What are the sources of revenue for Noodles & Company's reportable segment?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
are processed by one service provider. Concentration of credit risk related to accounts receivable are limited, as the Company's receivables are primarily amounts due from franchisees and the Company directly pulls the amounts owed from the franchisees bank accounts.
Revenue Recognition
Revenue consists of sales from restaurant operations and franchise royalties and fees. Revenue from the operation of companyowned restaurants is recognized when sales occur. The Company reports revenue net of sales and use taxes collected from customers and remitted to governmental taxing authorities.
Gift Cards
The Company sells gift cards which do not have an expiration date, and it does not deduct non-usage fees from outstanding gift card balances. The Company recognizes revenue from gift cards when the gift card is redeemed by the customer or the Company determines the likelihood of the gift card being redeemed by the customer is remote ("gift card breakage"). The determination of the gift card breakage rate is based upon Company-specific historical redemption patterns.
Source: Item 22 — CONTRACTS (FDD pages 98–99)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, the company operates as one reportable segment. The revenue for this segment is derived from two primary sources: sales from company-owned restaurants and franchise royalties and fees.
Specifically, revenue from company-owned restaurants is recognized at the point of sale. This means that when a customer purchases a meal at a Noodles & Company restaurant, the revenue is recorded at that time. The company also reports its revenue net of sales and use taxes, meaning that these taxes collected from customers are not included in the reported revenue figures.
In addition to restaurant sales, Noodles & Company also generates revenue from its franchise operations. This includes royalties, which are a percentage of the franchised restaurants' revenues, and franchise fees. These royalties are recognized in the period when the franchised restaurants make their sales. Development and franchise fees are collected in advance and are nonrefundable. The company recognizes these fees ratably over the term of the franchise agreement, which indicates that the initial services are not distinct from the ongoing services provided during the franchise term.