Noodles & Company has agreed to acquire 16 franchised restaurants for about $13.4 million.
The restaurants, which are operated by longtime franchisee Sagamore Dining Partners LLC, are all located in the greater Indianapolis area, and they are expected to remain open during the transition. The deal is expected to close in early July.
Sagamore, which was founded by Mike Lamb, agreed to sell the Indianapolis units in part to help finance a plan to open Noodles & Company units in the greater Louisville, Ky., market. The franchise operator signed a deal earlier this year with the Broomfield, Colo.-based fast-casual chain to develop the new territory, where the first restaurant is expected to open in late 2014.
“Mike Lamb and his team at Sagamore Dining Partners have done an outstanding job of establishing the Noodles & Company brand in Indianapolis over the past eight years,” Kevin Reddy, Noodles & Company’s chairman and chief executive, said in a statement. The successful restaurants they have built and operated are extremely well-run, and we look forward to adding them to our portfolio of company-owned restaurants in neighboring markets.”
Noodles & Company already owns and operates three restaurants in Indiana.
Wall Street analysts saw the move as beneficial to Noodles & Company, saying the acquired locations could add roughly $2 million to annual earnings before interest, taxes, depreciation and amortization, or EBITDA, and about 1 cent to 2 cents in per share earnings for the year, according to a report Tuesday by David Tarantino of Robert W. Baird & Co.
Noodles & Company operated and franchised 394 restaurants in 30 states and the District of Columbia as of the April 1-ended quarter. Of those, 63 were franchised units.
In 2014, Noodles & Company expects to open 42 to 50 company-owned locations and 10 to 15 franchised units.
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