Banking On Pasta
The world’s first global noodle restaurant plans for significant expansion with new franchised area operators.

In the beginning, Noodles & Company’s goal was to saturate the Heartland with 20 to 40 restaurants and prove the validity of the global noodle shop concept. It proved successful. Over the last few years, Noodles & Company has set out to build and open about 20 new restaurants every year at a very sustainable pace, and that’s just what the company has done.

“We anticipate about the same next year,” says CEO and Founder Aaron Kennedy. “Now the benefit is that we’ll layer on franchised area-operator stores at about that same pace. So we’ll open more like 40 to 45 restaurants next year.”

Kennedy founded the quick-service noodle restaurant in 1995 along with 25 investors in the Cherry Creek North neighborhood of Denver. With plans to launch the concept in multiple markets, he opened his second location in 1996 in Madison, Wisconsin. After much testing and refining, Kennedy made one significant change — all dishes became freshly sautéed to order.

The restaurant’s Asian-inspired menu offers pasta and noodle fare from around the world. The original menu includes dishes like Japanese Pan Noodles, Penne Rosa and award-winning Wisconsin Mac & Cheese, and desserts like puddin’ cookies and made-fresh-daily Rice Krispy treats. The company imports its ingredients from local organic sources and authentic, time-tested sources around the world to enhance the flavor and authenticity of its recipes. The company has recently introduced a new menu with globally inspired Noodle-less dishes, such as Mediterranean Mixed Grill, Shrimp Curry Sauté, Chicken Rustica and Sweet Chili Chicken. Each dish includes freshly grilled proteins alongside garden greens or sautéed vegetables with a savory sauce.

The company also has a new design initiative and has launched the first two prototypes in Salt Lake City and Omaha. The restaurant’s design incorporates a creative use of natural materials and noodle-shaped design elements. A blend of pendulum lamps and spotlights, natural colored carpet, recycled bamboo tables, iron post half-moon menu boards, cushioned benches and photographs featuring marketplaces from around the globe create an unusually comfortable dining area. You’ll also see curvaceous suspended noodle fins, wavy noodle chair rails, noodle-inspired wrought-iron patio railing and noodle-like half walls.

The new design will move the restaurant from the fast-casual sector toward a little higher-end positioning in the segment.

“In doing so, we’ve designed a very distinctive exterior façade that’s a combination of wood elements with a geometric component, as well as some painted metal and brushed aluminum on the façade along with our logo that might allow us to be a little easier to identify,” says Kennedy. “We hadn’t had that sort of a package before.”

The design has also migrated from the saturated colors of fall to the vibrancy of spring with an interior that is “colorful, fresh and comfortable.”  Other changes include a dedicated carryout component and two cashier lines for faster service.

“We’d like to move our carryout business from about one-third to one-half of our revenue,” notes Kennedy. “So we’re pursuing locations that have dedicated carryout access, and we’ve designed a counter area with a dedicated carryout cashier.”

Noodles & Company currently has 99 restaurants in Colorado, Illinois, Wisconsin, Minnesota, Maryland, Virginia, Texas, Utah and Michigan and has plans to open in Southern California and Nebraska. Since announcing its intention to expand more rapidly through franchise partnerships, the company has since signed five franchised area operators to build a total of 141 restaurants throughout the U.S. in Southern California, Kansas City, Western Michigan, Indianapolis and New England.

The company currently has one franchised area operator restaurant open. A.O. One, who opened just south of San Diego in Chula Vista, has agreed to open 56 restaurants in 7 years throughout Los Angeles, San Diego and Orange counties, and plans to open three more restaurants in Southern California by the end of this year. Casual Foods, Noodles & Company’s Kansas City franchised area operator, also plans to open its first location by the end of this year. Other franchised area operators include The Jan Companies, Pasta Per Trio, LLC, and Sagamore Dining Partners, Inc., who combined will open 74 restaurants throughout the next 7 years.

Kennedy says the company’s real estate model parallels that of Starbucks, who looks for end-cap, corner locations that are highly visible, easily accessible and semi-urban or suburban.

“In terms of the true central business district locations, those tend to only have lunch revenue Monday through Friday, so that is probably the only metropolitan zone that we wouldn’t be interested in,” says Kennedy. “We have quite a few very successful restaurants in lifestyle centers but none in any regional malls.”

Noodles & Company plans to continue expanding in current and new markets through company operated and franchised area-operated restaurants. The company expects to have a total of more than 200 restaurants by the end of 2006.

“Some of our developers have called us sort of a mini-anchor tenant because we generate a tremendous amount of traffic and set a certain quality expectation for the people living in the area,” Kennedy notes. “We serve between 500 and 700 people a day so there are a lot of them coming in, and it makes it an attractive place for other tenants. Thus, it raises the potential rent because there’s more competition for the spaces. And that’s good for everybody because when they bring in other compatible tenants, there’s a great synergy that begins to happen in the shopping center.”

— Susan H. Fishman