What was the total value of Noodles & Company's long-term operating lease liabilities in the year 2023?
Noodles_Company Franchise · 2025 FDDAnswer from 2025 FDD Document
ded right-of-use asset impairment charges, which reduced the carrying value of operating lease assets to their respective estimated fair value by $1.7 million, $1.6 million, and $0.2 million in 2024, 2023 and 2022 respectively.
Supplemental balance sheet information related to leases is as follows (in thousands):
| Classification | 2023 | |||
|---|---|---|---|---|
| Assets | ||||
| Operating | Operating lease assets, net | $ | 157,821 | $ 183,857 |
| Finance | Property and equipment | 3,807 | 3,440 | |
| Total leased assets | $ | 161,628 | $ 187,297 | |
| Liabilities | ||||
| Current lease liabilities | ||||
| Operating | Current operating lease liabilities | $ | 32,055 | $ 30,1 |
Source: Item 22 — CONTRACTS (FDD pages 98–99)
What This Means (2025 FDD)
According to Noodles & Company's 2025 Franchise Disclosure Document, the company's long-term operating lease liabilities totaled $186,285 in 2023. This figure represents the financial obligations Noodles & Company has for the use of property under operating lease agreements that extend beyond one year. These leases primarily pertain to restaurant facilities.
For a prospective franchisee, understanding the lease obligations of Noodles & Company is crucial because it provides insight into the company's financial commitments and how they manage property costs. Lease liabilities are a significant component of a restaurant business due to the need for physical locations. The FDD also mentions that the company leases restaurant facilities, office space, and certain equipment with lease terms expiring on various dates through September 2043, with typical restaurant leases in shopping centers having a base term of 10 years and options to extend for additional periods of five to 15 years.
It's important to note that these lease liabilities are subject to change and can be influenced by factors such as rent escalations, inflation indexes, and fair market value adjustments. The FDD indicates that Noodles & Company recognizes expenses for these leases on a straight-line basis over the lease term. Additionally, the company recorded right-of-use asset impairment charges, reducing the carrying value of operating lease assets to their estimated fair value by $1.6 million in 2023. This suggests that changes in market trends can affect the value of restaurant leases and, consequently, the company's financial results.
Therefore, a potential franchisee should carefully review the lease terms and conditions, understand the potential for rent escalations and market value adjustments, and consider how these factors could impact the profitability of their Noodles & Company franchise. Understanding these long-term financial obligations is essential for making an informed investment decision.