Changing of the Noodle guard

Founder takes chairman role as company shoots for 500 locations

By Alicia Wallace, Camera Business Writer

April 25, 2006

Aaron Kennedy knew a change was coming when his Noodles & Company chain reached the 100-restaurant milestone.

Two years ago, the wheels were put in motion — expansion plans clarified, and seasoned board members and executives added — to help get the Boulder-based company to the next level: 500 restaurants.

The most visible of those changes came Friday when Kennedy handed the reins of his company to Kevin Reddy, a former Chipotle Mexican Grill executive hired by Noodles last year. Reddy will serve as chief executive officer and president. Kennedy will take the role of chairman of the board of directors.

With a new guard in place, the fast-casual noodles restaurant company plans to reach 500 locations in four to seven years — leading some to question whether it will follow Chipotle's footsteps and go public.

Kennedy said Noodles' investors have contacted him at a much greater frequency after Denver-based Chipotle and others went public this year.

"Everyone's very excited for what the implications are for the value of Noodles & Company," he said. "How they capture that value is a topic that we continue to discuss."

That could come by offering stock or drawing investment from private equity firms, he said.

Thanks to Chipotle's $122 million January public offering earlier, the market is craving similar concepts, which could mean good things for a company like Noodles, said Francis Gaskins, president of research site IPOdesktop.com.

"If they're profitable, they could go public," Gaskins said. "The question is, if they want to."

Noodles for now is focused on the people who fill the restaurants' seats and not necessarily Wall Street, Reddy said.

"We are focused on delivering a great dining experience and running restaurants we're proud of," Reddy said. The 10-year-old company is profitable, has seen growth in its same-store sales and has plans to increase its 120 restaurants by another 24 to 30 this year, Reddy said.

This recent executive repositioning will help, Kennedy said. As part of his role as chairman and working with investors, he'll also serve as "brand ambassador" — incorporating trends and evolving the concept.

Some test markets such as Boulder already have gotten a taste of the changes: a menu that is organized by the cuisine's locale — Asian, Mediterranean and American — and uniform pricing by serving size.

Mailers that include phrases such as "Explore the world of Noodles" will help to solidify that brand and those changes, Kennedy said.

By the end of June, those changes will be rolled out nationally, with the company expanding into the Columbus, Ohio, St. Louis and Portland markets by the end of the year.

Contact Camera Business Writer Alicia Wallace at (303) 473-1332 or wallacea@dailycamera.com.