NOODLES & CoNDLS
NOODLES & Co Income Taxes Disclosure
Income Taxes
The components of the provision (benefit) for income taxes are as follows for 2025, 2024 and 2023 (in thousands):
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current tax provision (benefit): | ||||||||||||||||||||
| Federal | $ | — | $ | — | $ | — | ||||||||||||||
| State | 24 | 33 | (2) | |||||||||||||||||
| 24 | 33 | (2) | ||||||||||||||||||
| Deferred tax (benefit) provision: | ||||||||||||||||||||
| Federal | (100) | 17 | 21 | |||||||||||||||||
| State | 140 | 4 | 5 | |||||||||||||||||
| 40 | 21 | 26 | ||||||||||||||||||
| Total provision for income taxes | $ | 64 | $ | 54 | $ | 24 | ||||||||||||||
The reconciliation of the income tax (benefit) provision that would result from applying the federal statutory income tax rate to pre-tax income, as shown in the accompanying consolidated statements of operations, is presented below (in thousands) for 2024 and 2023 under the income tax disclosure guidance in effect for those periods. The reconciliation for the year ended December 30, 2025, prepared in accordance with ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, is presented separately below.
| 2024 | 2023 | |||||||||||||
| Federal income tax (benefit) at federal rate | $ | (7,730) | $ | (2,065) | ||||||||||
| State income tax (benefit), net of federal tax | (1,793) | (420) | ||||||||||||
| Other permanent differences | 783 | 629 | ||||||||||||
| Tax credits | (1,400) | (1,513) | ||||||||||||
| Change in valuation allowance | 9,484 | 3,352 | ||||||||||||
| Tax rate change | 74 | — | ||||||||||||
| Deferred tax asset write-off | 630 | 78 | ||||||||||||
| Other items, net | 6 | (37) | ||||||||||||
| Provision for income taxes | $ | 54 | $ | 24 | ||||||||||
| Effective income tax rate | (0.1) | % | (0.2) | % | ||||||||||
Effective in 2025, the Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, on a prospective basis. As a result, the following table presents (in thousands) an expanded reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate for the year ended December 30, 2025, in accordance with the enhanced disclosure requirements of the new standard. The reconciliations for 2024 and 2023 above were prepared under the guidance in effect for those periods and have not been retrospectively adjusted. As the Company operates exclusively in the United States, certain reconciling items related to foreign jurisdictions required by ASU 2023-09 are not applicable and have been omitted.
| 2025 | ||||||||||||||
| Amount | % | |||||||||||||
| U.S Federal Statutory Tax Rate | $ | (8,931) | 21.0 | % | ||||||||||
| State and Local Income Taxes, Net of Federal Income Tax Effect * | 131 | (0.3) | % | |||||||||||
| Effect of Changes in Tax Laws or Rates Enacted in the Current Period | — | — | % | |||||||||||
| Tax Credits | ||||||||||||||
| Work Opportunity Tax Credit (WOTC) | (326) | 0.8 | % | |||||||||||
| Federal Insurance Contributions Act (FICA) Tip Credit | (1,097) | 2.6 | % | |||||||||||
| Changes in Valuation Allowances | 8,659 | (20.4) | % | |||||||||||
| Nontaxable or Nondeductible Items | ||||||||||||||
| Excess Tax Benefit from Stock Comp | 689 | (1.6) | % | |||||||||||
| Other Permanent Items | 327 | (0.8) | % | |||||||||||
| Changes in Unrecognized Tax Benefits | — | — | % | |||||||||||
| Other Adjustments, net | 612 | (1.4) | % | |||||||||||
| Effective Tax Rate | $ | 64 | (0.2) | % | ||||||||||
*State taxes in Minnesota made up the majority (greater than 50 percent) of the tax effect in this category.
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, requires disclosure of cash income taxes paid disaggregated by federal, state, and foreign jurisdictions. The Company adopted the guidance prospectively in 2025; accordingly, cash income taxes paid by jurisdiction are presented below for the year ended December 30, 2025 only. Prior periods are not presented as the disclosure was not required for those periods.
As the Company operates exclusively in the United States, cash income taxes paid to foreign jurisdictions are not applicable. In addition, the Company maintains a full valuation allowance on its deferred tax assets and has significant net operating loss
(“NOL”) carryforwards, and as a result, no federal income taxes were paid during the year ended December 30, 2025. The Company also has significant state net operating loss carryforwards and state tax credit carryforwards, and as a result, state income taxes paid during the year were limited to minimum or franchise tax amounts. Total cash taxes paid to all state jurisdictions for the year ended December 30, 2025 was diminimus.
The Company’s total deferred tax assets and liabilities are as follows (in thousands):
| 2025 | 2024 | |||||||||||||
| Deferred tax assets | $ | 116,212 | $ | 118,454 | ||||||||||
| Deferred tax liabilities | (45,723) | (58,573) | ||||||||||||
| Total deferred tax assets | 70,489 | 59,881 | ||||||||||||
| Valuation allowance | (70,805) | (60,157) | ||||||||||||
| Net deferred tax liabilities | $ | (316) | $ | (276) | ||||||||||
Deferred income taxes arise because of the differences in the book and tax bases of certain assets and liabilities. Deferred income tax liabilities and assets consist of the following (in thousands):
| 2025 | 2024 | |||||||||||||
| Deferred tax assets (liabilities): | ||||||||||||||
| Loss carry forwards | $ | 52,016 | $ | 47,555 | ||||||||||
| Deferred franchise revenue | 1,159 | 1,655 | ||||||||||||
| Property, equipment and intangible assets | (9,227) | (14,479) | ||||||||||||
| Stock-based compensation | 596 | 1,197 | ||||||||||||
| Tax credit carry forwards | 11,566 | 10,143 | ||||||||||||
| Interest expense | 6,058 | 3,609 | ||||||||||||
| Inventory smallwares | (1,692) | (1,754) | ||||||||||||
| Other accrued expenses | 480 | 886 | ||||||||||||
| Operating lease assets | (34,804) | (42,340) | ||||||||||||
| Operating lease liabilities | 42,882 | 51,739 | ||||||||||||
| Other | 1,455 | 1,670 | ||||||||||||
| Total net deferred tax assets | 70,489 | 59,881 | ||||||||||||
| Valuation allowance | (70,805) | (60,157) | ||||||||||||
| Net deferred tax liabilities | $ | (316) | $ | (276) | ||||||||||
For the year ended December 30, 2025, the Company determined that it was appropriate to maintain a valuation allowance of $70.8 million against U.S. deferred tax assets due to uncertainty regarding the realizability of future tax benefits. The valuation allowance is recorded against net deferred tax assets, exclusive of indefinite-lived assets and liabilities. The Company will maintain the remaining valuation allowance until there is sufficient evidence to support a full or partial reversal. The reversal of a previously recorded valuation allowance will generally result in a benefit to the effective tax rate.
As of December 30, 2025 and December 31, 2024, NOL carry forwards for federal income tax purposes of approximately $197.0 million and $184.0 million, respectively, were available to offset future taxable income. Of these amounts, $106.8 million is available to offset future taxable income through 2038 and $90.2 million can be carried forward indefinitely, but can only offset 80% of future taxable income. The Internal Revenue Code Section 382 generally limits the utilization of NOLs when there is an ownership change. Prior to the utilization of NOLs in the future, the Company will determine whether there are any limitations under Section 382. If such a limitation exists, it is possible that a portion of the NOLs may not be available for use before expiration.
Uncertain tax positions are recognized if it is more likely than not that the Company will be able to sustain the tax position taken, and the measurement of the benefit is calculated as the largest amount that is more than 50% likely to be realized upon resolution
of the benefit. The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions.
There were no uncertain tax positions for the years ended December 30, 2025 or December 31, 2024. For federal and state income tax purposes, the Company’s 2022 through 2024 tax years remain open for examination by the authorities under the normal three year statute of limitations. Should the Company utilize any of its U.S. or state NOLs, the tax year to which the original loss relates will remain open to examination.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 26, 2026 | Showing above |
| 2024 | Mar 7, 2025 | |
| 2023 | Mar 9, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Mar 15, 2018 | |
| 2017 | Mar 2, 2017 | |
| 2015 | Mar 1, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.