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Shopping Centers Today -> May 2002
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NOODLES & CO. HAS AN APPETITE FOR EXPANSION
By Kimberly Pfaff
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| Nearly a third of Noodles’ restaurants are located in lifestyle centers. |
Think “casual dining,” and healthful, fast food doesn’t always spring to mind. But Aaron Kennedy is out to change all that.
As founder and president of Boulder, Colo.-based Noodles & Co., he has developed an innovative fast-casual concept centered on healthful American, Asian, European and Mediterranean fare, fresh ingredients and the ultimate comfort food: noodles.
“It’s high-quality food made to order,” Kennedy said of the 39-restaurant chain. “It’s quick and convenient, very affordable and served in a very appealing dining environment.”
Founded in 1995, the chain balances such ethnic dishes as sesame-seared lo mein and Indonesian peanut sauté with such guaranteed kid-pleasers as Wisconsin Mac and Cheese, all served in weighty china bowls. The menu also features homemade soups, salads, bread and desserts.
Adding to the appeal is that the restaurant serves wine and beer. “It makes us a real viable dinner option for any occasion,” noted Kennedy. “And it clearly articulates that we’re not fast food — we’re casual dining.”
For these and other reasons, the chain has caught the attention of Chicago-based retail developers General Growth Properties and other developers.
“It’s a great concept — it’s a value-driven, very healthy niche, and it doesn’t have any geographic boundaries,” said Robert A. Michaels, General Growth’s president and COO, who is working to open Noodles restaurants at some of the company’s projects. “It’s a concept that can do well in any area. We’re excited to be working with them, and we would hope to do a number of deals with them, as their expansion plans roll out.”
About 30 percent of Noodles locations are in lifestyle centers — one has opened at the Aspen Grove Lifestyle Center, Littleton, Colo. (see story) — with another 30 percent in strip centers or outparcels anchored by higher-end grocery stores such as Whole Foods. The remainder are individualized sites in attractive central business districts — along State Street in Madison, Wis., near the University of Wisconsin, for instance.
But one retail setting where you won’t find the chain is in enclosed malls or food courts. “We serve our food in real porcelain bowls, we have beer and wine on the menu, and we do table delivery, so we don’t lend ourselves to those settings,” said Tom Weigand, executive vice president of real estate.
Noodles serves up 11,000 noodle bowls each day, with each check adding up to an average of just above $7. That translates to an average store revenue of $1 million per year.
The firm’s success has not gone unnoticed. Ernst & Young named Kennedy a regional 2001 Entrepreneur of the Year for consumer products, and the company is a 2001 Nation’s Restaurant News Hot Concepts award winner. Last year the chain ranked 45th on Inc magazine’s list of fastest-growing private U.S. companies.
This is a company that’s serious about food. The chain’s culinary steering committee meets weekly to improve the quality of the dishes.
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| Noodles plans to expand to 400 locations by 2005. But don’t expect to see it in food courts. |
“We might find a new curry paste that we love, or we’ll replace the sliced black olives with Kalamata olives in our Mediterranean noodle salad,” Kennedy said. “That kind of thing happens all the time.”
But the chain doesn’t change the menu often, he added. “It’s a very methodical process; it requires refining, testing and making sure it’s right for the customer.”
Besides, he added, every menu addition requires a menu subtraction, which can be problematic for loyal customers with favorite dishes.
“We still have customers who want their farfalle,” he said with a laugh. “We took that off the menu a year and a half ago, changed it to penne, and we just won’t hear the end of it.”
After spending the past few years building a presence in Colorado, Illinois, Minnesota and Wisconsin — most Noodles locations (21) are in Colorado — the company is now branching out. The chain is entering the Washington, D.C., area this year and is pursuing two additional markets: Atlanta and Michigan, particularly Ann Arbor and Detroit. Plans call for adding 30 stores this year; ultimately, Noodles expects to have about 400 locations by 2005.
Of course, being a private company, Weigand noted, means having the luxury to scale back if necessary.
“If we sense we’re going too fast,” he said, “we’ll pull back and slow down the growth rate to something we’re more comfortable with.”
Most locations are 2,500 square feet, while some go up to 2,800 square feet. The firm also has a 3,500-square-foot prototype, for locations where there is potential for volume sales.
For the moment, the firm has no plans to franchise.
“If you’re short on capital or you want to move quickly into new markets, franchising is a great plan,” noted Weigand. “In our case, neither is necessary for us, and we’re just as comfortable keeping the consistency and controlling our growth.
But it’s something he’d consider in the future. “I have a list of 500 franchisees who’ve expressed interest.”
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As for co-tenants, Noodles looks to larger grocery chains, department stores, book stores — and other restaurant chains.
“We like the synergy of being with other high-quality restaurants, whether it’s casual, fine dining or other fast food,” noted Weigand. “It creates a setting where the customer immediately thinks, ‘I can go over to Shopping Center X, and while I’m there I know I can find something to eat.’”
Noodles executives say the chain’s sales did not suffer in the aftermath of the Sept. 11 attacks and the economic downturn, in part because the company is well positioned.
“Our price point and our service format tend to appeal to a lot of people who might be choosing fast casual over fine dining right now,” said Weigand. “They still want good food, served in china bowls, but they also want to watch their costs. So we’re finding that those consumers are stepping down to our venue.”
 | Current Issue February 2012 |