Once-Popular Pasta Chain on a Downward Spiral as Stock Price Sinks
A once-popular restaurant chain is on the brink of disaster after its stock price dropped to under $1 for 30 consecutive business days, putting it at risk of being delisted from the Nasdaq Global Select Market.
Noodles & Company, a fast casual pasta chain with more than 450 locations across 26 states, reported a 3.3% drop in sales, according to Q3 earnings data. The chain had a net loss of $6.8 million compared to a net income of $0.7 million in Q3 2023, and attempts to clean house in 2024 were not successful. The company has until June 23 to reach at least $1 per share or risk shutting down.
"The Company intends to monitor closely the closing bid price of its common stock and to consider all of the options for regaining compliance with Nasdaq's Listing Rule 5450(a)(1), including by proposing a reverse stock split for stockholder approval, if necessary," Noodles & Company said in the filing.
The company is hopeful it can turn things around with a focus on new menu items and the Noodles app. "In the third quarter, we continued to face a challenging consumer environment with a significant level of industry-wide promotional and discount activity coupled with a marked and unexpected decline in our third-party delivery sales," says Drew Madsen, Chief Executive Officer of Noodles & Company as of March 2024.
Madsen says the company plans a multi-pronged approach for improving sales, including "fortifying our financial position by reducing capital expenditures, slowing new unit growth, researching lower cost restaurant prototypes and capturing increased efficiencies across the business. We believe that focusing on these priorities will allow the brand to resonate with our guests and lead to sustainable long-term, top-line momentum and profitable growth."
Noodles & Company is planning to close 15-20 restaurant locations in 2025, the chain announced. "We believe closing underperforming restaurants will allow us to focus more on our restaurants with the most growth potential and provide an increase in company earnings and cash flow post closure," Madsen says. This isn't the first time the company has downsized, having previously shut down 55 locations in 2017.
Customers still seem happy with the food and service at Noodle & Company as a whole, judging by the Google reviews. "I unfortunately ordered my meal and its toppings incorrectly… when I came in to get my correct sauces, the manager Morgan and the customer service person at the counter Reynaldo gave me a reorder of the ENTIRE meal! They definitely made not only MY MISTAKE corrected, but they went above and beyond soI could eat a warm meal the way I intended to order it! I can't say thank you enough for explaining to me how to correctly order my food so it comes out the way I like it! 10 stars!" said a customer in the Middleton, Wisconsin location.
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