Image source: Getty Images.

What: Shares of Noodles & Co (NASDAQ:NDLS) fell 24.4% in July, according to data provided by S&P Global Market Intelligence, after reporting disappointing preliminary second-quarter results.

So what: Management said total revenue for the quarter will be about $121.0 million. The bigger worry is that same-store sales were down 0.9% for company-owned restaurants, and franchise stores were down 2.1%.  

Results were disappointing, and CEO Kevin Reddy also announced he was stepping down from the company immediately. This leaves a leadership vacuum at a time when Noodles & Co needs leadership to turn operations around.

Now what: After swinging to a net loss in 2015, it's not encouraging that Noodles & Co is still in decline on a same-store sales basis. Typically, that's a great measure of a company profit growth potential because restaurants generate leverage from the fixed costs of each restaurant. So, when same-store sales decline, it can hit the bottom line fast. Until that trend turns around, I don't see much upside for shares. Further, with the CEO position now open, we won't know what the turnaround strategy will look like for some time.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.