Fast casual=Quality +Value
The main listed proponents of this trend are Chipotle Mexican Grill (CMG) and Panera Bread (PNRA). They are both favourites of mine a typical meal in New York will consist of me having breakfast at Panera Bread and lunch at Chipotle. Both concepts cater to the tend of eating healthy and making things easier for the consumer who no longer has to wait for the bill and tip.
There is another fast casual concept which has just joined the group, Noodles & Company listed last Friday with shares doubling on debut much like Chipotle when it listed. Noodles is a player in the fast casual space focused on you guessed it noodles. Noodles serves pasta and noodles from around the world ranging from Japanese Pan Noodles, Wisconsin Mac and Cheese, Pad Thai and Spaghetti. They also serve soups, sandwiches and salads. Average per person spend is $8.
Noodles has one of the best outlooks for store growth in the fast casual space. They have only 7 stores in California and zero in New York. Panera and Chipotle have great long term growth outlooks just in the US not even contemplating growth overseas but Noodles has even further to go.
Source: Noodles investor roadshow
After the float the management and directors will own 8.5% of the company. The great part about management is that they are ex-Chipotle Mexican Grill. When Chipotle was owned by McDonalds management helped grow Chipotle to more than 400 restaurants between 2000 and 2005 and have since grown Noodles from 100 to 327 between 2005 and 2012.
A risk is management's old employer Chipotle, they are beginning to open their own noodle concept called Shophouse Southeast Asian Kitchen. Chipotle expect to have 8 restaurants opened by mid-2014.
Similar ingredients for long term success
Same store sales are not as great as Chipotle's double digital growth when it listed but then again not many restaurant companies have. The large store growth potential and lack of noodle options/competitors suggest Noodles has similar ingredients for long term success.
Come visit our booth at the Sydney Trading and Investment Expo on the 19th-20th of July.
Disclosure: Decisive does not have a position in Noodles stock