What costs are encompassed by 'Occupancy Costs' for Noodles & Company restaurants?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Occupancy Costs includes base rent, percentage rent, common area maintenance, real estate taxes, and other miscellaneous lease expenses.
| Summary Profit & Loss Statement | Average Amount | Average % of Net Sales | Number and % of Units Exceeding Average | Median Amount(8) | Median % of Net Sales |
|---|---|---|---|---|---|
| Number of | 371 | 371 | |||
| Restaurants | |||||
| Net Sales (1) | $ 1,302,662 | 174/48.3% | $ 1,252,672 | ||
| Cost of Sales (2) | $ 335,828 | 25.8% | 163/45.3% | $ 321,420 | 50.0% |
| Gross Profit | $ 966,834 | 74.2% | 163/45.3% | $ 931,252 | 50.0% |
| Labor (3) | $ 433,858 | 33.3% | 164/45.6% | $ 408,913 | 50.0% |
| Controllable | $ 182,152 | 14.0% | 163/45.3% | $ 171,608 | 50.0% |
| Expenses (4) | |||||
| Occupancy Cost | $ 128,839 | 9.9% | 163/45.3% | $ 117,439 | 50.0% |
| (5) | |||||
| Non-Controllable | $ 79,642 | 6.1% | 165/45.8% | $ 74,960 | 50.8% |
| Expenses (6) | |||||
| Restaurant | $ 142,343 | 10.9% | 190/52.8% | $ 158,332 | 50.0% |
| EBITDA (7) |
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 84–89)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, 'Occupancy Costs' include several components related to the restaurant's physical location. These costs consist of base rent, which is the fixed amount paid regularly to the landlord, and percentage rent, which is an additional rent payment based on a percentage of the restaurant's sales. Common area maintenance (CAM) fees, which cover the costs of maintaining shared spaces such as parking lots and hallways, are also included. Real estate taxes, which are taxes levied on the property, and other miscellaneous lease expenses are also part of the occupancy costs.
For a prospective Noodles & Company franchisee, understanding these occupancy costs is crucial for financial planning. These costs can significantly impact the profitability of the restaurant, as they represent a substantial portion of the operating expenses. The document states that for company-owned restaurants, occupancy costs averaged $128,839, representing 9.9% of net sales. The median occupancy cost was $117,439, accounting for 50.0% of net sales. These figures provide a benchmark for franchisees to compare their own potential occupancy costs.
It's important to note that occupancy costs can vary widely depending on the location of the restaurant. Factors such as the size of the space, the desirability of the location, and local real estate tax rates can all influence these costs. Therefore, a prospective franchisee should carefully evaluate the occupancy costs associated with their specific location and factor them into their financial projections. Additionally, franchisees should review their lease agreement carefully to understand all of the terms and conditions related to occupancy costs, including any potential increases or adjustments over time.