Image source: Noodles & Co.   

It's November, and that means that Noodles & Co. (NASDAQ:NDLS) is celebrating "Family Nights" by giving away a free kid's meal with every adult entree purchase on Thursdays. Unfortunately it's not the only thing that the pasta-tossing chain has been giving away. The stock lost more than a fifth of its value last week after posting disappointing quarterly results. 

Revenue climbed 10% since a year earlier to hit $117.3 million for the third quarter, but don't go thinking that the chain's popularity is growing at the individual eatery level. All of that top-line growth -- and then some -- came courtesy of the concept's brisk expansion. We've seen the Noodles & Co. chain expand from 430 units to 488 locations over the past year. Systemwide comps actually declined by 0.9% during the period. 

Noodles & Co. reported a small loss during the period. Margins contracted as it wasn't able to pass on rising labor, occupancy, and other restaurant operating expenses to its consumers. It's hard to raise prices when customers aren't coming the way they used to. The fast-casual chain broke even on an adjusted basis, and that's not going to work when analysts are holding out for a profit of $0.07 a share. Then again, should the market really be surprised? This is the fourth quarter in a row that Noodles & Co. has failed to live up to Wall Street's profit targets. 

It's a rough time for Noodles & Co., and not just because of last week's 21% drop that sent the stock down to the pre-teens. The stock was the belle of the IPO ball two years ago when it went public at $18. It was trading north of $50 just a few days later. The market was ready to hop on anything fitting the "fast casual" niche that was gnawing away at fast-food and casual dining. It didn't seem to care that noodles themselves have the stigma of being cheap and easy to make at home. 

Noodles & Co. doesn't just boil noodles, of course. It offers pasta in several international varieties with culinary tweaks that aren't easy to duplicate back at the dorm. There are also salads, soups, and sandwiches for those looking for something else. The concept is unique enough to creep its way into more suburban strip malls across the country. However, if comps remain negative -- and same-store sales are now flat for the year -- it will be harder to justify brisk expansion of company-owned stores and even harder for franchisees to hop on.

Last week was a rough one for several restaurant stocks, but Noodles & Co. was the worst performer in the lot. If investors ever expect to see this now-busted IPO claw its way back, it's going to have to boost its comps and margins. It'll also have to stop disappointing Wall Street. Coming up short is always going to be a quick recipe for indigestion. That's what's turning Family Nights into Family Nightmares.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.