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 2020 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 2020 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 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
- Section V – Presentation and analysis of Noodles & Company’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average, median, high, and low net sales for the 384 company-owned, 62 franchise-owned, and 446 company-owned and franchise-owned Noodles & Company Restaurants open during the entire 52-week period ended December 31, 2019
- 2019 average and median net sales, cost of sales, gross profit, labor, controllable expenses, occupancy cost, non-controllable expenses, and restaurant EBITDA for the 384 company-owned Noodles & Company Restaurants open during the entire 52-week period ended December 31, 2019
Section I – Background Information
24 Things You Need to Know About the Noodles & Company Franchise
Becomes First Restaurant to Introduce Cauliflower-Infused Noodles Nationwide
1. In late September 2019, Noodles & Company announced a new noodle innovation that’s here to stay, Caulifloodles. Cauliflower is an excellent source of key nutrients including Vitamins C, K, B6, and fiber, making Caulifloodles a great way to sneak vegetables into kids’ diets. A kid’s serving of Caulifloodles has half the daily serving of vegetables for children and the authentic pasta taste makes it something kids will love eating.
2. The cauliflower-infused noodles, a permanent addition to the menu, were also available in two new limited-time-only seasonal dishes, the Cauliflower Rigatoni in Light Onion Cream Sauce and the Cauliflower Rigatoni Fresca with Shrimp. Plus, guests can substitute Caulifloodles into any dish on the menu at no additional cost.
3. According to Nick Graff, executive chef at Noodles & Company, “A regular serving of our new Caulifloodles boasts a full serving of vegetables, and the best part is they taste just like classic pasta, so guests don’t have to compromise flavor or texture. By expanding our Zoodles and Other Noodles platform with dishes that include the light and nutrient-rich cauliflower-infused noodles, we’re able to offer choices for everyone in the family, no matter their dietary needs.”
4. In addition to the Caulifloodles, Noodles & Company launched a seasonal dessert, the Pumpkin Spice Crispy. The treat offered a blend of seasonal fall spices mixed into melted butter, gooey marshmallows, and crispy rice cereal.
5. Guests who tried the new Caulifloodles or Pumpkin Spice Crispy also racked up points in the new Noodles Rewards platform. The program, which was unveiled at the time of the announcement and is available on the Noodles mobile app and website, will switch to a points-based system and allow noodle lovers to earn special deals and freebies along the way. The new rewards program will make it even easier and faster for guests to earn free food.
6. Jonathan Tress, vice president of marketing for Noodles & Company, said, “We listened to guest feedback and made changes to our app and website to ensure an experience that you can’t beat. The updates allow us to better reward returning customers with the food they love and provide first-time guests at Noodles with an easy way to access and understand not only our simple ordering process, but the variety on our menu.”
7. Noodles & Company announced one more change in the same press release; the company said that it would remove fountain drinks as an option from the kids’ menu panel and replace them with selections including organic juices and milk to ensure healthy options are easy and accessible. Noodles & Company is committed to nourishing and inspiring every guest, including children, and the change will feature choices that are better for guests’ lifestyles.
8. Dave Boennighausen, CEO of Noodles & Company, added, “I can’t think of a better place for the entire family to enjoy a meal than at Noodles & Company where everyone can find a dish they love on our menu. We encourage parents and kids alike to enjoy a balanced diet and make healthy choices, which is why we’ve updated our kids’ beverage options to make the decision as easy as possible.”
Launches New Family Meals and Gives Back to Healthcare Workers
9. In early April 2020, Noodles & Company announced new Noodles Family Meals for a cause. Family meals are only available online and guests can choose quick pick-up at any location or the added convenience of new curbside pick-up at locations nationwide. Additionally, guests were able to receive free delivery through April 30 when ordering directly from Noodles.com or the Noodles app.
10. While Noodles Family Meals provide a convenient and enjoyable break in the day for guests, Noodles & Company also wanted to give back to those dedicating their time to others during this difficult period. For every family meal purchased, Noodles will donate a regular-sized bowl back to healthcare workers.
11. Stacey Pool, chief marketing officer of Noodles & Company, said, “Staying at home doesn’t mean we can’t connect with others; in fact, maintaining a strong human connection is more important than ever in these unprecedented times, and while we’ve always been about noodles, right now, we’re about company. The importance of shared connections with our guests, team members, and the communities we serve – even virtually – is what comes first.”
12. Family meals are $40 and will serve four people for less than if ordered individually. Guests can choose from one of the following options: Italian Classics, Mac Pack, Asian Bowls, and World Flavors. Each family meal also comes with two sides, ensuring there is plenty to eat for every member of the family, with some left over for lunch the next day. Family meals are available for orders placed via Noodles.com or with the Noodles Rewards app.
Now Offering Delivery Through Its Website
13. In late March 2020, Noodles & Company announced that it was offering free delivery through Noodles.com. To make life easier for guests and to allow them to enjoy the noodles they know and love within the comfort of their own home, Noodles & Company offered free delivery on all orders of $15 or more placed via Noodles.com or on the Noodles Rewards app through March 31, 2020 at participating locations.
14. In addition to delivery through Noodles.com, Noodles offered free delivery nationwide via DoorDash and Uber Eats.
15. Stacey Pool, chief marketing officer of Noodles & Company, said, “There is nothing more important than the safety and wellbeing of our guests, and during this unprecedented time, delivery gives us an opportunity to continue meeting the needs of our guests by delivering them the meals they love directly to their doorstep. Our food travels incredibly well and our guests can trust we have taken every measure and precaution possible to safely serve and deliver to them.”
16. Placing a delivery order is easy. Guests can visit Noodles.com or the Noodles Rewards app and select the delivery option. Once the order has been submitted, the guest will receive a text notification with the status of their delivery, including a notification when the meal is being delivered to their door.
17. With delivery through Noodles.com, guests will earn rewards points on every meal and can use stored payments methods – including gift cards – on all orders. New users who sign up for Noodles Rewards through April 30 received an additional 1,500 bonus rewards points, which is enough points for a free regular entrée. Customers’ favorite dishes are stored in Rewards, so they can quickly order the same dish anytime.
18. Noodles & Company was founded in October 1995 by Aaron Kennedy in Denver, Colorado. Kennedy, who was a former Pepsi marketing executive, was inspired to open a restaurant that focused solely on noodle dishes after realizing that not enough places served noodles and that noodles were a staple for many international cuisines.
19. Not long after opening the first Noodles & Company restaurant, Kennedy was joined by his friend, real estate developer Tom Weigand. Together, they opened a second Noodles & Company in Madison, Wisconsin in early 1996.
20. Although people were interested in the Noodles & Company concept, the business nearly shut down after a reporter with the Wisconsin State Journal published a negative review that led other newspapers to publish similarly negative reviews. In response, Kennedy started a “Redefine Noodles & Company” campaign “to redefine and refine nearly every aspect of the operation.”
21. Noodles & Company completely overhauled its menu, prices, decor, and more. The restaurant implemented a warmer color scheme. Steam tables to keep food warm were replaced with saute lines to cook each dish as it is ordered. The food and the reviews improved dramatically and Noodles & Company recovered from the early hit.
22. In 2003, Noodles & Company started franchising and by 2007, 22 of its stores were franchises, with the rest being company-owned locations. Noodles & Company managed to survive the 2007-08 recession and by 2013, the brand had grown to over 300 locations.
23. Since 2017, Noodles & Company has closed dozens of underperforming stores, while still opening new locations. Today, there are company-owned and franchised Noodles & Company locations across 29 states.
Entrepreneur’s Franchise 500
24. Noodles & Company did not rank on Entrepreneur’s 2020 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 2020 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 2020 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 75
- Outlets at the End of the Year: 66
- Net Change: -9
- Outlets at the Start of the Year: 66
- Outlets at the End of the Year: 65
- Net Change: -1
- Outlets at the Start of the Year: 65
- Outlets at the End of the Year: 68
- Net Change: +3
- Outlets at the Start of the Year: 455
- Outlets at the End of the Year: 412
- Net Change: -43
- Outlets at the Start of the Year: 412
- Outlets at the End of the Year: 394
- Net Change: -18
- Outlets at the Start of the Year: 394
- Outlets at the End of the Year: 389
- Net Change: -5
Section V – Financial Performance Representations (Item 19, 2020 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 December 31, 2019
- As of December 31, 2019, Noodles & Company operated 389 domestic company-owned Restaurants and there were 68 franchise-owned Restaurants, for a total of 457 Restaurants.
- 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.
- 384 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 446.
- In 2019, Noodles & Company closed 6 company-owned Restaurants (none of which had been open less than 12 months) and its franchisees closed 2 franchise-owned restaurants.
Company and Franchise Net Sales