How much gift card breakage did Noodles & Company recognize in restaurant revenue in 2023?
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 company recognized $0.3 million in gift card breakage in restaurant revenue during 2023. Gift card breakage refers to the revenue Noodles & Company recognizes when it determines that the likelihood of gift cards being redeemed by customers is remote.
Noodles & Company bases its determination of the gift card breakage rate on the company's specific historical redemption patterns. The company has 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.
For a prospective franchisee, understanding how Noodles & Company accounts for gift card breakage can provide insight into the company's revenue recognition policies and financial performance. It also highlights the importance of historical data and estimations in financial reporting. This information can be useful for evaluating the financial health and stability of the franchise system.