Fears grow for popular 471 location pasta chain amid closures and share price tanking
Shares of a once-thriving restaurant chain have fallen so much that the company is facing a hit from the stock market.
Noodles & Company – which has 471 restaurants in 31 states – is on the verge of being delisted from the Nasdaq Global Select Market after its stock price fell below $1 as losses mounted.
The warning caps a disastrous 2024 for the chain, which has struggled to make a turnaround under new CEO Drew Madsen.
After taking over in March, he revamped the menu and in August closed 20 underperforming restaurants and cut jobs at the company’s headquarters to save money.
But those efforts have not paid off: Sales fell 3.3 percent in the July to September quarter compared to the previous year, with the chain posting a loss of $6.8 million.
And there are fears that Noodles & Company will ultimately follow in the footsteps of a string of other restaurant chains that have struggled in 2024.
The biggest name recognition was Red Lobster, which filed for bankruptcy in May but became a going concern after closing nearly 100 restaurants. BurgerFi, Buca di Beppo and TGI Fridays also closed restaurants and filed for bankruptcy.
At least 22 restaurant chains filed for bankruptcy last year — the highest number since 2020, according to BankruptcyData.
Noodles & Company – with 471 restaurants in 31 states – is about to be delisted from Nasdaq
Dishes such as spaghetti and meatballs cost about $8 to $11
A Noodles & Company promotional photo of a family eating at one of their restaurants
CEO Drew Madsen, who took over in March, is trying to boost Noodles & Company’s fortunes
The Colorado-based chain, known for its pasta dishes, received a warning letter from regulators on Dec. 24 saying it no longer complies with Nasdaq rules that require a minimum closing price of $1 per share.
The stock has been trading below this threshold for 30 consecutive business days.
Noodles & Company has until June 23 to get its stock price above $1 for ten consecutive trading days.
A possible delisting would be a significant blow.
It would push the shares into over-the-counter markets, making it harder for investors to trade shares and limiting the company’s ability to raise capital.
Bosses said they will consider a so-called reverse stock split to boost the share price.
A reverse stock split combines multiple shares into one share, reducing the total number of shares and increasing the price per share. Companies often use this strategy to meet exchange requirements, as is the case here.
Noodles shares fell 80 percent in 2024. After markets closed on Friday, shares were trading at 71 cents – above a 52-week low of 55 cents, but far from safe.
Industry experts blame the current woes for restaurants on stubbornness inflationhigher wages and consumers tightening their belts when it comes to eating out.