Revamped Noodles & Co. brings operator back for more
You were an early Noodles franchisee, but sold off many stores. What happened?
We were with the brand from day one. What happened previously, Noodles & Company made a couple of mistakes. One, the operational complexity in the kitchen was extremely challenging. There were too many items on the menu, too many SKUs, even though we considered ourselves top of class. They did a really good job of removing things that were too complex. Then they were really on trend with the Zoodles and the cauliflower noodles.
What else went on after deciding to keep just four stores?
The company changed. The turning point was when we sold 16 restaurants for $14 million. The positive from that was a lot of cash on the balance sheet and great returns, but the downside was that we lost our economies of scale. But now, the balance sheet is strong and we’re back to what we’re good at: growing and developing people.
Why is unit growth important to the people pipeline?
It’s huge, that’s why I made the tactical decision two years ago to grow again. We acquired three Noodles & Company and Rosati’s Pizza. We made the strategic decision to keep those careers going. I think we’re a better organization with the number of units we have now. You need to create and provide a career path because most restaurant operators don’t want to be a general manager for the majority of their career. That’s where we’ve been successful, by promoting people. It gets them out of bed every day.
Another key tactic for the company is owning real estate. Why go that route?
That tends to work out well for us for many reasons. More than anything, from an asset standpoint, you’re much better paying yourself rent than a landlord. That’s as simplistic as it gets. You have to be extremely conscious of your occupancy costs, especially as margins are squeezed, even if our Noodles margins are going up.
Staff writer Nicholas Upton asks what makes multi-unit operators tick—and presents their slightly edited answers in this column in each issue. To suggest a subject, email email@example.com.
What do you look for in a plot of land?
Noodles is proofing out their new prototype, and we want to do as many of our own builds as we can. We may be able to take down a half acre instead of a full acre. We’ve never had luck with B locations, especially in today’s world. We’re looking at A, A+. You have to bet on the come a little bit when you’re looking at green sites. I’m cautiously optimistic about a few deals where we can develop on our own. But you have to believe in what the developer is selling. Some of the places we’re looking at are red hot, like Nashville. Orlando is red hot; Charlotte is red hot.
What makes you a successful entrepreneur?
Wanting to be the best and fear of failure and the eagerness to impact people’s lives in ways they never thought possible. Our goal is to make our employees good to great. That’s what we talk about on a regular basis and what I think has made us successful.
What is your advice to prospective franchisees or those looking to grow to your scale?
Don’t get into the restaurant business. But assuming you made that decision, it’s a nickels and dimes business. The margins aren’t great but the opportunities are. Every detail matters. The business is all about details and they all matter, so you have to focus on them all. And find the right people to execute your business.