Dive Brief:

• Noodles & Company is seeking multi-unit franchise partners to grow its footprint in the South and Southwest, according to a company release. The chain is targeting Alabama, Florida, Georgia, New Mexico, South Carolina and Texas, specifically.
• Vice President of Franchise Development John Ramsey, who Noodles hired in November, will support the company's plans for accelerated unit growth. Ramsey said in the release the chain's smaller store models, pickup windows for digital orders and streamlined operations cater well to the pandemic diner environment. 
• Noodles has been honing its off-premise strategy over the last year, announcing plans in January to launch a ghost kitchen operation and company-owned, off-premise-only restaurant units in Q1 2021. In October, the chain said it planned to deploy drive-thru pickup windows at 70% of its new units.

Dive Insight:

Noodles' decision to hit the gas on expanding its off-premise focused units follows a bumper year for its digital growth. During Q3 2020, the chain's digital sales rose 151% and represented 61% of sales for the period. 

This growth should be attractive to franchisees looking to partner with brands that are well-positioned to benefit from diner interest in fast, contactless restaurant experiences as dining room restrictions persist in many municipalities. When Noodles opened a new restaurant with a pickup drive-thru window in October, 78% of digital orders were processed at the touch point, for example.

"Pre-COVID, the brand was continuing to grow primarily through its company division, but once we saw the reaction from our guests to [off-premise innovation] and the direction of our existing franchise groups, we said this could be a great opportunity to really emphasize and bring franchising back into the forefront of our growth strategy and use franchisees specifically to grow into new markets," Ramsey said. 

Noodles' drive-thru pickup windows could be a strong point of differentiation within the fast casual space as well. Despite the QSR segment's major same-store sales gains in 2020 — which stem overwhelmingly from drive-thru traffic — only 6% of fast casual operators have added drive-thru services since the start of the pandemic, according to the National Restaurant Association's 2021 State of the Restaurant Industry report. The association suggests that this low level of adoption likely reflects the high cost of adding this touchpoint. 

New stores in the South and Southwest markets will also feature footprint configurations to be better positioned for off-premise traffic, smaller store models and a focus on outdoor dining space to take advantage of the region's mild weather, Ramsey said. 

The success of Chipotle's pickup drive-thru suggests a lucrative path to bolstering fast casual off-premise sales, and could give Noodles' proposed units a halo effect that could lure new operators. Chipotle plans for more than 70% of the 200 restaurants expected to open this year to feature a Chipotlane, according to a February earnings call, and the channel helped grow its digital sales 174% to $2.8 billion in 2020.