What was the change in valuation allowance for Noodles & Company in 2023 (in thousands)?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | |
|---|---|---|
| Deferred tax assets (liabilities): | ||
| Loss carry forwards | $ 47,555 | $ 45,547 |
| Deferred franchise revenue | 1,655 | 1,968 |
| Property, equipment and intangible assets | (14,479) | (20,473) |
| Stock-based compensation | 1,197 | 1,872 |
| Tax credit carry forwards | 10,143 | 8,744 |
| Interest expense | 3,609 | 1,935 |
| Inventory smallwares | (1,754) | (1,772) |
| Other accrued expenses | 886 | 518 |
| Operating lease assets | (42,340) | (49,138) |
| Operating lease liabilities | 51,739 | 59,611 |
| Other | 1,670 | 1,606 |
| Total net deferred tax assets | 59,881 | 50,418 |
| Valuation allowance | (60,157) | (50,673) |
| Net deferred tax liabilities | $ (276) $ | (255) |
For the year ended December 31, 2024, the Company determined that it was appropriate to maintain a valuation allowance of $60.2 million against U.S. deferred tax assets due to uncertainty regarding the realizability of future tax benefits. The previously recorded valuation allowance increased during 2023 due to increases in deferred tax assets. The valuation allowance is recorded against net deferred tax assets, ex
Source: Item 22 — CONTRACTS (FDD pages 98–99)
What This Means (2025 FDD)
According to the 2025 FDD, Noodles & Company maintained a valuation allowance of $60.2 million against U.S. deferred tax assets as of December 31, 2024. The FDD states that the previously recorded valuation allowance increased during 2023 due to increases in deferred tax assets. This valuation allowance is recorded against net deferred tax assets, excluding indefinite-lived assets and liabilities.
The document indicates that Noodles & Company will continue to maintain this valuation allowance until there is sufficient evidence to support a full or partial reversal. Should a reversal occur, it would generally result in a benefit to the effective tax rate for Noodles & Company.
For a prospective franchisee, this information is relevant because it reflects the company's financial strategies related to deferred tax assets and how they manage potential future tax benefits. While the exact amount of the increase in the valuation allowance during 2023 is not specified, the FDD confirms that an increase did occur. Franchisees may want to inquire further about the specific factors that led to this increase and the potential implications for the company's future tax liabilities and overall financial health.