Even the biggest, most successful restaurant chains close locations regularly.
Starbucks, for example, closes hundreds of locations every few years. That’s because populations shift, rents increase, and other factors change that make a once-viable restaurant no longer profitable.
The coffee chain, for example, used to operate a location in a Westin hotel near my former employer in Alexandria, Virginia. During the Covid pandemic, that company moved to a work-from-home model, and the entire building emptied over the next few years.
Starbucks closed that location when its lease expired because much of its former customer base no longer walked by the store. It was a strategic decision that made the overall company healthier.
That type of store closure is not a comment on the overall health of the company. It’s a choice made because that particular Starbucks store lost a large part of its potential audience, and the chain already operates other locations in the area that serve residential neighborhoods not impacted by the work-from-home change.
Noodles and Company has been revamping its business. That has included adding value offerings to its menu, leaning into limited-time offers (LTOs), and closing underperforming stores.
Noodles & Company shrinks its way to health
After closing 42 restaurants in 2025, according to Restaurant Business, Noodles and Company continued to strategically pare down its portfolio in the first quarter of 2026.
“In the first quarter, we closed 20 company-owned restaurants and three franchise restaurants,” CFO Michael Hynes said during Noodles and Company’s first-quarter earnings call.
Those closures were designed to improve the overall health of the business.
“The 20 company-owned restaurants were closed as part of our restaurant portfolio optimization project, which continues to yield a significant transfer of sales to nearby locations given our high mix of off-premise sales, contributing to improvement in our comp sales and overall profitability,” he added.
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Noodles and Company isn’t alone in following this playbook. Closing locations has also been a big part of Red Lobster’s turnaround plans.
“Red Lobster’s push mirrors a broader trend across U.S. casual dining, where brands like Olive Garden, Chili’s, and Applebee’s have pared back their menus and streamlined operations. Industry analysts say smaller footprints and simpler menus can help operators manage higher labor and seafood costs while appealing to younger, value-conscious diners,” Fortune reported.
UBS analyst Michael Lasser said strategic closures can improve productivity at remaining stores
“We believe this trend should continue in the years to come, with consumers consolidating their trips and shifting towards online channels. As underperforming retail stores are shuttered, it should help the store productivity of surviving locations,” Lasser said in a UBS analysis covered by Retail Dive.
That’s part of a broader shift analysts say is reshaping the restaurant industry.
“When a brand stops subsidizing its bottom 10% of units, it can reallocate capital, management attention, and marketing spend to the units with the highest growth potential. This ‘traffic transfer’ effect is a powerful tool for survival in 2026,” Black Box Intelligence Vice President Victor Fernandez told Restaurant Dive.
Noodles and Company has limited cash
Noodles has seen positive same-store sales for 16 straight months.
Its first-quarter numbers included some encouraging results, but the chain still lost money.
- Total revenue remained flat at $123.8 million.
- Comparable restaurant sales increased 9.1% system-wide, comprised of a 9.4% increase at company-owned restaurants and an 8% increase at franchise restaurants.
- Net loss was $3.4 million, or $0.58 loss per diluted share, compared to net loss of $9.1 million, or $1.58 loss per diluted share, in the first quarter of 2025.
The chain also faces having to make changes with only a limited amount of cash on hand.
“As of March 31, 2026, the company had available cash and cash equivalents of $1.4 million and outstanding debt of $106.8 million. The amount available for future borrowings under its revolving credit facility was $15.2 million as of March 31, 2026,” the chain shared in its first-quarter earnings release.
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Noodles and Company makes menu changes
During Q1, Noodles and Company tested a value offering called “Boost Week.”
“During this window, reward members can enjoy two of our culinary classics for $12. The results were strong as we added new loyalty members, reactivated past guests, and drove a meaningful increase in traffic to our website,” CEO Joseph Christina said during the chain’s Q1 earnings call.
That’s a promotion, he noted, the chain intends to repeat. The CEO also shared that the chain leaned into menu innovation.
“This progress began last year with the most significant menu transformation in our company’s history as we introduced a range of new and enhanced dishes that strengthen the core of our offerings,” he added.
Those menu items included Chili Garlic Ramen and the return of Steak Stroganoff
“We brought it back in response to strong guest demand, and the results reinforce both the strength of our loyal guest base and our ability to attract new guests,” he added.
Noodles and Company is redefining its brand
“Noodles is no longer chasing sporadic spikes in traffic. It’s building a steady dialogue with guests, anchored in its core identity. The numbers suggest the strategy is resonating. New guest active purchases jumped 36% in the quarter, while loyalty sign-ups increased 33%,” according to QSR Magazine.
The chain has seen positive results, but its future remains in flux.
“In September 2025, Noodles and its board of directors began a strategic review of alternatives, including the possibility of a sale. The company said that the review is still in process,” QSR reported.
Noodles and Company has also not finished closing underperforming locations.
“The company has said it plans to close another 10 to 15 restaurants in 2026, as it continues to review the portfolio. Another two franchised units are also expected to shutter,” Nation’s Restaurant News reported.
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