Noodles & Company has agreed to sell 15 of its company-owned locations in California to multi-concept restaurant operator Warner Foods, which in turn has agreed to open 40 new Noodles & Company locations in the state over the next 12 years, the fast-casual noodle chain said Monday.
Warner, which already operates more than 150 restaurants under the Jack in the Box, Panera Bread and Black Bear Diner brands, will form a new company, NorCal Noodles LLC, to operate the Noodles & Company restaurants.
The transaction is expected to close on Wednesday, Jan. 12.
Speaking at the ICR conference, being held virtually Jan 10-12, Dave Boennighausen, CEO of Broomfield, Colo.-based Noodles & Company, said Warner Foods is “a great partner — somebody really forward looking in terms of where the consumer is going … and the economic opportunity.”
He said Noodles & Company, which in the 3rd quarter of 2021 saw average unit volumes hit $1.38, approaching its stated goal of $1.45 million by 2024, resonates with a wide variety of consumers and also is attractive to franchisees: He said new locations have seen a 30% cash-on-cash return on investment
“This is a concept that really has the opportunity to expand significantly with Warner Foods,” he said. “That’s a group that has great experience in California, where we have a lot of opportunity.”
He said that, although he didn’t expect to see many other refranchising opportunities, “the brand is really situated well to attract that level of franchisee and we’re proud as heck to have Warner Foods join the fold.”
He added that Warner would probably open one new location in 2022, and 3-4 locations per year after that.
Boennighausen added that the variety of menu items offered by 450-unit Noodles & Company, including lighter fare such as zucchini noodles, and lower-carb, higher protein LEANguine that’s currently in test, as well as its popular mac & cheese and stuffed tortelloni, made it appeal to a broad audience, and also meant it performed well in searches on third-party delivery apps.
“You type in ‘healthy,’ vegetarian,’ ‘Italian,’ ‘family friendly,’ we’re going to show up on all of those searches. And the fact that our food travels as well as it does … has really introduced the brand just not to brand new consumers but to new occasions for existing guests,” he said.
In a press release announcing the franchise agreement, Warner Foods partner and operator Eddie Nieves said, “We are excited to add Noodles to our portfolio of brands. Noodles is one of the strongest brands in the fast-casual space, and over the past couple of years we've seen Noodles emerge as a leader in its ability to innovate its menu, its culture, and its brand. We're excited about the opportunity to partner with them and further grow Noodles in California, where we already do well with our other brands."
The announcement of this deal comes months after the August announcement that Tsunami Enterprises LLC, headed by Carlos Hill, would open four franchised Noodles & Company locations in the El Paso-Las Cruces, Texas, metropolitan area over the next three years, with the first scheduled to open this fall.
Noodles said it expected to open 7-9 new restaurants in the first quarter of 2022 and to grow by a total of 8% in 2022 — around 35 net new restaurants total — and 10% annually in subsequent years.
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