10-Q: Noble Roman's Q1 2026 Earnings Show Revenue Growth

Noble Roman's reports a 3.9% increase in total revenue for Q1 2026, driven by franchising, despite a slight dip in non-traditional restaurant sales.

Summary

• Noble Roman's reported total revenue of $3,904,046 for the first quarter ended March 31, 2026, an increase of 3.9% compared to $3,760,198 in the same period of 2025.
• Net income for the quarter was $232,530, a significant increase from $130,633 in Q1 2025.
• Company-owned Craft Pizza & Pub revenue grew by 3.7% to $2,094,417, with same-store sales showing a positive trend.
• Franchising revenue increased by 5.1% to $1,519,025, attributed to the expansion of franchised units.
• Company-owned non-traditional restaurant revenue saw a slight decrease of 6.6% to $276,241.
• General and administrative expenses increased significantly to $622,517 from $424,405 in the prior year's quarter.
• Interest expense decreased to $244,521 from $329,754 due to principal repayments and loan amendments.
• The company is actively pursuing refinancing of its Corbel loan and plans to purchase and cancel Corbel's outstanding warrants.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a moderately positive filing, with strong net income growth and revenue increases, but tempered by rising G&A costs and ongoing refinancing needs.

Positives

• Total revenue increased by 3.9% to $3,904,046 in Q1 2026.
• Net income more than doubled, reaching $232,530 in Q1 2026 compared to $130,633 in Q1 2025.
• Company-owned Craft Pizza & Pub revenue increased by 3.7%, demonstrating resilience in a challenging market.
• Franchising revenue grew by 5.1% to $1,519,025, indicating successful expansion of the franchise network.
• The company expects to open another 60 to 70 franchised locations in 2026.
• Operating expenses for the franchising segment decreased as a percentage of revenue, improving margin contribution.
• Interest expense decreased by $85,233 due to loan repayments and revised interest terms.
• The company has a significant pipeline of leads and prospects for future non-traditional franchise sales.
• The company anticipates sufficient cash flow to meet obligations and execute its business plan, contingent on successful refinancing.

Negatives

• Company-owned non-traditional restaurant revenue decreased by 6.6% to $276,241.
• General and administrative expenses increased by $198,112 (46.7%) to $622,517, primarily due to accounting structure enhancements.
• The current ratio was 0.43-to-1 as of March 31, 2026, indicating a tight liquidity position.
• The company is dependent on successfully refinancing its Corbel loan by June 30, 2026, and failure to do so could adversely affect liquidity.
• The company has a reserve of approximately $231,000 against its accounts receivable.
• The company's financial close process has previously exhibited weaknesses in timely and accurate reconciliation of account balances, and documentation of internal controls is insufficient.

Risks

• The company's ability to service its loan and refinance the Senior Note before its maturity in 2026.
• The emergence or spread of human or animal pandemics (such as COVID-19 or the Avian Bird Flu).
• Non-renewal of franchise agreements or the openings contemplated by the Development Agreement not occurring.
• Shifts in market demand.
• The success of franchise programs.
• General economic conditions.
• Changes in demand for the Company's products or franchises.
• The impact of franchise regulation.
• The success or failure of individual franchisees.
• Inflation, other changes in prices or supplies of food ingredients and labor.
• Activist stockholder activities or interference in business relationships.
• Potential for increased interest expense if SOFR increases by 1% (approximately $57,000 annually).

Future Outlook

The company expects to open another 60 to 70 franchised locations in 2026. Its cash flow projections for the next two years are primarily based on growing the non-traditional franchising venue and operating existing Craft Pizza & Pub locations. The company believes it will have sufficient cash flow to meet its obligations and carry out its current business plan, contingent on the successful refinancing of its Corbel loan.

Management Comments

• Regarding Craft Pizza & Pub revenue growth of approximately 3.7%, management noted it as a 'very rewarding growth rate considering high gas prices, the uncertainty in the market and the general trend among restaurants and consumer spending in general.'
• Management attributes the decrease in salaries and wages as a percentage of revenue in both company-owned and franchising segments to 'more efficient use of labor' and the 'growing number of franchises open without the necessity of adding additional staff.'
• Management does not anticipate further increases in general and administrative expenses over the current rate.
• Management believes the deferred tax asset of $3.0 million is more likely than not to be used up over the next five years, thus no allowance was deemed necessary.

Industry Context

StockSavvy.ai notes that Noble Roman's Q1 2026 performance reflects a mixed but generally positive trend within the casual dining and franchise restaurant sector. While overall revenue and net income show improvement, the slight decline in non-traditional restaurant sales and significant increase in G&A expenses warrant attention. The company's strategy to focus on non-traditional franchising aligns with industry trends seeking scalable growth models.

Comparison to Industry Standards

• The same-store sales increase of 3.7% for Company-owned Craft Pizza & Pub locations is considered a solid performance, especially given broader industry challenges like inflation and uncertain consumer spending. Many national casual dining chains have reported flat to low single-digit same-store sales growth in recent periods.
• The significant increase in franchising revenue (5.1%) and the projected opening of 60-70 new locations in 2026 suggest a more aggressive expansion strategy than many competitors, particularly in the non-traditional segment.
• The improvement in operating margin for the franchising segment (from 62.2% to 72.4%) is a strong positive, indicating efficient scaling of the franchise model, which is a key benchmark for franchise-based businesses.
• The increase in General and Administrative expenses, while substantial, is framed by management as necessary for improved controls and redundancy, a common investment for growing companies seeking to strengthen their operational backbone, though it outpaces revenue growth.

Corporate Governance

Legal Proceedings

• Currently, there are no pending legal proceedings which the Company considers to be material.

Related Party Transactions

• The company has a policy that all transactions between the Company and its officers, directors, principal shareholders and other affiliates must be approved by a majority of the Company's disinterested directors and be conducted on terms no less favorable to the Company than could be obtained from unaffiliated third parties.

Stakeholder Impact

• Shareholders: Potential for increased value due to improved net income and revenue growth, but contingent on successful debt refinancing and management of G&A expenses.
• Creditors: The company is actively working to refinance its significant debt obligations, with a new loan secured on June 10, 2026, to address the Corbel loan and subordinated notes.
• Employees: Increased efficiency in labor utilization noted, potentially impacting staffing levels or workload.
• Franchisees: Continued expansion of the franchise network offers growth opportunities. The company's focus on quality ingredients and operational support remains a key aspect of the franchise model.

Next Steps

• Complete the refinancing of the Corbel loan and associated transactions (warrant purchase, subordinated note repayment).
• Continue expansion of non-traditional franchise locations.
• Open an additional 60 to 70 franchised locations in 2026.
• Implement remediation efforts for identified weaknesses in the financial close process and internal control documentation.

Key Dates

Recommendation

The company shows positive revenue and net income growth, driven by its franchising segment, and has secured new financing. However, significant G&A increases, a tight current ratio, and the ongoing need to manage and refinance debt present considerable risks. A 'hold' recommendation reflects the balance between improving operational performance and the financial uncertainties that remain.

Keywords

Noble Romans, 10-Q, Quarterly Report, Franchising, Craft Pizza & Pub, Restaurant Revenue, Financial Statements, Net Income, Operating Expenses, Debt Refinancing, SEC Filing