This is an independent manager-run estimate, not an official franchisee profit disclosure. The base case is about $13,000 per mature traditional restaurant per year, before financing costs, depreciation, amortization, capital expenditures and personal income taxes. Because Noodles & Company currently requires a minimum three-restaurant development commitment, the comparable modeled result for a fully mature three-unit portfolio is roughly an $86,000 loss to $211,000 of profit, with a base case near $39,000.
What does the 2026 FDD actually disclose?
Officially, Item 19 discloses restaurant sales and company-operated unit economics—not franchise owner earnings. For the 52 weeks ended December 30, 2025, 92 franchise-owned restaurants reported average Net Sales of $1,318,978 and median Net Sales of $1,316,974. The FDD defines Net Sales as restaurant sales after specified taxes, discounts, promotions and refunds; it expressly warns that sales do not show the costs needed to calculate net income or profit.
The same Item 19 separately reports results for 371 company-operated restaurants: average Restaurant EBITDA of $163,483 on average Net Sales of $1,386,135, or 11.8% as presented in the FDD. That company figure includes restaurant-level food, labor, occupancy and other operating expenses, but excludes the 5% franchise Royalty Fee, interest, income taxes, depreciation and amortization. It is therefore a useful same-brand operating proxy, but it is not a franchisee earnings result. FDD citation: 2026 Noodles & Company Franchise Disclosure Document, Item 19, pp. 76–80.
How is the owner-earnings estimate calculated?
For a mature traditional U.S. restaurant within a three-unit portfolio, the estimate applies a same-brand company Restaurant EBITDA proxy to franchise revenue, then deducts known franchise-specific costs and required portfolio oversight. It intentionally combines fiscal 2025 operating data with the April 2026 fee schedule because those are the current terms of the franchise offer and no full-year 2026 operating results exist. The base formula is: median franchise Net Sales × the company Restaurant EBITDA margin after deducting the 5% Royalty Fee, the new 1.75% Brand Development Fund contribution and the 1.25% Marketing Administration Fee, less the $12,000 annual Restaurant Technology Support fee and less one-third of a $74,880 Operating Partner wage proxy for a three-unit portfolio.
Which assumptions create the conservative, base and upside cases?
For the fiscal 2025 traditional-unit sales population and a three-unit U.S. portfolio, the scenarios are estimated, not probabilities. Because Item 19 reports an average, median, high and low but no quartiles, the revenue anchors use 80%, 100% and 120% of median franchise Net Sales. The franchise-adjusted operating-margin proxy uses the calculated central margin of 3.79%, plus or minus 3 percentage points.
- Revenue: 80%, 100% and 120% of the official $1,316,974 franchise median. The spread is an editorial modeling assumption, not an FDD distribution.
- Operating margin: company Restaurant EBITDA of $163,483 divided by company Net Sales of $1,386,135 equals 11.794%; subtracting the 5% Royalty Fee, 1.75% Brand Development Fund and 1.25% Marketing Administration Fee produces a 3.794% central proxy.
- Margin sensitivity: 0.794%, 3.794% and 6.794% are analytical assumptions, not franchisor-reported franchise margins.
- Fee base: the model applies percentage fees to Item 19 Net Sales as a practical proxy, although the FDD states that Net Sales may not equal Net Royalty Sales. The undisclosed difference is a compatibility risk.
- Technology: the model subtracts $1,000 per month per restaurant, or $12,000 annually, for Restaurant Technology Support.
- Portfolio management: the manager-run case allocates one $74,880 Food Service Manager wage proxy across three restaurants, or $24,960 per unit. Individual general managers remain inside the FDD labor proxy. The BLS figure is cash wage, not fully burdened employer cost, and may understate the required senior role.
| Scenario | Modeled revenue | Franchise-adjusted margin proxy | Manager-run earnings per unit |
|---|---|---|---|
| Conservative | $1,054,000 | 0.8% | −$28,600 |
| Base | $1,317,000 | 3.8% | $13,000 |
| Upside | $1,580,000 | 6.8% | $70,400 |
Interpretation: after current franchise-specific fees and required portfolio oversight, the conservative scenario produces an operating loss and the base case leaves only a modest restaurant-level residual.
Source and method: 2026 FDD, Item 19, pp. 76–80; Items 6, 11 and 15; May 2025 BLS Occupational Employment and Wage Statistics. Values are rounded after calculation using full-precision inputs.
How are marketing obligations treated?
For the fiscal 2025 company-operated traditional-unit proxy and the April 2026 franchise fee schedule, the marketing treatment is uncertain because “restaurant marketing” is included inside Non-Controllable Expenses but not separately disclosed. Item 6 currently requires 1.75% for the Brand Development Fund, 1.0% for Field Marketing Funds and 1.25% for the Marketing Administration Fee—4.0% in total. The model separately subtracts the 1.75% Brand Development Fund contribution because the FDD says no BDF funds were collected in fiscal 2025, and it subtracts the 1.25% Marketing Administration Fee because that charge is franchise-specific. The 1.0% Field Marketing requirement is treated as embedded in the company P&L’s restaurant-marketing expense. If the embedded amount is lower than 1.0%, the estimate is too high; if it is higher, the estimate may be conservative.
- Estimated pre-tax owner earnings
- Cash-like restaurant-level residual after modeled operating expenses, royalty, technology fee and allocated Operating Partner labor, but before debt service, depreciation, amortization, capital expenditures and personal income taxes.
- Restaurant EBITDA
- The FDD’s company-operated contribution to profit before interest, income taxes, depreciation and amortization. It is not franchisee net income and excludes the 5% Royalty Fee.
- Owner-operator benefit
- Manager-run residual plus the market value of work personally performed by the owner as Operating Partner. The labor component is compensation for active work, not passive business profit.
How does owner involvement change the result?
Under the April 2026 U.S. FDD’s minimum-three-unit traditional offer, an owner who personally serves as the required Operating Partner may retain about $74,880 more across the portfolio than an owner who hires that role, but this added amount is labor value rather than passive profit. Item 15 says the owner is not required to participate directly, yet the Area Operator must designate a full-time Operating Partner involved in day-to-day operations. It also requires a full-time general manager for each restaurant when more than one restaurant is operated.
That structure matters. An active owner cannot reasonably add back one general-manager salary at every unit because the FDD still requires a full-time general manager for each restaurant in a multi-unit system. The narrower owner-operated scenario assumes the owner replaces only the portfolio-level Operating Partner role, using the BLS May 2025 annual mean wage of $74,880 for Food Service Managers as a broad labor-value proxy. The wage source is the BLS Occupational Employment and Wage Statistics release for May 2025. OEWS wages exclude employer-paid supplementary benefits, so a hired Operating Partner’s fully burdened cost could be higher.
Interpretation: owner involvement changes compensation structure more than it changes restaurant economics. The additional $74,880 is payment for full-time portfolio management work.
Source and method: 2026 FDD, Item 15, pp. 51–53; BLS May 2025 Food Service Managers mean annual wage; three-unit portfolio values use unrounded scenario calculations.
Which recurring obligations can reduce what the owner keeps?
For a traditional U.S. restaurant under the April 2026 fee schedule, the most visible franchise-specific deductions are the 5% Royalty Fee, current marketing obligations totaling 4% of Net Royalty Sales and the $12,000 annual technology-support fee per restaurant. The scenario explicitly deducts royalty, the BDF, the MAF and technology. The 1.0% Field Marketing requirement is treated as embedded—but not quantified—inside the company P&L proxy, which remains a material limitation.
Item 10 says Noodles & Company offers no direct or indirect financing and does not guarantee a note, lease or obligation. Debt service is therefore excluded from the earnings range. A highly leveraged buyer may have little or no cash remaining after interest and principal payments even when restaurant-level earnings are positive. Personal income taxes are also excluded because they depend on entity structure, jurisdiction, deductions and owner circumstances.
Item 7 estimates an initial investment of $1,061,500 to $1,707,500 per restaurant, excluding the ongoing cost of buying or renting the location. That startup range is not an annual expense and is not subtracted from one year of sales. It matters here only because financing, depreciation, future capital expenditures and remodel obligations can materially reduce cash available to the owner.
How much confidence should a buyer place in the range?
Confidence is limited because the fiscal 2025 traditional-unit model crosses two Item 19 populations: franchise revenue and company-operated profit. The franchised sales sample is relevant to revenue, but the expense structure comes from company restaurants. Purchasing scale, occupancy, field supervision, local wage markets, accounting classifications and marketing costs may differ.
Item 20 adds another caution. The franchise system moved from 92 outlets at the start of 2025 to 83 at year-end, with nine outlets ceasing operations for reasons other than termination, non-renewal or franchisor reacquisition. The 2025 company filing likewise reports 340 company and 83 franchise restaurants at year-end; see the Noodles & Company 2025 Form 10-K. Item 19 says 92 franchise restaurants were used for the sales statement and says 2025 openings were excluded. A buyer should obtain written clarification on how the nine outlets that ceased operations were treated in the Net Sales calculation.
Company results also moved materially within 2025: the official year-end release reports a 12.6% full-year restaurant contribution margin and a 14.1% fourth-quarter margin, while noting 33 company closures. Those consolidated measures are not interchangeable with Item 19 Restaurant EBITDA, but the variation reinforces that a single annual margin is not stable across periods. See the fiscal 2025 results release.
What should a prospective owner verify before relying on any earnings estimate?
For the current 2026 U.S. offer and the fiscal 2025 traditional-unit sample, the buyer should replace every proxy with restaurant-level evidence from Item 19 substantiation and from current and former franchisees. The Federal Trade Commission advises buyers to examine the source, limitations, assumptions, sample size and geographic relevance of financial performance representations and to request written substantiation.
- Closed-outlet treatment: confirm in writing whether the nine franchise restaurants that ceased operations during 2025 were included in the 92-unit sales sample and how partial-year results were handled.
- Franchise P&Ls: request actual cost percentages for food, labor, occupancy, delivery, utilities, insurance, repairs, credit-card processing and all marketing programs.
- Marketing reconciliation: determine whether the 4% current Item 6 marketing burden is above, below or equal to the restaurant marketing amount embedded in the company P&L.
- Management structure: verify compensation for each general manager, the Operating Partner and any area or district manager across the required development schedule.
- Maturity and ramp-up: separate mature-unit economics from first-year restaurants, and do not multiply one mature-unit result across units that open at different times.
- Cash below EBITDA: model interest, principal, maintenance capital expenditures, remodels, depreciation, working capital and owner-level overhead separately.
What is the strongest defensible earnings range?
On a fiscal 2025 operating basis with April 2026 fees, the strongest defensible range is approximately a $29,000 annual loss to $70,000 of manager-run pre-tax owner earnings per mature traditional U.S. unit, with a base scenario near $13,000. It is scenario-based, not official. For a fully mature three-unit portfolio, the same unrounded model produces about an $86,000 loss to $211,000 of profit, with a base near $39,000. An owner who personally fills the required Operating Partner role could have an owner-operator benefit about $74,880 higher across the portfolio, but that increment compensates active work.
The largest earnings driver is the combination of Net Sales and restaurant-level labor and occupancy efficiency. The largest unresolved uncertainty is whether the company-operated expense structure—including embedded marketing and field-management costs—matches a franchise operator’s economics. Before making a decision, a buyer should reconcile Item 19 substantiation to franchisee P&Ls, confirm closed-outlet treatment, and interview current and former franchisees about mature sales, staffing, marketing, occupancy, debt service and cash capital needs.