Devin Sauer, Emily Steelman, Kayla Vankirk, Xinyao Wang, Zhouyang Lin, & London Graves

Noodles & Company

Group #2

Table of ContentsI. Executive Summary..................................................................................................3

II. Vision and Mission Statements................................................................................4

III. Environmental Analysis...........................................................................................7

IV. Products and Services.............................................................................................10

V. Market Analysis

VI. Management Team and Human Resources

VII. Day- To-Day Operations

VIII.Financials

IX. Funds Required

X. Critical Risks

XI. Appendix

Executive SummaryMission and Vision Statements:

The Noodles & Company mission is to provide a warm and inviting place for everyone to gather and eat as one, with noodles from around the world, right in the heart of Norman, OK.

The vision of our Noodles & Company is to create memories one bowl at a time.

Environmental Analysis:The five forces that will play a major role in our franchise are the threat of

substitutes, and the threat of new entrants. These forces are relatively high in the restaurant industry. We will need to be aware of these forces.     The PESTEL analysis for Norman, OK shows certain tax policies and health and safety laws that we will follow, along with a wide range of different ages, races, and incomes in the area. It was also found there are certain natural disasters that could occur, along with technologies that we will need to be aware of when conducting business.

Products and Services:Noodles & Company offers a wide range of different pasta and noodle dishes

from around the world. We pride ourselves in the freshness of our ingredients, and the ability for the customer to “create” their dish based on their tastes. Customers will order at the counter and them be served at their table.

We also have expectations that we must follow from our franchisor. These expectations include: proper training, limited complaints, food up to corporations standards, follows culture outlined in franchise agreement, no fryers or microwaves in kitchens, dishes are cooked to order, no tippling is required

Market Analysis:           Noodles & Company is targeting on white-collar workers from different cultural backgrounds and customers with higher educations. With a little, less than half of the population in Norman holds a bachelor’s degree and more than 30,000 college students the new site is expecting consistent revenue to ensure stability of the business. In addition, the new Noodles & Company restaurant will be located at the University Town Center.

Management Team and Human Resources:    Our Noodles & Company will consist of the six-team members in the management roles with the two lowest job titles being hired on. Pay will depend on position ranking and experience. However, experience is not required to be hired on. We will train all new employees the “Noodles” way and they will be able to succeed in their positions with this training.  

Day-to-Day Operation:           Noodles & Company provides guide for day-to-day operation for its franchisee with little flexibility. It requires all its new coming franchisee to hold a “Grand Opening Marketing Program” and contribute 1.25% of Net Royalty sales on local promotion. Furthermore, Noodles & Company also provides guidelines of Noodles & Company: Menu Detail website emphasizes the importance of providing “real food with real ingredients.”

           General Manager with the assistance from Shift and Assistant Manager will be responsible for most of the administrative issues and personnel selection. Team members who had experiences with accounting will handle bookkeeping.

Key Financial Information:

Funds Required/ Used:

Critical Risks:Risks that could have an effect on our business include our supplier could cut or delay

food ingredient shipments, fluctuations in employment, natural disaster hits Norman, OK, construction in the area, fluctuations in customers, technology issues, competition, changes in tax or employment laws, and food and safety law changes. Al of these risks could have the potential to harm the way we operate. Therefore, we have prepared for them and will deal with the issues as they arise.

Vision and Mission Statements

Vision Statement

To create memories one bowl at a time.

Mission Statement

To provide a warm and inviting place for everyone to gather and eat as one, with noodles

from around the world, right in the heart of Norman, OK.

Environmental AnalysisThe Five Forces

The five forces analysis can help determine what is driving competition in the restaurant industry. According to MarketLine, there are a large number of transactions in the restaurant industry so the impact of any single customer on revenues is likely to be fairly small. Therefore, buyer power is moderate. The statutory minimum wage imposed increases the importance of suppliers so supplier power is moderate. New entrants are assessed as strong, because the U.S. restaurants industry has maintained moderate growth in recent years. The threat of substitutes is also assessed as strong as there are many other leisure options one may choose to do instead of eating out (Market Line). Please see the Appendix A for a graphic depiction of the five forces analysis for the restaurant industry.

PESTEL AnalysisPlease see Appendix B for a chart describing the macroeconomic factors affecting the restaurant industry in Norman, Oklahoma.

Products and ServicesNoodles and Company focuses on providing delicious, fresh dishes that are always satisfactory to the customer’s order. Noodles and Company takes pride in their unique menu and business operations that set them apart from competitors of similar size. For example, Noodles and Company has a “no tip required rule,” does not have fryers or microwaves in the kitchen, and possesses a relatively reasonable average price of $8 per dish. Noodles and Company serves sixteen dishes under 400 calories to cater to the health conscience generation. The menu also has gluten free and vegan options as well. The menu has options for adults and children. The key elements of being able to cater to all types of health conscience groups, providing a family oriented atmosphere, and being sensitive to consumers’ budgets provides an optimistic look on the opportunity for customer growth.

Market AnalysisTarget Market

Noodles & Company seeks location in downtown areas or in neighborhoods with a dense mix of residential housing and white-collar office buildings. The company has clearly indicated the target market as white-collar workers from different cultural backgrounds and customers with higher educations (Noodles & Company-Franchise Disclosure Document Exchange).

Market Base and Needs          

According to the Henry J. Kaiser Family Foundation, in the U.S. workforce overall, “there are 39% white collar workers and 61% blue collar workers. Among the state of Oklahoma, white-collar workers occupy 35% of the workforce” (The Henry J. Kaiser Family Foundation). White-collar workers emphasize the importance of quick service, fresh ingredients, and warm atmosphere. Noodles & Company have considered their customers’ needs and interpreted their goal as “serving real food, real quick” (Noodles & Company-Restaurant Site Criteria). According to the U.S. Census Bureau, population in Norman is 118,197 with 92.0% high school graduates and 43.5% bachelor degree holders (Federal Census). As listed above, Noodles & Company targets customers from different cultural backgrounds and with higher educations. Therefore, the estimated customer base would be the population of about 51,415.In addition, the students and staff members from the University of Oklahoma provide an even bigger market for all the food businesses in the city of Norman. With over 30,000 students and more than 2,700 full-time faculty members, the University of Oklahoma has been considered as one of the major economic boosters for Norman (Federal Census).  

Competition

Competition level within Norman is moderate. Only seven other restaurants provide noodles and pasta, but none of them have a similar business model, menu variety, or quickness like Noodles & Company does. Furthermore, Pei Wei, which is located at 24th Ave NW, Norman, is considered the major competitor. It is a restaurant chain in the U.S., with 190 locations in the U.S. and 3 international locations. According to Pei Wei, it provides customized meal with fresh ingredients with a similar pricing strategy (Pei Wei).

Location

Noodles & Company has restricted policy on location choices. It requires the location to be as large as 2,400 to 2,600 sq. ft. as well as the ability of providing 40 to 50 parking spaces. Please see Appendix C for the detailed Franchise Disclosure Document. The Norman Noodles & Company will be held at the University Town Center, 1400 24th Ave NW (see map below). The University Town Center is a booming business location for the city of Norman. Two of the major supermarkets, Target and Crest Foods, attract high-class-income customers. Other than Pei Wei, there are five restaurants currently running in the similar location but they not considered as serving the same target market as Noodles & Company.

Estimated market share projected

According to the U.S. Census Bureau, the estimated total accommodation and food services sales in 2007 was $281,624,000 and average net sales for each Noodles & Company Restaurant was $1,120,097 in 2010 (Federal Census). Therefore, in the base of total accommodation and food services of Norman, market share will be about 0.4% (Federal Census). Please see Appendix D for the Norman Census details. With average $8 per person per meal, the estimated unit sale for each will be 140,000 bowls, which account for targeted customers to have three meals per person each year.

Management Team and Human ResourcesOur managers are also owners. We want our managers to take a personal stake in the success of the company, and for that reason, they are also part owners for the franchise. This franchise location will have a management team made of up the six members of our group. One of our members will have the label of area manager. The remaining four-team members will be placed in the following titles: Market Training Manager, General Manager, Assistant Manager, and Shift Manager. The two lowest levels of employment at Noodles & Company, Journey Leader, and Team Member, will be hired on and trained for their appropriate positions within the company. If in the case one of the management positions requires more than one person in the position, the next lowest level of management team member will move up to help the higher position. This will result in training of the next lower level person to move up a promotion level. It is our plan to hire mostly University of Oklahoma students for the positions of Journey Leader and Team Members. These employees will work mostly part time. It is because of this that these employees will require no benefits, thus reducing our payroll burden.

Our team members will hold the following positions:

Position Team Member

Area Manager Devin Sauer

Market Training Manager Emily Steelman

General Manager Kayla Vankirk

Assistant Manager Xinyao Wang

Shift Manager Zhouyang Lin

Shift Manager London Graves

Job rankings within our franchise are as the follows:

Team members will include positions such as cashier, server, dishwasher, cook, etc. Journey leaders will have the same positions as the team members only they will have a little more responsibility. These responsibilities will include being a mentor to the team members, helping with training of new team members, and helping with the management team with a variety of tasks. These positions will require no prior work experience. This is because we want to train our employee the “Noodles” way and not have to fix old bad habits acquired elsewhere.

Salaries and Wages

Salaries and wages will depend on the position of the employee and their experience background, but the average salaries and wages will look as follows:

Position Wages

Team Members $9/hour

Journey Leaders $10.50/hour

Shift Manager $22,500/ Year

Assistant Manager $36,000/ Year

General Manager $42,000/Year

Market Training Manager

$58,000/ Year

Area Manager $71,500/Year

Day-to-Day OperationsPromotion

Noodles & Company has a very strict market promotion policy. It requires a “Grand Opening Marketing Program” for when restaurant is started. It would incur a minimum cost from $7,500 and further market promotion program after the “Grand Opening” (Noodles & Company). Please see Appendix E for detailed of these requirements. Furthermore, Noodles & Company requires all franchisees to spend at least 1.25% of net royalty sales on location promotion. For the purpose of advertising and public relations, expenditures include spending for advertising media, marketing of coupons, public relations to create goodwill, and enhancing public image and community relations including events and sponsorships (Noodles & Company-Franchise Disclosure Document Exchange). Please see Appendix F for a detailed description of marketing expenses.    Production

Noodles & Company’s Menu Detail website emphasizes the importance of providing “real food with real ingredients.” It requires all franchisees to sell all of the menu items designated as part of its standard menu and provide all standard services designated. All products must be purchased from designated suppliers. All other items must be purchased from approved suppliers(Noodles & Company). Please see Appendix E. Noodles & Company purchases different products from various supplier:

Products Suppliers/ Locations

Pasta Dakota Growers Pasta Company

Noodles Thailand

Beers Local Favorites

Cheese Self-Make

Vegetables Local

Personnel

Selection will be mainly processed through website. We will create an online hiring page which contains the information for positions available and job descriptions. Moreover, we have anticipated that lots of our staff members would be the current students of the University of Oklahoma. Therefore, we have designed a hiring plan for peak season (school time) and off-peak season (summer and winter).

No. of Staff member

Peak Season

Off-peak Season

Noodles & Company requires their employees to attend specific training programs (Noodles & Company-Franchise Disclosure Document Exchange). Please see Appendix G.  

Customer Protocols

Noodles & Company holds for a general customer services call center, which receives complaint calls from all the customers around the U.S. Within the store, Shift Managers will be taking care of customer service issues on a daily basis.All customer policy will be strictly performed according to Noodles & Company customer service requirement. The aim for our store is to have zero complaints from customers and provide the most welcomed environment to all the customers.

Administrative

General Manager will be handling daily administrative issues with assistance from Shift Managers.

Bookkeeping

Financial and accounting transactions as well as record keeping will be handled by our team members who have previous accounting experience. Most accounting data will be kept within the computer system provided by Noodles & Company.

Legal Form of Business:

The legal form of business will be a Limited Liability Company and taxed on the corporate level. In this way, “the owners do not pay personal income taxes on profits left in the company” (Bplans Blog). Furthermore, it will allow unlimited number of owners and limited liability for members.

Financials Selected financials are included below. For additional projection figures, please see Appendix (XX)

Monthly Cash Flows, Year 1

Balance Sheet, Year 1

Breakeven Analysis

Funds Required

Fund required/used

·       The financial plan depends on initial investment of $300,000. Six founders, who each contribute $50,000 for the same amount of share, owned the company. Because this will not cover start-up, requirements and we will establish a bank relationship as soon as possible. The start-up funding amounts are shown in the table below.

Start-up funding

Start-up Expenses to fund $82,000

Start-up Asset to fund $661,667

Total  funding required $743,667

Non-cash assets from start-up $660,167

Cash requirements from start-up $1,500

Additional cash raised $0

Cash balance on starting date $0

Total assets $651,667

Liabilities

Current Borrowing $0                            

Long-term Liabilities $443,667

Accounts Payable $0

Other current liabilities $0

Total Liabilities $443,667

Planned investment

Investor 1 $50,000

Investor 2 $50,000

Investor 3 $50,000

Investor 4 $50,000

Investor 5 $50,000

Investor 6 $50,000

Additional Investment Requirement 0

Total  Planned Investment $300,000

Start-up Expenses ($82,000)

Total Capacity $218,000

Total Capacity and liabilities $661,667

Total Funding $743,667

Critical Risks

Tolerance Cost Strategy

-Supplier cuts or delays food ingredients

Unacceptable  .4 x .8 x 15 days= 4.8 day

delay

Mitigate/Avoid

-Fluctuations in employment Acceptable with 2 weeks’ notice from employee

 .8 x .4 x 3 days= .96 days delay

Accept

-Natural disaster hits Norman, OK

Acceptable and Unavoidable

 .5 x .9 x 100,000=

$45,000 hit

Share with insurance

-Construction in the area Accept for a few weeks and work with city

council

 .6 x .6 x 15 days= 5.4 day

delay

Accept

-Fluctuations of customers Accept  .7 x .3 x 4 days= .84 day delay

Accept

-Technology issues Unacceptable  .5 x .8 x 6 days= 2.4 day delay

Mitigate/Avoid

-Competition Accept  .9 x .4 x 3 days= 1.08 day delay

Accept

-Changes in tax or employment regulations-if minimum wage

increases

Accept   .3 x .7 x 2 days= .42 day

delay

Accept

-Food safety laws-chance of food poisoning

Unacceptable  .4 x .7 x 2 days= .56 day delay

Avoid

Appendix A

Five Forces Analysis

Figure 7: Forces driving competition in the restaurants industry in the United States, 2014 (MarketLine)

Appendix B

PESTEL Analysis

POLITICAL Tax Policy: Sales Tax Rate 8.25% Social Security Tax 6.2% Medicare Tax 1.45% Income Taxes 6% Oklahoma Use Tax 4.5%

1) levy on the purchase price of tangible personal property, including pre-paid transportation, purchased outside Oklahoma and stored, used, or otherwise consumed within the state (Commission).

Stability of government: Stable

ECONOMIC Interest Rates: Unemployment Rates: 3.7% Median Household Income: $48,248 General State of Economy: Healthy (Federal Census)

SOCIAL Size: 117,528Age:

Under 15: 16.6% Age 15 to 24: 25.1% Age 25 to 44: 25.2% Age 45 to 64: 22.1% Age 65 and Over: 10.3%

Ethnicity: White: 90,583 81.1% American Indian and Alaska Native: 4,238 3.8% Black: 4,530 4.1% Asian: 3,796 3.4% Native Hawaiian and Other Pacific Islander: 179 0.2% Two or More Races: 7,239 6.5% Other: 1,188 1.1% Hispanic or Latino: 5,995 5.4% (Federal Census)

TECHNOLOGICAL Computerized technologies located at tables, front counter, and in kitchenENVIRONMENTAL Natural Disasters include: tornados, flooding, and high windsLEGAL Health and Safety laws: A safe work environment is critical to providing excellent service and a

workplace that values the health of employees. We conduct safety inspections of City operations to ensure compliance with Occupational

Safety and Health Administration (OSHA) standards and to identify unsafe work conditions and practices.

We provide safety training to prevent employee injuries and property damage. Training programs include hazard communication, fall protection, confined workspace, traffic barricading, and proper use of personal protective equipment, etc. We also provide consultative services to assist City operations with safety-related problems. This includes regulation interpretation, work practice review, accident trend analysis, loss prevention recommendations, etc.

We investigate vehicle and equipment accidents to determine cause and responsibility, and make recommendations for corrective actions (McLendon)

Appendix C

FDD Criteria

Source: (Noodles & Company-Restaurant Site Criteria)

Appendix D

Norman Census

Source: (Federal Census)

Appendix E

Note

Source: (Noodles & Company)

Appendix F

Marketing

Source: (Noodles & Company-Franchise Disclosure Document Exchange)

Appendix G

Training Summary

Source: (Noodles & Company-Franchise Disclosure Document Exchange)

Appendix H

Training Schedule

Source: (Noodles & Company-Franchise Disclosure Document Exchange)

Works Cited

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2015. <<http://www.ok.gov/tax/Businesses/Tax_Types/>>.

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<http://www.ci.norman.ok.us/content/demographics>.

MarketLine. Forces Driving Competition in Restaurants Industry in the United States. 08 April

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pid=MLIP1590-0025&view=d0e500>.

McLendon, Brandon. City of Norman-HR Safety. 2015. Web.

<http://www.ci.norman.ok.us/hr/hr-safety>.

Noodles & Company. Estimated Initial Investment. n.d. Website. 23 June 2015.

<http://www.noodles.com/about/noodlesfranchisepacket.pdf>.

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<http://fddexchange.com/view-fdd-docs/noodles-company/>.

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<http://www.noodles.com/about/noodlesfranchisepacket.pdf>.

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June 2015. <http://kff.org/other/state-indicator/blue-and-white-collar-workers/>.

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<http://quickfacts.census.gov/qfd/states/40/4052500.html>.