Noodles restaurant chain eyes expansion

At a time when some restaurant chains are putting the brakes on expansion plans in the face of penny-pinching consumers, Noodles & Co. is rolling out new stores at a pace of roughly three a month.The Broomfield, Colo.-based company, which started with a single restaurant in Cherry Creek North 12 years ago, this year is opening outposts in new markets including Chicago, San Francisco and Charlotte, N.C. By the end of the year, Noodles expects to grow by 35 to 45 restaurants from its current 181.Noodles is betting that when consumers are more worried about filling their gas tanks than eating out, the company's upscale spin and $5.25 entrees will capture diners trading down from full-service restaurants. "We're certainly cognizant of what's going on around us, and we don't take future success for granted," said Kevin Reddy, Noodles CEO. "But the fact that we're growing real transactions in today's climate gives us a lot of confidence that we're delivering on the things guests are looking for."Closely held Noodles won't disclose revenue figures, but says same-store sales have grown by the mid-to-high single digits over each of the past three years. That comes without price increases for menu items, despite rising prices for ingredients, particularly its mainstay of pasta.The uptick in sales comes after Noodles overhauled its approach in 2005, bringing in former Chipotle chief operating officer Reddy to bring a long-term strategic approach to the onetime entrepreneurial upstart. Noodles was the brainchild of Aaron Kennedy after he dined in an Asian noodle shop in New York in 1993, and came up with the idea of offering a global array of pasta-based dishes. Kennedy no longer is involved in the day-to-day business but still consults with the company.Noodles plans to expand primarily through company-owned stores, while franchise agreements will help plug the gaps in markets that it would take the company years to reach on its own, Reddy said. Noodles in recent months signed development agreements for Austin, Texas, and Dallas as well as Florida. About 146 stores are company- owned and 35 are franchised, and the company expects to add another 30 corporate stores and 10 franchised outlets this year.Growing during a downturn often has the benefit of cheaper real estate, and construction crews are more readily available, said restaurant consultant John Imbergamo. "Especially for a chain as small as Noodles, there are still great markets and sites out there," he said.Noodles plans to expand to 500 restaurants within five to six years, and last year sold a stake to private equity firm Och-Ziff Management Group to help fund the growth. A possible initial public offering has long been speculated for Noodles, but Reddy said that isn't a goal for the company.Noodles recently revamped its menu to charge one price across the board, rather than individual dish prices, and lowered prices in the process. Regular portions are $5.25, or $6.95 with the addition of a protein like beef or tofu.Reach Joyzelle Davis at davisj(at)RockyMountainNews.com. For more stories visit scrippsnews.com