Noodles & Company Franchise Costs: Estimated Initial Investment (Item 7, 2022 FDD)

The table below includes costs incurred to open four recently opened company-owned restaurants in the trailing 12-month period ended December 28, 2021. These restaurants ranged in size from 2,300 to 2,400 square feet with an average of 2,345 square feet.

These costs include all of Noodles & Company’s out-of-pocket costs to develop and open a company-owned restaurant net of tenant improvement allowances adding in a Franchise Fee for illustrative purposes.

1. Leasehold Improvements: $477,000 to $638,000

These estimates assume that the location will be a leased, unimproved, unfinished retail store-type unit. If you purchase a location, lease a freestanding building, or lease a space in a multi-story structure, your initial investment may be much greater.

A typical Noodles & Company restaurant will be located in a suburban or urban area on a major thoroughfare or adjacent to or part of a retail shopping center.

For the restaurants included in the table, occupancy costs, which are comprised of base rent, percentage rent, CAM, and real estate taxes averaged $9,399 per month and ranged from approximately $8,888 to $10,168 per month.

2. Architectural and Other Design Fees: $63,000 to $102,000

3. Landlord Credits: ($125,000) to ($90,000)

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Often, landlords provide allowances or rent-free periods for tenant improvements. Noodles & Company received an average tenant improvement (“TI”) allowance and free rent totaling $103,750, and such allowances ranged from $90,000 to $125,000.

4. Kitchen Equipment: $164,000 to $181,000

5. Millwork & Furniture: $34,000 to $54,000

6. Computer Equipment: $19,000 to $31,000

7. Signage: $24,000 to $30,000

The construction costs presented include all significant costs incurred in constructing or remodeling a location to conform to Noodles & Company’s standards, except for time incurred internally by staff to design the restaurant and manage the construction process.

Costs include general contractor and subcontractor fees along with other costs to construct leasehold improvements to conform to Noodles & Company’s standards.

1. Permits and Licenses: $0 to $28,000

Permits and licenses include, for example, business licenses, tap fees, and liquor licenses. (Building permits are included in the Total Build-Out Costs.)

For the restaurants included in the table, total permits and licenses averaged $9,573 and ranged from $0 to $28,341.

Permits and licenses can vary widely between locations. However, while Noodles & Company restaurants historically sold liquor, they no longer do so and liquor licenses are no longer required.

2. Supplies and Smallwares: $3,800 to $4,000

3. Opening Inventory: $6,000 to $10,000

Proprietary Products must be purchased from Noodles & Company’s Designated Suppliers. Other items must be purchased from an Approved Supplier or an Alternative Approved Supplier.

4. Safe and Cash on Hand in Registers: $1,000 to $3,000

5. Utilities: $1,000 to $7,000

6. Pre-Opening Cash Occupancy Costs: $0

In general, Noodles & Company negotiates the payment of its leases to coincide with the start of operations. However, in some cases it may be necessary to begin lease payments before opening in order to secure a particular location, or to accommodate the optimal timing of a new restaurant opening.

7. Training: $23,000 to $32,000

Lodging and travel costs for training are included in these estimates to train three persons for your first restaurant. Fully-burdened labor costs for your employees to attend the training are not included as these may vary widely.

8. Grand Opening Marketing Program: $1,500 to $2,100

You must spend a minimum of $15,000 for the first 2 restaurants in a discrete market and $5,000 per restaurant for each grand opening after the first 2 grand openings in a market.

9. Legal Expenses: $0

Legal expenses will differ by restaurant, Area Operator, individual real estate, and site requirements. For company-owned restaurants, Noodles & Company handles a significant amount of these activities with its existing management team, including internal legal counsel.

10. Additional Funds – 3 Months: $0 to $34,458

These additional funds may be used for restaurant-level employee wages and benefits, point of purchase collateral, other marketing costs, insurance, maintenance, linens, cleaning and office supplies, leased equipment, occupancy expenses, and credit card processing fees, among other costs.