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Business Observer Friday, Oct. 28, 2022 1 month ago

Fast-casual noodles chain in growth mode looks to Tampa Bay

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A national chain with a fervent fan base targets the region for expansion. "We get letters all the time: 'Please, please, please come to Tampa,'" says an executive.
by: Louis Llovio Commercial Real Estate Editor

Noodles & Company, a Colorado fast-casual chain of restaurants, is coming to the Gulf Coast with plans that could see as many as 30 locations open within 10 years.

Those are the words fans of the pasta-focused restaurant chain — and there are legions — have been longing to read for many years. But before these fans get too excited, the company first needs to find out who is going to run the operations locally and just where they’re going to open.

John Ramsay, Noodles & Company’s vice president of franchise operations, says the company has begun the process to find a local owner, or owners, who can bring the concept to what the company calls the greater Tampa Bay market — Hillsborough, Pinellas, Pasco, Manatee and Sarasota counties. 

John Ramsay, Noodles & Company’s vice president of franchise operations. (courtesy)

Noodles & Company's concept, not surprisingly, focuses on noodle-based menu items that range from Thai and Korean meals to Mushroom Stroganoff and Mac & Cheese. It has 462 restaurants in 31 states, and a big following, particularly in the Midwest.

The large majority of the Noodle & Company locations are corporately owned, with a few legacy franchisees mixed in. Now, as Noodles & Company moves into growth mode, Ramsay says the goal is to expand the franchisee pool to open in new markets, allowing the company to handle expansion in states where it already has a presence.

While there are a couple of Noodles & Company locations in Orlando and Jacksonville, the growth locally is a little behind schedule. The chain had hoped to open its first location in the Tampa market this year. But the franchisee backed out and the search is on for a replacement.

Ramsay says once a franchisee is chosen, the company will look for locations similar to ones that have been successful in other markets. He says, given the chain’s clientele and a growing business during dinner hours, the company shies away from locations in downtown and central business districts.

Post COVID, 55% of Noodles & Company’s business is dinner and 45% lunch.

“We need that sort of suburban family’s dinner time business to support the overall growth of the business,” Ramsay says.

The Business Observer recently spoke with Ramsay about the chain’s plans for the market.

 

What are the company’s plans for Florida?

We’re a little bit unique of a company in that we’re 25-plus years old, we go coast to coast, however because of the nature of our development, we’re very selective over the years as to where we went and when we went there. Therefore, there’s quite a few larger markets that we’ve just never built in. For example, we’re very strong and very built out in places like Chicago, Minneapolis, Detroit, the Washington, D.C. area. Yet there are other markets where we have nothing. Atlanta, Dallas, Tampa, Miami. We have these gaps that we’ve identified, and it’s actually worked to our advantage because now, as we start to expand our franchise program, a lot of franchisees have the opportunity to control and build out a whole market. It is very attractive. We do have restaurants in the Orlando market. We do have a franchisee there (who) just opened up a new restaurant last year, right off the University of Central Florida. We have a small base in Jacksonville. But now as we really look at our top markets in the country, Tampa is right up there in the top five.

 

What led the company to decide that it wanted to use franchisees for the expansion?

We have a proven franchise model in place, we just never expanded it. So, we have the experience, number one. Number two, (which) we also learned the hard way through expansion of company restaurants, is that it’s very difficult to scale company growth, especially from the people standpoint. So we then said, ‘well, let’s focus on the markets where we already have a company presence and grow and continue to build out those markets. And then let’s take these other markets where we don’t have a presence, and we’ll use franchising as the vehicle to grow those markets. It’s really a growth strategy of maximizing, where do we focus our company resources? And where is it best to bring in franchise partner?

 

What do you see about Tampa Bay that makes you think it’s the kind of market you need to expand into?

There are couple things we look at when we evaluate markets. The first thing we do is we compare the markets we’re currently in to the markets we’d like to be in and look for similarities. Not surprisingly, to a lot of this (comes down to) size. We’ve done very well in what I would call those top 20, top 50 markets in the country. Chicago, Minneapolis, Detroit, Denver, places that have a strong population base, and sort of have a wide diversity of population. So, it’s very easy for us to, or easier for us, to replicate the success that we’ve had by comparing market to market. That’s number one. Number two is growth. The other thing you look for is markets that are growing and, not surprisingly, the Southeast, the Southwest, is where the populations are going to. And then the third sort of the magic piece is this 20-plus year presence in places like Milwaukee, Chicago, Detroit. I don’t have to tell you about population of Tampa Bay, there’s probably more (Chicago) Cubs T-shirts than (Tampa Bay) Rays. You know, it’s sort of a built-in audience, if you will. Obviously, you have to be prepared for new people who’ve never been to Noodles, but there’s a whole group of people who grew up on Noodles, whose kids grew up on Noodles. We get letters all the time, ‘Please, please, please come to Tampa.’

 

What is the time frame is going to look like?

We were actually very close to getting started this year. The partner that we were close to starting with backed away, put things on hold. But the good news is, things are starting to pick up again. Our goal is to bring in a new partner within the next 12 months. Most likely the goal would be to start in 2023. The other thing that we learned over time is to be patient, to be smart. For us, it’s not a matter of coming in and having to build up 10 restaurants in the first year. But to really come in, allow the franchisee to get that first restaurant open, get staffed correctly, start to train a full team and create a bench strength for when they open up restaurants two and three. For us, typically, restaurants two or three happen within the first 18 months. You might see one opening in ’23 and then by ’24 you start to see two to three per year. Big picture, when we look at the greater Tampa area, we’re probably looking at 15 to 30 restaurants. It takes time. We might build that 15, 20, 25 restaurants, you know. Then the next wave, 10 years from now, we’re going to come back in and double that again, once you sort of established the brand.

 

As you move forward, are you concerned broader economic issues will affect your expansion here?

It’s all about purchasing and distribution. You have to fine tune your purchasing and distribution system. On the other hand, what we see right now is real estate. There’s a real shortage of commercial real estate properties available. What’s unusual in this environment is that there’s a lot of capital out in the marketplace. A lot of brands, a lot of restaurants, are expanding right now. It’s not like the past recession, 2008, where people pulled back. Right now, people continue to look but there’s not a lot of real estate availability. We’re finding ourselves having to compete. We have to have to pay higher rents. Getting construction work done, getting crews, it’s the same. It’s about understanding what those headwinds are and adapting to accommodate them. Take real estate, a good example is that we have now focused on smaller footprint spaces, right? It’s OK. It doesn’t have to be the exact same size. It can be a little bit smaller, can be a little bit different, can be a little bit unique. Things like that, that you do to accommodate the headwinds that you’re facing.

 

 

Louis Llovio is the commercial real estate editor at the Business Observer. Before going to work at the Observer, the longtime business writer worked at the Richmond Times-Dispatch, Maryland Daily Record and for the Baltimore Sun Media Group. He lives in Tampa.

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