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Noodles & Company (NDLS) Inks Franchise Deal With Warner Foods

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Noodles & Company NDLS recently announced Warner Foods as its new exclusive franchise partner for the state of California. The deal is expected to close on Jan 12. Warner Foods already operates more than 150 Jack in the Box, Black Bear Diner, and Panera Bread restaurants.

Per the agreement, Warner Foods will operate as NorCal Noodles, LLC (NorCal Noodles) and will develop 40 new Noodles & Company locations throughout the state. The deal includes re-franchising of all 15 current company-owned Noodles & Company locations in California to NorCal Noodles.

Dave Boennighausen, CEO of Noodles & Company, said “We are thrilled to announce our partnership with Warner Foods to expand our brand further into the California market. Importantly, this also marks the second announced new franchise agreement in the last few months, reflecting momentum towards our goal to significantly increase our franchise locations as part of our overall growth plan.”

Noodles & Company has been focusing on expansion efforts. In the first quarter of 2022, the company anticipates opening seven to nine new restaurants. The company expects 8% unit growth in 2022 and 10% annual growth thereon.

Share Performance

In the past two years, shares of Noodles & Company have gained 40.3% compared with the Zacks Retail - Restaurants industry’s growth of 22.8%. The company has been benefiting from its strong momentum and resiliency in business models.

The company’s digital sales and off-premise capabilities are likely to mitigate market challenges and uncertainties and the potential impact of the coronavirus pandemic.

Currently, Noodles & Company carries a Zacks Rank #3 (Hold).

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Zacks Investment Research

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Key Picks

Some better-ranked stocks in the same space include Chuy's Holdings, Inc. CHUY, Arcos Dorados Holdings Inc. ARCO and McDonald's Corporation MCD.

Chuy's Holdings currently carries a Zacks Rank #2 (Buy). CHUY has reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 52.7%. Shares of the company have increased 6% in the past month.

The Zacks Consensus Estimate for Chuy's Holdings current financial-year sales and EPS suggests growth of 23.8% and 115.5%, respectively, from the year-ago period’s levels. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arcos Dorados carries a Zacks Rank #2. ARCO has a long-term earnings growth of 42.9%. Shares of the company have increased 14.4% in the past three months.

The Zacks Consensus Estimate for Arcos Dorados current financial-year sales and EPS suggests growth of 31% and 112.5%, respectively, from the year-ago period’s levels.

McDonald’s carries a Zacks Rank #2. A robust drive-thru presence and investments in delivery and digitization in the past few years have helped the company to tide over the pandemic. The company has a trailing four-quarter earnings surprise of 6.8%, on average.

The Zacks Consensus Estimate for McDonald's current financial year sales and EPS suggests growth of 20.9% and 55.7%, respectively, from the year-ago period’s levels. MCD has rallied 27.5% in the past year.


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McDonald's Corporation (MCD) : Free Stock Analysis Report

Chuy's Holdings, Inc. (CHUY) : Free Stock Analysis Report

Noodles & Company (NDLS) : Free Stock Analysis Report

Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report

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