Hospitality & Tourism  February 10, 2017

Noodles to close 10 percent of its restaurants, plans stock offering

BROOMFIELD — Fast-casual pasta chain Noodles & Co. said Thursday that it will close 55 underperforming restaurants nationwide “to eliminate the negative cash flow of these restaurants and improve overall performance.”

Noodles also filed a form S-1 with the U.S. Securities and Exchange Commission for a public offering of its common stock, seeking to raise up to $36.8 million. The offering is not yet effective.

The restaurant closures will come during the first and second quarter of 2017 and represent more than 10 percent of the company’s 510 locations, though Noodles did not immediately specify which restaurants will close.

SPONSORED CONTENT

Solar Operations and Maintenance for Commercial Properties

One key qualification to consider when selecting a solar partner to install your system is whether they have an Operations and Maintenance (O&M) or service department. Since solar is a long-term asset with an expected lifecycle of 30 plus years, ongoing O&M should be considered up front. A trusted O&M partner will maximize your system’s energy output and therefor the return on your investment.

Closure of the 55 locations will alleviate a burden on Noodles’ profitability, with the company saying that its “financial performance has been adversely impacted by these restaurants, many of which were opened in the last two to three years in newer markets where brand awareness … is not as strong as in other markets.”

Noodles also announced that it has raised $18.5 million through a private placement of stock and warrants to an existing shareholder controlled by L Catterton, a venture-capital and private-equity firm based in Greenwich, Conn. That transaction closed Feb. 8 and was done “to strengthen the Company’s balance sheet and fund strategic initiatives,” the company said.

Proceeds from the private placement and the public offering will be used to pay costs associated with its plan to close underperforming restaurants, to satisfy liabilities arising from a data breach that occurred in 2016 and to fund, in part, capital expenditures in its remaining company-owned restaurants, the company said.

The company’s filing with the SEC places costs associated with the restaurant closings at $24 million to $29 million.

Noodles said it has also amended its existing credit facility, allowing for greater financial flexibility.

The company also is implementing some menu changes to boost sales.

“Today we announced important initiatives that we believe are critical to the long term success of Noodles & Co.,” Dave Boennighausen, Noodles chief financial officer and interim CEO, said in a statement. “These initiatives focus on our strong go-forward restaurant portfolio, shore up our balance sheet and give us the financial flexibility to further our in-restaurant operational and culinary initiatives.”

Noodles released preliminary fourth-quarter financial results, showing quarterly revenue of $129 million, representing a 1.3 percent decline in comparable-restaurant sales.

The company also will record a charge during the fiscal quarter that ended Jan. 3, 2017, of $11 million for liabilities related to a data security breach that occurred during 2016.

BROOMFIELD — Fast-casual pasta chain Noodles & Co. said Thursday that it will close 55 underperforming restaurants nationwide “to eliminate the negative cash flow of these restaurants and improve overall performance.”

Noodles also filed a form S-1 with the U.S. Securities and Exchange Commission for a public offering of its common stock, seeking to raise up to $36.8 million. The offering is not yet effective.

The restaurant closures will come during the first and second quarter of 2017 and represent more than 10 percent of the company’s 510 locations, though Noodles did not immediately specify which restaurants will close.

Christopher Wood
Christopher Wood is editor and publisher of BizWest, a regional business journal covering Boulder, Broomfield, Larimer and Weld counties. Wood co-founded the Northern Colorado Business Report in 1995 and served as publisher of the Boulder County Business Report until the two publications were merged to form BizWest in 2014. From 1990 to 1995, Wood served as reporter and managing editor of the Denver Business Journal. He is a Marine Corps veteran and a graduate of the University of Colorado Boulder. He has won numerous awards from the Colorado Press Association, Society of Professional Journalists and the Alliance of Area Business Publishers.
Sign up for BizWest Daily Alerts