Describe the culture at Noodles and Company. Share some of the challenges that Kennedy and his company faced relating to growth. Discuss what you consider as a group some of the best options moving forward with Noodles and Company

A) Culture:

At Noodles and Company (N&C), the culture is unique and this is due to the way the company is structured.

Noodles and Company (N&C) operates a franchise system. However, within that franchise system, operations are regulated using a Standard Operating Manual called the "The Noodles Brain".

This is part of (N&C)'s best in class hiring protocols. In addition to the above, prospective franchisees go through a very meticulous selection process. They are screened using psychological tests and are selected based on strategically designed criteria.

Another culture at N&C is that new franchisees are onboarded into the N&C system with the help of a seasoned corporate manager who serves as a mentor. This mentor in N&C culture is referred to as "Noodles Buddy".

B) Growth Challenges:

Initially, there was the issue of lack of experience and information about how to manage multiple locations at the same time without losing the N&C experience/quality.

C) Best Options with Regards to Way Forward

As far as the principles of Franchises are concerned, N&C is currently on the right track. It has decided to grow its franchise system very inclusively but slowly to ensure that there is a system, not a group separate entities running the business under the same name.    

According to Aaron Kennedy, one of the growth options being considered is going the way of IPO. Whilst this is a fantastic option, the question is, does it match N&Cs slow but firm growth strategy?

Successful IPOs generate a lot of cash in the short run as well as a lot of expectations from the new stakeholders/shareholders. There is also the scrutiny it brings from the Securities and Exchange Commission (SEC). With a new IPO status, N&C would need to ensure that it is consistently compliant with the requirements of the SEC etc.

So rather than go IPO to open up more franchises, in the short run,

it is more profitable and safer to do an IPO then execute a backwards integration afterwards. With noodles being a key ingredient in its business' manufacturing costs, the acquisition (fully or part) of its noodles supplier to the end that the cost of its key manufacturing component is reduced will give it a cost to profit advantage.

This will ignite an upward spiral in its bottom line, and give it a strong edge over other franchises who may or may not depend on the new N&C's sister company for supplies.  

From this position of a cost/price advantage, N&C may decide to edge make competition less of a threat or even take them over.

Nothing catalyses growth like a combination of great product/service Plus great customer price in addition to very competitive pricing.

Cheers!

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