By Daily Mail (U.S.) | Created at 2025-01-04 03:56:42 | Updated at 2025-01-06 07:31:49
2 days ago
Shares in a once-thriving restaurant chain have dropped so much that the company faces the ax from the stock market.
Noodles & Company - with 471 restaurants across 31 states - is teetering on the edge of being delisted from the Nasdaq Global Select Market after its stock price plunged below $1 as losses have mounted.
The warning caps off a disastrous 2024 for the chain, which has struggled to execute a turnaround under new CEO Drew Madsen.
After taking the helm in March, he revamped the menu, and in August shut 20 underperforming restaurants and cut jobs at the company’s central office to save money.
But those efforts haven’t yielded results - with sales down 3.3 percent in the July to September quarter compared to the year before, with the chain making a loss of $6.8million.
And there are fears Noodles & Company will end up following in the footsteps of a string of other restaurant chains that struggled in 2024.
The highest profile was Red Lobster, which filed for bankruptcy in May but emerged as a going concern after shuttering almost 100 restaurants. BurgerFi, Buca di Beppo and TGI Fridays also shuttered restaurants and filed for bankruptcy.
In fact, at least 22 restaurant chains filed for bankruptcy last year - the highest number since 2020, according to BankruptcyData.
Noodles & Company - with 471 restaurants across 31 states - is teetering on the edge of being delisted from the Nasdaq
Dishes like spaghetti and meatballs cost around $8 to $11
A Noodles & Company promotional photo of a family eating in one of their restaurants
CEO Drew Madsen, who took over in March, is trying to boost fortunes at Noodles & Company
The Colorado-based chain, known for its pasta dishes, received a warning letter on December 24 from the regulators - saying it is no longer in compliance with Nasdaq rules requiring a minimum closing bid price of $1 per share.
The stock had been trading below that threshold for 30 consecutive business days.
Noodles & Company has until June 23 to get its share price above $1 for ten consecutive trading days.
A potential delisting would be a significant blow.
It would push the stock to 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 what is known as a reverse stock split to boost the share share price.
A reverse stock split merges multiple shares into a single one, decreasing the total share count while boosting the price per share. Companies often use this strategy to meet stock exchange requirements, as is the case here.
Noodles’ stock plunged 80 percent in 2024. After the markets closed on Friday, stock was trading at 71 cents - above its 52-week low of 55 cents, but far from safety.
Industry experts blame the current woes for restaurants on stubborn inflation, higher wages, and consumers tightening their belts when it comes to eating out.
