What was the revenue recognized by Noodles & Company in 2024 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 in 2024 for the redemption of gift cards was $2.6 million. This indicates the value of gift cards that customers used at Noodles & Company restaurants during that year. Additionally, Noodles & Company recognized gift card breakage in restaurant revenue of approximately $0.4 million in 2024.
Gift card breakage refers to the portion of gift cards sold that are never redeemed. Noodles & Company recognizes this breakage as revenue, estimating that approximately 15% of gift cards will not be redeemed and recognizing this amount ratably over an estimated 24-month redemption period. This accounting practice is common in the restaurant industry, as companies must account for the potential revenue from unredeemed gift cards.
For a prospective Noodles & Company franchisee, understanding these revenue recognition practices is important for interpreting the company's financial statements. The franchisee should be aware that gift card sales contribute to revenue both when the cards are redeemed and when breakage is recognized. This can impact the overall financial performance of the restaurant and should be considered when evaluating the potential profitability of a Noodles & Company franchise.