Galloway Capital Partners, LLC announced that it has taken a 6.01% ownership interest in Noodles & Company (NASDAQ: NDLS). The move marks the firm’s first major stake in the fast‑casual chain and signals an activist approach aimed at unlocking shareholder value.
Galloway’s letter to Noodles’ board outlines a plan to sell roughly 200 company‑owned restaurants, a move that could generate about $60 million in proceeds. The firm intends to use the proceeds to retire high‑cost debt, which currently sits at roughly $276 million, with interest rates ranging from 9% to 10%. By deleveraging, Galloway believes the company can reduce interest expense, improve cash flow, and create a stronger capital structure.
Noodles’ recent financials underscore the urgency of the proposed changes. In the third quarter of 2025 the company reported a net loss of $9.2 million, or $0.20 per diluted share, compared with a $6.8 million loss ($0.15 per diluted share) in the same quarter a year earlier. Total revenue fell 0.5% to $122.1 million from $122.8 million, while operating margins contracted to –5.2% from –3.9% year‑over‑year. The company’s debt load, combined with high interest rates, has amplified the pressure on earnings and cash flow.
Bruce Galloway, Chief Investment Officer of Galloway Capital, said the firm is “partnering constructively with management to drive performance and unlock shareholder value.” He added that Noodles is at a “decisive turning point” and that the proposed balance‑sheet reset and targeted asset sales are “compelling” from a financial perspective. Noodles’ own board has already been exploring strategic alternatives, including refinancing, refranchising, and a potential sale of all or part of the business, indicating that the activist’s intervention could accelerate a broader restructuring effort.
The proposed asset sale and debt reduction could materially improve Noodles’ financial health by lowering interest expense and reducing leverage, thereby mitigating bankruptcy risk. However, the company still faces challenges such as declining unit volumes, intense competition in the fast‑casual segment, and the need to maintain profitability while executing a large‑scale refranchising program. If the plan is implemented, it could set the stage for a more sustainable, asset‑light business model, but the transition will require disciplined execution and continued focus on core operations.
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