What was the amount of revenue recognized by Noodles & Company in 2023 for the redemption of gift cards?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
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As of December 31, 2024 and January 2, 2024, the current portion of the gift card liability, $2.0 million and $2.2 million, respectively, is included in accrued expenses and other current liabilities, and the long-term portion, $1.0 million, is included in other long-term liabilities in the Consolidated Balance Sheets.
Revenue recognized in
Source: Item 22 — CONTRACTS (FDD pages 98–99)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, the revenue recognized for the redemption of gift cards in 2023 was $2.8 million. This indicates the value of gift cards that customers used at Noodles & Company restaurants during that year. For a prospective franchisee, this figure provides insight into the popularity and usage of gift cards among Noodles & Company customers.
Gift card revenue is an important component of overall sales for Noodles & Company. The company sells gift cards that do not have an expiration date. Noodles & Company recognizes revenue from gift cards when they are redeemed or when the likelihood of redemption is considered remote, which they term "gift card breakage."
The company determined that approximately 15% of gift cards will not be redeemed, which is recognized ratably over the estimated redemption period of the gift card, approximately 24 months. This breakage calculation is based on Noodles & Company's historical redemption patterns. Understanding these revenue recognition practices can help a franchisee better interpret the financial statements and manage their own operations.