain working capital. Our working capital position benefits from the fact that we generally collect cash from sales to customers the same day, or in the case of credit or debit card transactions, within several days of the related sale, and we typically have up to 30 days to pay our vendors.
Current wording
We have historically used cash and our revolving credit facility under our A&R Credit Agreement to fund capital expenditures for new restaurant openings, reinvest in our existing restaurants, invest in infrastructure and information technology and maintain working capital. Our working capital position benefits from the fact that we generally collect cash from sales to customers the same day, or in the case of credit or debit card transactions, within several days of the related sale, and we typically have up to 30 days to pay our vendors.
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 March 31, 2026, and expect to continue to be in compliance for at least the next twelve months.
Current wording
We believe that we will have sufficient sources of cash to meet our liquidity needs and capital resource requirements for twelve months from the date of this report, 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 June 30, 2026, and expect to continue to be in compliance for twelve months from the date of this report. The Company will require new financing or other sources of capital to repay or an agreement with its current lenders to extend or refinance the amounts outstanding under the A&R Credit Agreement on or before maturity on July 27, 2027. The Company continues to review its options with respect to such debt obligation in connection with its review of strategic alternatives; however, there is no assurance that the Company will obtain such financing, other sources of capital, an extension or refinancing on or before the maturity date.
Previous 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.
Current wording
Net cash provided by operating activities was $9.3 million in the first two quarters of 2026 compared to net cash provided by operating activities of $3.2 million in the first two quarters 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 $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.
Current wording
Net cash used in investing activities decreased $2.7 million to $3.6 million in the first two quarters of 2026 from $6.3 million in the first two quarters of 2025. This decrease was primarily due to the absence of capital expenditures for new restaurant development in 2026 and lower spending on certain technology projects.
Previous 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.
Current wording
Net cash used in financing activities was $5.7 million in the first two quarters of 2026, compared to net cash provided by financing of $4.3 million in the first two quarters of 2025. The change from the first two quarters of 2025 was primarily due to payments on our revolving credit facility in 2026 versus borrowings on our revolving credit facility during 2025.
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, 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.
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, including our debt under our A&R Credit Agreement, which matures on July 27, 2027. 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 $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.
Current wording
We estimate capital expenditures will be approximately $9.0 million to $10.0 million for fiscal year 2026, 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.
Previous 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.
Current wording
Liquidity. As of June 30, 2026 and December 30, 2025, we had a cash balance of $1.3 million. The amount available for future borrowings under our A&R Credit Agreement (defined below) was $16.6 million as of June 30, 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 under our A&R Credit Agreement will be sufficient to fund our cash requirements for working capital needs and capital improvements and maintenance of existing restaurants for twelve months from the date of this report. The Company will require new financing or other sources of capital to repay or an agreement with its current lenders to extend or refinance the amounts outstanding under the A&R Credit Agreement on or before maturity on July 27, 2027. The Company continues to review its options with respect to such debt obligation in connection with its review of strategic alternatives; however, there is no assurance that the Company will obtain such financing, other sources of capital, an extension or refinancing on or before the maturity date.
Previous 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.
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 and 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.
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 (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.
Current wording
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 was subsequently amended on December 21, 2023 and on October 29, 2024, the Company entered 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 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.
Current wording
As of June 30, 2026, we had $105.4 million of indebtedness under the credit facility (excluding $0.9 million of unamortized debt issuance costs) and $3.0 million of letters of credit outstanding under our A&R Credit Agreement.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
The table below presents our unaudited operating results for the first two quarters of 2026 and 2025, and the related period-over-period changes.
Current report — wording carried from elsewhere
Restaurant Impairments, Closure Costs and Asset Disposals
Current report — wording carried from elsewhere
The effective tax rate for the first two quarters of 2026 and for the first two quarters of 2025 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 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. We estimate the annual effective tax rate for 2026 to be between (1.0%) and (0%).