Noodles & Company (NDLS): Business Model Canvas [Dec-2025 Updated]

You're looking at a company in the middle of a major pivot, trying to balance a challenging fast-casual market with a strategic overhaul. Honestly, digging into the Business Model Canvas for Noodles & Company right now shows a clear playbook: they're closing 31-34 underperforming spots this year while pushing digital sales, which grew 12% in Q3 2025. We need to see if their focus on operational execution, aiming for a 12.3%-12.7% restaurant contribution margin, will hit their projected 2025 revenue guidance of up to $495 million. Below, I break down exactly how their key partnerships, resources, and cost structure are aligned with this high-stakes strategy.

Noodles & Company (NDLS) - Canvas Business Model: Key Partnerships

You're looking at the critical external relationships Noodles & Company relies on to execute its strategy as of late 2025. These aren't just vendors; they're integral to expansion, digital reach, and strategic direction.

The franchise model remains a key component for growth and cost sharing. For the third quarter ended September 30, 2025, comparable restaurant sales growth at franchise restaurants was 4.3%. Looking forward, the full-year 2025 guidance anticipates the closure of between 7 to 8 franchise restaurants as part of the ongoing optimization effort. At the end of Q3 2025, Noodles & Company operated approximately 450 restaurants nationwide.

Digital channel partners are driving significant top-line activity. Digital sales, specifically through third-party delivery channels, saw an increase of 12% during the third quarter of 2025. This channel helps with brand accessibility, though it also contributes to rising operating costs, as other restaurant operating costs increased by 40 basis points, driven in part by higher third-party delivery fees.

The partnership with Food Network is a clear marketing lever. This collaboration, announced on June 10, 2025, involved curating four menu items as "Food Network Favorites," including the Buffalo Chicken Ranch Mac & Cheese and Basil Pesto Cavatappi. This leverages the network's authority in flavor to drive guest interest in the reinvented menu.

The company's most significant recent partnership is the engagement of Piper Sandler as its financial advisor. This relationship began when the Board of Directors initiated a review of strategic alternatives on September 3, 2025. The scope of this review includes options like refinancing existing debt, refranchising, or the sale of all or part of the business. The company has not set a definitive timetable for this process.

Key food and beverage vendors are essential for supply chain stability and cost management, though specific vendor rebate amounts aren't public. The menu reinvention, which involved two-thirds of the menu being new or improved as of March 2025, required deep collaboration with suppliers to integrate elevated ingredients. The company's Restaurant contribution margin for Q3 2025 was 13.2%.

Here's a quick look at the scale and recent performance tied to these key external relationships:

You should note the following operational details related to these partnerships:

• Total system-wide comparable sales growth was 4.0% in Q3 2025.
• Company-owned restaurants saw a 4.0% comparable sales increase in Q3 2025.
• Average Unit Volumes for company-owned restaurants increased 5.4% to $1.34 million in Q3 2025.
• The company incurred a $5.3 million pre-tax restaurant impairment charge in Q3 2025, related to planned closures.
• The Delicious Duos platform, a value proposition, is mixing around 4% to 5% of sales.

Finance: draft 13-week cash view by Friday.

Noodles & Company (NDLS) - Canvas Business Model: Key Activities

The Key Activities for Noodles & Company focus heavily on menu evolution, portfolio streamlining, operational efficiency, and digital channel growth as of late 2025.

Menu innovation, including the new menu rollout and Delicious Duos value platform.

The launch of the Delicious Duos value platform on July 30, 2025, was a direct response to consumer focus on value. This offering pairs a small entree, a protein, and a side, starting at just $9.95. For chef-curated options with protein, the price point is $10.95. By the third quarter of 2025, Delicious Duos was contributing a steady 4% to 5% of sales. The overall menu evolution, which included the March 12 rollout, contributed to system-wide comparable restaurant sales increasing 4.0% in the third quarter of 2025. Momentum continued, with October comparable restaurant sales increasing 8%. The initial menu rollout in the second quarter of 2025 incurred a $1.7 million one-time cost, and COGS saw a 180 basis point increase year-over-year in Q2 2025, partly due to new menu offerings.

Strategic portfolio optimization, closing 31-34 underperforming company restaurants in 2025.

Noodles & Company is actively closing underperforming units to strengthen the overall portfolio. The company is on track to close between 31 to 34 company-owned restaurants by the end of 2025, alongside closing 7 to 8 franchise restaurants. In the third quarter of 2025 alone, 15 company-owned and three franchise restaurants were closed. This activity is expected to positively impact 2026 restaurant level contribution by over $2 million. The company estimates retaining approximately 30% of sales from these closures through transfer to neighboring units. As of September 30, 2025, the total restaurant count stood at 435 locations, down from 471 in the third quarter of 2024.

The portfolio optimization is detailed below:

Operational execution to improve restaurant contribution margin to 12.3%-12.7% for 2025.

The focus on operational discipline and portfolio optimization is directly aimed at margin improvement. The full-year 2025 guidance for Restaurant level contribution margins is set between 12.3% to 12.7%. This compares to the 13.2% achieved in the third quarter of 2025 and the 12.8% achieved in the second quarter of 2025. The third quarter margin improvement of 40 basis points was partly attributed to the restaurant closure actions.

Digital platform management and targeted marketing for NoodlesREWARDS.

Digital channels are a critical growth engine. In the third quarter of 2025, digital and third-party delivery channels increased 12% year-over-year. The Noodles Reward program received recognition as one of the Best Loyalty Programs by Newsweek in 2025.

Executing a cost savings plan targeting over $5 million in 2025 P&L savings.

Cost control is reflected in the updated full-year 2025 guidance for overhead expenses. General and administrative expenses are expected to be between $48 million to $49 million for the full year 2025. This guidance includes stock-based compensation expense of approximately $3.3 million.

• System-wide Comparable Restaurant Sales Growth (FY 2025 Guidance): 3.6% to 4.2%.
• Total Revenue (FY 2025 Guidance): $492 million to $495 million.
• Q3 2025 Net Loss: $9.2 million.
• Q3 2025 Adjusted EBITDA: $6.5 million.

Noodles & Company (NDLS) - Canvas Business Model: Key Resources

You're looking at the tangible and intangible assets Noodles & Company relies on to deliver its value proposition. These are the foundational elements that make the business run, from the physical locations to the intellectual property and the cash in the bank.

The physical footprint is substantial, though actively being optimized. As of Q3 2025, the system comprised 435 locations. This network is a mix of corporate control and partnership. Specifically, the count breaks down to 349 company-owned and 86 franchise locations as of the end of the third quarter of 2025. This is down from the approximately 458 locations reported in mid-2022. Still, the brand states it is made up of approximately 450 restaurants.

The core offering rests on proprietary recipes and the flexibility to meet individual diner needs. The success of this is reflected in the operational performance metrics, such as the average unit volumes (AUVs) for company-owned restaurants, which rose by 5.4% to $1.34 million in Q3 2025. The menu innovation, like the Delicious Duos platform, is a key driver here. Also, the digital infrastructure is a growing asset; digital sales, which include third-party delivery, saw an increase of approximately 12% in the third quarter of 2025. The company's technology stack includes about 8 technology products and services.

Human capital is critical for operations excellence. While historical data from late 2023 showed 8,100 employees, the latest estimate from October 2025 places the total team size at approximately 10K employees. This aligns with the Q3 2025 statement mentioning approximately 7,000 passionate team members. These team members execute the operations excellence required for consistent service.

Financial capital provides the necessary runway and operational flexibility. As of September 30, 2025, Noodles & Company reported $4.7 million in available cash and cash equivalents. The balance sheet carried $109.8 million in outstanding debt as of that same date. To support liquidity, the amount available for future borrowings under the revolving credit facility was $12.2 million. Management guided for full-year 2025 net interest expense to be approximately $11 million. The trailing twelve-month revenue as of September 30, 2025, stood at $494 million.

Here's a quick view of the key operational and financial anchors:

The NoodlesREWARDS program shows engagement is increasing, which is a key intangible asset supporting customer retention alongside the digital sales growth. The company is actively managing its physical assets, planning for 31 to 34 company-owned closures by the end of 2025.

Finance: review the impact of the $109.8 million debt load against the $4.7 million cash balance in the next liquidity forecast.

Noodles & Company (NDLS) - Canvas Business Model: Value Propositions

You're looking at how Noodles & Company positions its food to win over customers in this competitive late-2025 environment. The core value is delivering global flavor variety with a focus on modern value, which is a direct response to what diners are telling them.

Globally-Inspired Noodle and Pasta Dishes, Offering a World of Flavor in One Bowl

Noodles & Company built its brand on the idea that one kitchen can serve Italian pasta, American comfort food, and Asian noodle bowls. This variety is a key differentiator. For instance, you can get the classic Creamy Cheddar Mac & Cheese alongside the sweet and savory Japanese Pan Noodles or the zesty Pesto Cavatappi. As of their March 2025 menu reinvention, two-thirds of the menu was new or improved, showing a commitment to keeping that global kitchen fresh.

The menu structure supports this global reach:

• Italian-American classics like Spaghetti & Meatballs.
• Asian-inspired bowls such as Pad Thai and Spicy Korean Beef Noodles.
• American comfort dishes like the Pulled Pork BBQ Mac & Cheese.

Strong Value Proposition Through the Delicious Duos Platform Starting at $9.95

Honestly, the consumer focus on value is intense right now. A recent survey commissioned by Noodles & Company showed that over 75% of diners prioritize price and value when eating out. To meet this, they launched Delicious Duos, which pairs a small entrée with a protein and a side, starting at just $9.95. If you opt for one of the chef-curated options with protein included, the price point moves to $10.95. This move directly addresses the need for affordability, especially since a regular-sized bowl previously cost between $10 and $17. The Delicious Duos platform offers over 15 pasta options to mix and match.

Here's a quick look at the Delicious Duos structure:

Freshness and Quality by Sautéing Each Bowl to Order

You're paying for food that isn't sitting under a heat lamp. Noodles & Company emphasizes that each bowl is sautéed to order, which speaks to the made-to-order nature of their fast-casual service. This process is part of the elevated ingredient strategy, which saw two-thirds of the menu updated or improved as of March 2025. The goal is to maximize sauce coverage and layer flavors using premium additions like roasted cherry tomatoes and pickled red onions.

Menu Variety Catering to Dietary Needs

The menu is designed to be inclusive, which helps capture a wider customer base. You can eat as healthy or as indulgently as you want. For those with specific needs, the menu clearly marks options for different diets.

• Catering to vegetarian and vegan preferences.
• Clearly marked gluten-sensitive options available.
• Lighter choices like Zoodle-based dishes are offered.

Quick, Convenient Fast-Casual Dining Experience for Dine-In and Takeout

The operational model supports quick service. Across multiple visits, orders were consistently delivered within 5-10 minutes, even when the restaurant was busy. This efficiency is crucial for the lunch crowd; in fact, nearly half of surveyed diners preferred smaller entrees with sides, suggesting a need for quicker, lighter meals. As of the third quarter of 2025, Noodles & Company operated more than 400 restaurants. The system-wide comparable restaurant sales growth was 4.0% in Q3 2025 compared to Q3 2024, indicating that the core offering is still driving traffic, with average unit volumes reaching $1.34 million in Q3 2025.

Noodles & Company (NDLS) - Canvas Business Model: Customer Relationships

You're looking at how Noodles & Company keeps its guests coming back, especially in a value-conscious market. The focus is definitely on making the relationship feel both personal and easy, even when you're just grabbing a quick bite.

The NoodlesREWARDS loyalty program is central to this. Management noted seeing increased enrollment and engagement in the program during the third quarter of 2025. This program uses tiers to reward frequency, offering perks like a FREE Regular Entrée for your birthday for Signature tier members, or a FREE small entrée reward for Premier members. The 30th-anniversary promotion was specifically used to drive this engagement. While older data showed 4.8 million loyalty members accounting for 25% of all transactions, the recent focus is clearly on leveraging this base for targeted interactions.

The transactional service model is heavily leaning into digital channels. In the third quarter of 2025, company comp traffic actually decreased by 0.6%, but the average check grew by 4.6%, which included 2% in effective pricing. This suggests that while fewer people might be walking in, those who do are spending more, or the digital mix is shifting the average. Digital sales remain a critical engine, with third-party delivery increasing by 12% in Q3 2025. This aligns with the older figure where 55% of all orders were placed digitally.

Targeted promotions are used to create immediate frequency spikes. The 30th-anniversary offer in October 2025 is a prime example. From October 4 to 6, 2025, seven classic dishes were offered for $4.95 each, a price matching 1995 levels. This specific deal was available exclusively to Noodles Rewards members. Furthermore, new members signing up during this period received a FREE entrée after their first purchase of $10 or more. This type of targeted, high-value offer is designed to pull customers into the loyalty ecosystem and drive immediate visits.

Here's a snapshot of the operational and promotional metrics influencing the customer experience as of late 2025:

The company is clearly using its digital platform and loyalty incentives to manage traffic and check size, which is reflected in the 4.6% average check increase against a -0.6% dip in comp traffic for Q3 2025. The operational goal is to translate this engagement into better unit-level economics, evidenced by the 13.2% restaurant contribution margin in Q3 2025.

The structure of the loyalty program itself involves three tiers, where points earned dictate status, and rewards can start being redeemed as low as 150 points.

• Signature Tier Birthday Reward: FREE regular entrée
• Premier Tier Birthday Reward: FREE small entrée reward

Finance: draft 13-week cash view by Friday.

Noodles & Company (NDLS) - Canvas Business Model: Channels

You're looking at how Noodles & Company gets its globally inspired food into the hands of its customers as of late 2025. The channel strategy is a mix of traditional brick-and-mortar presence and a growing reliance on digital ordering.

Company-owned physical restaurant locations.

As of the data available around May 2025, Noodles & Company operated 380 company-owned restaurants across 31 states. The company is actively managing this footprint, planning for a net reduction by year-end 2025. The full-year 2025 guidance projects the closure of 31 to 34 company-owned restaurants, offset by the planned opening of two new company-owned sites. Through October 2025, the company had already closed 29 company-owned restaurants. These closures target underperforming units, with management expecting to retain approximately 30% of sales through transfer to neighboring units post-closure. Company-owned restaurants saw comparable sales increase by 4.0% in the third quarter of 2025, and their Average Unit Volumes (AUVs) reached $1.34 million in Q3 2025. For the full year 2025, the company projects total revenue between $492 million and $495 million, which is built upon the performance of these physical locations.

Franchise-owned physical restaurant locations.

The franchise segment provides a smaller, but growing, part of the physical presence. In May 2025, there were 89 franchised locations. The 2025 plan included closing four franchise restaurants, with a revised full-year guidance projecting closures of 7 to 8 franchise restaurants. Franchise restaurants posted a comparable sales increase of 4.3% in the third quarter of 2025. The initial investment to start a new Noodles & Company franchise ranged from $669,000 to $1,412,000 based on 2025 estimates.

Digital channels via the Noodles & Company app and website.

Digital ordering is a key focus area for driving traffic and engagement. As of early 2025, fifty-five percent (55%) of Noodles & Company's orders were placed digitally. The loyalty program is deeply integrated, boasting 5 million members who account for 25% of all transactions. These loyalty members generate two times the annual revenue of non-members. While the most recent specific digital sales growth figure available is from Q4 2024, showing a 5.6% increase for company-owned digital sales, the overall strategy is clearly centered on these owned platforms to capture higher-margin sales.

Third-party delivery aggregators like DoorDash and Uber Eats.

Third-party delivery is explicitly called out as a driver of recent sales momentum. In the third quarter of 2025, year-over-year growth in the third-party delivery channel increased by 12%. This channel is noted as strengthening both awareness and accessibility for the brand. While specific commission rates are not public, the reliance on these aggregators is significant enough to be highlighted as a key factor in comparable sales performance, even as the company focuses on its owned digital channels.

• Third-party delivery sales growth (Q3 2025 YoY): 12% increase.
• Digital sales are a critical growth engine, aligning with overall sales trends.
• Comparable restaurant sales growth in October 2025 accelerated to 8%, partly driven by third-party delivery momentum.

Finance: review the Q4 2025 digital sales penetration against the 55% digital order rate reported earlier in the year by Friday.

Noodles & Company (NDLS) - Canvas Business Model: Customer Segments

You're looking at the core groups Noodles & Company is targeting as of late 2025, based on their recent performance and strategic focus. It's about balancing value, digital ease, and menu breadth.

Value-conscious fast-casual diners seeking affordable, globally-inspired meals.

This group is clearly responding to the value focus. For the full year 2025, Noodles & Company is guiding total revenue between $492 million to $495 million. In the third quarter of 2025, system-wide comparable restaurant sales grew 4.0%, and that momentum accelerated to an 8% increase in October 2025. The average check size in Q3 2025 was up 4.6%, suggesting customers are adding items or trading up slightly, but the success of the 'Delicious Duos' platform points to a continued focus on value delivery. Franchise restaurants are seeing an average unit revenue (AUV) of about $1,198,000 per year.

Here's a quick look at some key operational numbers reflecting the environment these diners operate in:

Digital-native consumers prioritizing convenience and delivery options.

The focus on digital is clear, as third-party delivery sales increased by 12% in the third quarter of 2025. This segment is highly engaged with the loyalty program, which captures 25% of all transactions. Honestly, members of that program generate two times the annual revenue of non-members. While older data, the chain previously reported that 55% of all orders were placed digitally.

• Loyalty Program Member Share of Transactions: 25%
• Monthly New Loyalty Member Adds (Historical Rate): Approximately 50,000
• Third-Party Delivery Growth (Q3 2025): 12%

Families looking for a variety of approachable, customizable comfort food.

Noodles & Company keeps the family-friendly, comfort-food aspect central. The 'Creamy Cheddar Mac & Cheese' is cited as the 'undisputed king of the menu' and the 'ultimate comfort food.' The kids' menu supports this directly with entrée options like Buttery Parmesan Noodles and Creamy Cheddar Mac & Cheese. The menu structure, blending American, Italian, and Asian flavors, helps solve the 'what should we eat?' dilemma for groups with varied tastes.

Diners seeking specific dietary options (e.g., plant-based, gluten-sensitive).

The menu evolution directly addresses this. In 2025, Penne was removed and replaced with rigatoni in the menu structure. For those needing specific accommodations, the menu clearly marks vegetarian items, and there are dedicated noodle options for gluten-sensitive diners. Specifically, gluten-free pippette shells are listed as an available noodle choice. To be fair, as of 2025, only one item is fully vegan without modification, but customization is key.

Finance: draft 13-week cash view by Friday.

Noodles & Company (NDLS) - Canvas Business Model: Cost Structure

You're looking at the nuts and bolts of what it costs Noodles & Company to keep the doors open and the noodles cooking as of late 2025. The cost structure is where the rubber meets the road, and we see some clear pressure points, especially in the third quarter.

Cost of Sales (COGS)

Cost of Sales, or COGS, is a major lever. For the third quarter of 2025, COGS clocked in at 25.7% of sales. This was up 20 basis points from the prior year, and management pointed directly to higher food costs stemming from those new menu offerings and general inflation. To be fair, they managed to partially offset this through menu pricing and vendor rebates, but the pressure is definitely there.

Labor Costs

Labor is the other big piece of the direct cost pie. In Q3 2025, labor costs represented 31.4% of sales. That's actually an improvement, down 60 basis points from the prior year, which is good news given that you saw about a 2.5% hourly wage inflation during that same period. Here's the quick math: managing that inflation while improving the percentage shows some operational discipline, even if the absolute wage bill is rising.

Restaurant Operating Costs and Restaurant Closures

Beyond the direct costs, other restaurant operating costs rose by 40 basis points to 20.5% of sales in Q3 2025. This was mainly driven by higher third-party delivery fees, which is a channel that grew 12% year-over-year, plus increased marketing expenses. To improve the overall structure, Noodles & Company closed 15 company-owned and 3 franchise restaurants in Q3 2025, which is part of a strategy to shed underperforming locations and transfer sales to nearby profitable ones.

Here is a snapshot of key Q3 2025 cost metrics:

Fixed and Overhead Costs

When you look at the overhead, the full-year 2025 projections give you the bigger picture for fixed costs that aren't directly tied to daily sales volume. You need to keep these in mind for any valuation work you're doing.

The projected costs for the full year 2025 are:

• General & Administrative (G&A) Expenses: Projected between $48 million to $49 million.
• This G&A projection includes stock-based compensation expense of approximately $3.3 million.
• Estimated total Capital Expenditures (CapEx): Expected to be $12 million to $13 million for new stores and maintenance.
• Depreciation and Amortization: Estimated to be $28 million to $29 million.
• Net Interest Expense: Projected to be approximately $11 million.

The Q3 actual G&A spend was $12.3 million, which was better than the $12.9 million spent in Q3 2024. That's a tangible saving you can model. Finance: draft 13-week cash view by Friday.

Noodles & Company (NDLS) - Canvas Business Model: Revenue Streams

You want the hard numbers on how Noodles & Company brings in its money as we head into the end of 2025. It's a mix, but the company-owned stores are definitely the lion's share of the top line.

The latest guidance for the full fiscal year 2025 projects total revenue to land in the range of $492 million to $495 million. This is the most current expectation, updated after the third quarter results were posted.

The revenue streams break down into a few key areas. The biggest chunk comes from direct sales at the restaurants the company owns and operates.

Here's a look at the key financial metrics relevant to these streams:

Franchising provides a steady, high-margin revenue source through ongoing fees. Franchise royalties are set at a standard 5% of the franchisee's net sales. This is a recurring stream that helps support brand-level operations.

When a new franchisee signs on, there's an upfront payment. The initial franchise fee is listed at $35,000. Also, franchisees contribute to advertising funds via a separate marketing fee, which is reported as 3% of net sales.

Digital channels are becoming a more distinct revenue stream. While the exact percentage of total revenue from digital sources isn't always broken out separately from in-store sales, we know third-party delivery revenue saw an increase of 12% in the third quarter of 2025, showing growth in that specific digital segment.

To give you a sense of the scale, the total revenue reported for the third quarter of 2025 was $122.1 million.

You can expect the revenue streams to look something like this:

• Sales from company-owned restaurants (The core revenue driver).
• Franchise royalties, calculated at 5% of net sales.
• Initial franchise fees, typically $35,000 per unit.
• Additional franchise marketing contributions of 3% of net sales.
• Digital sales, including third-party delivery activity.

Finance: calculate the projected franchise royalty revenue based on the midpoint of the 2025 revenue guidance and an assumed 85% company-owned/15% franchise revenue split for modeling purposes by Tuesday.