Noodles & Company
|Traded as||NDLS (NASDAQ: NDLS)|
|Founded||1995 in Cherry Creek, Denver, Colorado|
|Number of locations||339|
|Key people||Kevin Reddy (CEO & Chairman)|
& Other food products
|Revenue||$300.4 million USD|
|Operating income||US$16.052 million (2012)|
|Net income||US$5.639 million (2012)|
|Total assets||US$156.99 million (2012)|
|Total equity||US$10.4 million (2012)|
Noodles & Company (NASDAQ: NDLS) is a fast-casual restaurant headquartered in Broomfield, Colorado that offers international and American noodle dishes, as well as soups, salads, pasta and sandwiches.
It was founded in 1995 by Aaron Kennedy using personal savings and investments from friends and family. It obtained negative reviews at first, but the management team overhauled the concept and led a turnaround. Food critics began identifying it as the best fast-food restaurant in their respective cities and it won awards for fast-growth, healthy food and being family friendly. It grew from $300,000 in revenues in 1996 to $300 million when it went public in 2013. The company has 339 locations as of May 2013, some of which are franchised.
The idea for Noodles & Company was conceived by former Pepsi marketing executive, Aaron Kennedy, after eating at Mamie's Asian Noodle Shop in Greenwich Village, New York. He felt there were not enough restaurants that served noodle dishes, which are a staple for many international foods. Kennedy started developing recipes out of his mother-in-law's kitchen with the future COO, Ross Kamens, and head chef, Joe Serafin, in 1994.
Kennedy raised $73,000 in personal funds and $200,000 in investments from 24 friends and family members. The first Noodles & Company was opened in October 1995, in the Cherry Creek neighborhood of Denver, Colorado. Kennedy was joined by partner and real estate developer, Tom Weigand, who he had met at Augustana College. They opened a second location in Madison, Wisconsin, the following March.
In the first three months, Noodles & Company lost $42,000. It almost went out of business in 1996 after a reporter with the Wisconsin State Journal published a negative review. He said Noodles & Company was "a killer idea" but "criticized nearly every dish he'd tried." The Denver Post had published a similar review. In response, Kennedy started a "Redefine Noodles & Company" campaign "to redefine and refine nearly every aspect of the operation."
In mid-1996, the management team went to Chicago to observe other noodle restaurants and returned to a flooded basement at the Madison location. The next day, Kennedy made a list of 15 areas for improvement. The menu was reworked, new managers were hired and an architect changed the restaurant's decor. Steam tables for reheating noodles were replaced with saute lines and noodles were cooked al dente. According to Inc. Magazine, within sixty days "the food had improved dramatically." Rocky Mountain News said "the team completely revamped the Noodles concept, overhauling the menu, the prices, the decor and more. It worked."
From 1996–2000, Noodles & Company's revenues grew from $330,000 to $13 million. Local food critics in many cities began naming Noodles & Company as the best fast-food restaurant in the city and it was frequently listed as a "company to watch." The restaurant developed a word-of-mouth reputation as a good place to work and won a Hot Concept! award from Nation's Restaurant News. $1 million in stock was sold in 1998. This was followed by a $2.5 million round of funding and a $5 million round in 2000.
The restaurant had 37 locations in 2002, 65 in 2003 and 142 by 2007. The company started franchising in 2003 and by 2007, 22 of its stores were franchises. The restaurants were re-designed in 2004 with lighter colors, new packaging, a greater emphasis on carryout orders and a floorplan that emphasized an open kitchen, where the saute line was visible to customers.
According to Rocky Mountain News, the company was growing "so fast that it has had to move every two years." In 2006, its headquarters were moved from Boulder to Broomfield, Colorado. The company's founder, Aaron Kennedy, stepped down from his position as CEO that same year and was replaced by Kevin Reddy. The number of Noodles & Company locations grew three-fold from the beginning of the financial crisis of 2007–08 to 2013, reaching 339 locations.
In 2010, a majority interest in Noodles & Company was acquired by an investment group led by Catterton Partners. In January 2013, bankers told the Financial Times that Noodles & Company was scouting for underwriters for an IPO. Two months later, the intent for a public offering was confirmed with a filing with the Securities Exchange Commission for $75 million in stock. Around this time, the company had reached 339 locations, 51 of which were franchises, and $300.4 million in revenues. Within a day following Noodles & Company's IPO on June 27, the stock price doubled. Fast Company and The Daily Beast called it "the hottest IPO of the year" and compared it to Chipotle's IPO.
Menu and restaurants
Noodles & Company offers international and American noodle dishes, as well as soups, salads, pasta and sandwiches. Most pasta entrees come vegetarian, but have optional protein toppings such as tofu, chicken, beef or shrimp. It also sells flat bread and deserts, like Rice Krispies Treats.
Customers order at the counter and are served at their table, usually within five to seven minutes. The average check is approximately $8 per person. The restaurants use soft lighting, furniture made from recycled bamboo and have bench seating and community tables. Orders can be made online, for-here, or to-go.
Seasonal items were first introduced to supplement the menu in 2002. Two years later, noodle-less entrees were added in response to the trend for low-carb diets. The following year it introduced a whole grain Tuscan fettuccine. Naturally-raised pork was added as a meat option in 2012. Three seasonal items and a gluten-free fusilli were added in April 2013.
Noodles & Company has been ranked as one of the "Top 10 Healthiest Fast Food Restaurants" by Health Magazine and one of the "10 Best Family Restaurants" by Parents Magazine. The Tribune said Noodles' Company "wasn't fine dining," but offered an alternative to typical fast-food chains. The stores contain no microwaves, freezers or can openers. Locations tend to be established in "affluent neighborhoods and cosmopolitan college towns." According to a company spokesperson, customers are usually educated and cosmopolitan.
From 1997 to 2002, Noodles & Company sponsored outdoor and print ads. By 2002 it had a $1.3 million advertising budget and began airing ads on major television networks. One was of a "snake charmer" using a flute to charm noodles and the other was a noodles dish as a landing UFO, from which noodles emerged. Both ads carried the slogan "We're going to get you." Afterwards, in the early 2000s, the company reduced its advertising resources, before a rebranding effort that started in 2008.
The slogan "Your World Kitchen" was introduced in 2013. The largest component of Noodles & Company's advertising is in outdoor ads like billboards, but it also invests in radio, digital media and news sites. The billboards emphasize the global cuisine. One points to a parking lot and says "Recipes imported from more countries than these cars."
Operations and franchises
As of 2010, the average Noodles & Company store generated more than $1 million in annual revenue, with a profit of 21 percent. Takeout orders account for approximately 25 percent of revenues. According to Inc. Magazine, Noodles & Company is more selective than other franchise-based restaurants in franchise partners. It has a larger ratio of corporate-owned stores than most franchising restaurants.
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- Noodles & Company Chef shares an asparagus recipe
- An interview with CEO Kevin Reddy about going public