How is 'Restaurant EBITDA' defined for Noodles & Company, and what is excluded from its calculation in this statement?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
card processing fees, bank charges, restaurant marketing, leased equipment and licenses, utilities, insurance and other miscellaneous fixed expenses.
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- Restaurant EBITDA means restaurant contribution to profit before interest expense, income taxes, depreciation and amortization. Calculation of Restaurant EBITDA for this Statement excludes the 5.0% Royalty Fee, which these restaurants are not charged.
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- The median EBITDA of company-owned restaurants is $158,332.
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- Because the Noodles & Company restaurants whose results appear above are Company-operated restaurants, they paid no royalties. You must consider your restaurant's required Royalty payment (currently 5.0% of Net Royalty Sales) as part of its expected operating expenses. The annual Royalty Fee your restaurant would have been required to pay had it achieved the average Net Sales level reflected in the table
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 84–89)
What This Means (2025 FDD)
According to the 2025 Noodles & Company Franchise Disclosure Document, Restaurant EBITDA is defined as the restaurant's contribution to profit before interest expense, income taxes, depreciation, and amortization. In the context of the financial performance representation for company-owned restaurants, the calculation of Restaurant EBITDA excludes the 5.0% Royalty Fee, as these restaurants are not charged this fee. This is a crucial distinction for prospective franchisees to understand, as they will be required to pay this royalty fee, which will impact their actual EBITDA.
The exclusion of the 5.0% royalty fee from the Restaurant EBITDA calculation for company-owned restaurants means that the figures presented may not accurately reflect the potential profitability of a franchised Noodles & Company location. A franchisee must factor in this royalty payment as part of their operating expenses when evaluating the potential financial performance of their restaurant. The median EBITDA of company-owned restaurants is $158,332, but this figure does not account for the royalty fee that franchisees must pay.
Noodles & Company emphasizes that because the restaurants whose results appear in the financial performance representation are company-operated, they do not pay royalties. Franchisees need to consider their restaurant's required royalty payment, which is currently 5.0% of Net Royalty Sales, as a significant operating expense. The FDD includes a table showing the annual royalty fee a restaurant would have been required to pay had it achieved the average Net Sales level. This information is essential for franchisees to accurately assess their potential earnings and make informed financial decisions. Therefore, prospective franchisees should carefully review the provided financial statements, understand the exclusions, and conduct their own due diligence to project their potential financial performance accurately.