In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Noodles & Company franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Noodles & Company franchise, based on Item 7 of the company’s 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Noodles & Company franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Noodles & Company outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of Noodles & Company’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average, median, high, and low net sales for the 398 company-owned, 62 franchise-owned, and 460 company-owned and franchise-owned Noodles & Company Restaurants open during the entire 52-week period ended January 2, 2018

• 2017 average and median net sales, cost of sales, gross profit, labor, controllable expenses, occupancy cost, non-controllable expenses, and restaurant EBITDA for the 398 company-owned Noodles & Company Restaurants open during the entire 52-week period ended January 2, 2018

Section I – Background Information

15 Things You Need to Know About the Noodles & Company Franchise

Appoints New Chief Brand Officer

1.  In early March 2018, Noodles & Company announced that Chas Hermann had been named chief brand officer. Hermann is an experienced marketing leader with a 25-year history of connecting story-telling creative brand strategy with marketing promotion, culinary and product development, and financial strategy.

2.  He most recently served as the head of Chas Hermann Consulting where he partnered with executives and leadership teams to focus organizations on key business strategies that position products, services, and operations to build brands and deliver profitable growth. Among the companies he worked with were Papa Murphy’s, Del Taco, and Redbox.

3.  In his new position at Noodles & Company, Hermann’s responsibilities include developing and executing the company’s marketing, menu, and culinary strategy. He will report directly to chief executive officer Dave Boennighausen.

Rolls Out New Rewards Program

4.  During the summer of 2017, Noodles & Company unveiled its new rewards program called NoodlesREWARDS, which is available to customers exclusively through the NoodlesREWARDS
mobile app. According to the company, NoodlesREWARDS is “a surprise-and-delight-based rewards program that delivers unique, tailored offers and information directly into the palms of Noodles guests’ hands.”

5.  Jonathan Tress, vice president of marketing for Noodles & Company, said, “Over the last year, a great amount of time went into evaluating and testing several reward models to develop a first-class program that would appeal to all our guests. The result of those efforts is NoodlesREWARDS, which was solely created to better connect with our guests and reward them for their continued loyalty and love for all things Noodles.”

6.  The all-new NoodlesREWARDS program is designed to suit the needs of Noodles & Company customers by personalizing rewards and providing instant experiences. Each customer who signs up for the program will earn $3 off any order valid for two weeks after receipt, a reward for referring friends to the program, plus ongoing surprise offers tailored to their Noodles preferences.

7.  NoodlesREWARDS members can also do mobile ordering and have easy access to information on their favorite Noodles & Company dishes and locations. To earn rewards, customers can scan the app at the point of purchase, scan their receipt, enter their receipt code online, or order through the app.

Launches Zucchini Noodles Nationwide

8.  Noodles & Company has capitalized on the latest consumer trend of cutting back on carbohydrates, such as noodles, with the nationwide launch of zucchini noodles (zoodles) at the beginning of May 2018. Made from fresh zucchinis spiralized in-house daily, the low-calorie and low-carb zoodles debuted in two new dishes – the Zucchini Romesco and the fan-favorite Zucchini Thai Green Curry with Shrimp. Noodles & Company is the first national fast-casual chain to offer zoodles in the U.S.

9.  Chas Hermann, chief brand officer for Noodles & Company, said, “We’re excited to add zoodles to our restaurants nationwide. Expanding our noodle offerings from classic pastas like cavatappi, elbow and spaghetti to more adventurous noodles like udon, rice and ramen, zucchini is a natural step in providing our guests with more creative options. In addition to zucchini tasting delicious and being a great substitute in every dish we serve, zucchini noodles also meet many of today’s dietary needs, such as low-carb and gluten-free.”

10.  The Zucchini Romesco features a sweet and tangy, chunky roasted red pepper sauce made with
almonds, sundried tomatoes, and garden vegetables. Zucchini Thai Green Curry with Shrimp is
a new take on one of the brand’s staple dishes. It features a sweet coconut green curry sauce with pineapple, broccoli, red onion, snap peas, lime, black sesame seeds, and cilantro.

11.  Small zoodle bowls start at $5.75, with regular bowls starting at $7.25. Additionally, zoodles can be substituted for classic noodles in any dish for $0.75. To encourage customers to give zucchini noodles a try, Noodles & Company is offering a taste guarantee. Any customer who orders a bowl of zucchini noodles and is unsatisfied can get a replacement traditional noodle dish at no additional cost.

Company History

12.  Noodles & Company was founded in 1995 by Aaron Kennedy in the Cherry Creek neighborhood of Denver, Colorado. Kennedy got the idea to start Noodles & Company after he realized that there was a market for restaurants focused solely on serving noodle dishes. A year before opening the first Noodles & Company restaurant, Kennedy and future COO Joe Serafin and head chef Ross Kamens developed recipes out of Kennedy’s mother-in-law’s kitchen.

13.  Initially, Noodles & Company struggled and almost went out of business in 1996 after a reporter with the Wisconsin State Journal and several other newspapers published negative reviews of the restaurant’s food. Kennedy used this negative feedback to completely rework the Noodles & Company concept by overhauling the menu, prices, décor, and the other aspects of the restaurant that weren’t working. His efforts eventually paid off.

14.  Noodles & Company started franchising in 2003 and expanded across the United States. In more recent years, Noodles & Company has closed several underperforming restaurants, but continues to open new locations in successful markets.

Entrepreneur’s Franchise 500

15.  Noodles & Company did not rank on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Noodles & Company franchise costs, based on Item 7 of the company’s 2018 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Noodles & Company’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  53
• Outlets at the End of the Year:  70
• Net Change:  +17

2016

• Outlets at the Start of the Year:  70
• Outlets at the End of the Year:  75
• Net Change:  +5

2017

• Outlets at the Start of the Year:  75
• Outlets at the End of the Year:  66
• Net Change:  -9

Company-Owned

2015

• Outlets at the Start of the Year:  386
• Outlets at the End of the Year:  421
• Net Change:  +35

2016

• Outlets at the Start of the Year:  421
• Outlets at the End of the Year:  455
• Net Change:  +34

2017

• Outlets at the Start of the Year:  455
• Outlets at the End of the Year:  412
• Net Change:  -43

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

Part 1 – Statement of and Information Regarding Average and Median Net Sales of Noodles & Company Restaurants for the 52-Week Period Ended January 2, 2018

• As of January 2, 2018, Noodles & Company operated 412 domestic company-owned Restaurants and there were 66 franchise-owned Restaurants, for a total of 478 Restaurants.

• However, the Statement of Average and Median Net Sales consists of averages and medians of the reported Net Sales only for those Restaurants open for the entire preceding 52-week period.

• 398 company-owned Restaurants were open and operating for the entire 52-week period.

• There were also 62 franchise-owned Restaurants open and operating for the entire 52-week period, for a total of 460. The remaining 18 Restaurants (15 company-owned and 3 franchise-owned) were not open for the full preceding 52-week period.

• In 2017, Noodles & Company closed 57 company-owned Restaurants (of which 6 had been open less than 12 months) and its franchisees closed 12 franchise-owned restaurants (of which 0 had been open for less than 12 months).

Company and Franchise Net Sales