NOODLES & CoNDLS
NOODLES & Co Leases Disclosure
Leases
The Company leases restaurant facilities, office space and certain equipment that expire on various dates through October 2039. Lease terms for restaurants in traditional shopping centers generally include a base term of 10 years, with options to extend these leases for additional periods of to 15 years.
The Company’s leases typically contain rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. Total rent expense for operating leases for 2025, 2024 and 2023 was approximately $36.9 million, $39.4 million and $39.2 million, respectively.
Some of the Company’s leases include rent escalations based on inflation indexes and fair market value adjustments. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the restaurant’s sales in excess of stipulated amounts. Lease expense associated with rent escalation and contingent rental provisions is not material and is included within operating lease cost. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company elected the practical expedient to account for lease and non-lease components as a single component for substantially all lease types.
As most of the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
Changes in the market trend of the trade area affected certain of our restaurant operating results and the underlying asset values of the restaurant lease. The Company recorded right-of-use asset impairment charges, which reduced the carrying value of operating lease assets to their respective estimated fair value by $5.0 million, $1.7 million, and $1.6 million in 2025, 2024 and 2023 respectively.
Supplemental balance sheet information related to leases is as follows (in thousands):
| Classification | 2025 | 2024 | |||||||||||||||
| Assets | |||||||||||||||||
| Operating | Operating lease assets, net | $ | 126,319 | $ | 157,821 | ||||||||||||
| Finance | 6,373 | 3,807 | |||||||||||||||
| Total leased assets | $ | 132,692 | $ | 161,628 | |||||||||||||
| Liabilities | |||||||||||||||||
| Current lease liabilities | |||||||||||||||||
| Operating | Current operating lease liabilities | $ | 26,257 | $ | 32,055 | ||||||||||||
| Finance | 1,877 | 1,976 | |||||||||||||||
| Long-term lease liabilities | |||||||||||||||||
| Operating | Long-term operating lease liabilities | 126,924 | 156,723 | ||||||||||||||
| Finance | 5,020 | 2,014 | |||||||||||||||
| Total lease liabilities | $ | 160,078 | $ | 192,768 | |||||||||||||
The components of lease costs are as follows (in thousands):
| Year Ended | Year Ended | Year Ended | |||||||||||||||||||||
| Classification | December 30, 2025 | December 31, 2024 | January 2, 2024 | ||||||||||||||||||||
| Operating lease cost | Occupancy, other restaurant operating costs, general and administrative expenses, and pre-opening costs | $ | 36,934 | $ | 39,416 | $ | 39,192 | ||||||||||||||||
| Closure costs, loss on disposals and other | 2,341 | 2,833 | 2,929 | ||||||||||||||||||||
| Finance lease cost | |||||||||||||||||||||||
| Amortization of lease assets | Depreciation and amortization | 2,122 | 2,243 | 2,270 | |||||||||||||||||||
| Interest on lease liabilities | Interest expense, net | 659 | 186 | 297 | |||||||||||||||||||
| 42,056 | 44,678 | 44,688 | |||||||||||||||||||||
| Sublease income | Franchising royalties and fees, and other | (2,695) | (3,094) | (3,087) | |||||||||||||||||||
| Total lease cost, net | $ | 39,361 | $ | 41,584 | $ | 41,601 | |||||||||||||||||
Future minimum lease payments required under existing leases as of December 30, 2025 are as follows (in thousands):
| Operating Leases | Finance Leases | Total | |||||||||||||||
| 2026 | $ | 37,328 | $ | 2,431 | $ | 39,759 | |||||||||||
| 2027 | 36,098 | 2,349 | 38,447 | ||||||||||||||
| 2028 | 30,636 | 1,574 | 32,210 | ||||||||||||||
| 2029 | 24,849 | 1,623 | 26,472 | ||||||||||||||
| 2030 | 18,663 | 160 | 18,823 | ||||||||||||||
| Thereafter | 52,504 | 7 | 52,511 | ||||||||||||||
| Total lease payments | 200,078 | 8,144 | 208,222 | ||||||||||||||
| Less: Imputed interest | 46,897 | 1,247 | 48,144 | ||||||||||||||
| Present value of lease liabilities | $ | 153,181 | $ | 6,897 | $ | 160,078 | |||||||||||
Operating lease payments include $43.9 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $0.5 million of legally binding minimum lease payments for lease renewals signed but not yet commenced.
Lease term and discount rate are as follows:
| December 30, 2025 | December 31, 2024 | ||||||||||
| Weighted average remaining lease term (years): | |||||||||||
| Operating | 6.9 | 7.8 | |||||||||
| Finance | 3.6 | 2.5 | |||||||||
| Weighted average discount rate: | |||||||||||
| Operating | 8.2 | % | 8.0 | % | |||||||
| Finance | 9.3 | % | 7.2 | % | |||||||
Supplemental disclosures of cash flow information related to leases are as follows (in thousands):
| Cash paid for lease liabilities: | 2025 | 2024 | ||||||||||||
| Operating leases | $ | 41,793 | $ | 43,643 | ||||||||||
| Finance leases | 2,430 | 2,626 | ||||||||||||
| $ | 44,223 | $ | 46,269 | |||||||||||
| Right-of-use assets obtained in exchange for new lease liabilities: | ||||||||||||||
| Operating leases | $ | 4,602 | $ | 3,978 | ||||||||||
| Finance leases | 4,810 | 2,639 | ||||||||||||
| $ | 9,412 | $ | 6,617 | |||||||||||
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 Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.