Noodles & Company Annual Report 2015

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FY2015 Annual Report · Noodles & Company

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GET A
E E K

INTO

RR PA N

ors.

MADE. DIFFERENT.

2015 Annual Report

3/14/16 2:53 PM

Dear Shareholders,

MADE. DIFFERENT.

Since our first restaurant opened twenty years ago in Denver, Colorado, Noodles & Company has always
offered a truly differentiated, unique dining experience for our guests. From our culinary approach to the friendly,
welcoming Noodle Ambassadors in our restaurants, Noodles & Company is indeed Made. Different. In 2015,
we completed important work to better reach new and existing guests alike to build the Brand.

In October, we launched our Made. Different. brand positioning and related REAL Food. REAL
Cooking. REAL Flavors. platform.

So what does “REAL Food. REAL Cooking. REAL Flavors.” mean to us?

First…REAL Food.

Noodles & Company has always been committed to providing high quality ingredients to our guests, and
in 2015 we took important steps to further this commitment. We announced in October that we have
removed all artificial colors, flavors, preservatives and sweeteners from our core menu, including all of
our noodles, sauces, soups, condiments, bread and dressings. A few years ago, we introduced naturally-
raised pork nationwide, and by the end of 2016 we will have expanded our REAL Food platform to
include naturally raised bacon, meatball and steak offerings as well. We have also been testing antibiotic-
free chicken in Colorado and plan on introducing it nationwide in 2017. As our guests’ interests and
expectations continue to evolve, we are delighted that we have been able to maintain our commitment to
serving food that our guests can be proud to serve their families.

Second…REAL Cooking.

Perhaps nothing exemplifies our Made. Different. positioning more than our approach to REAL
Cooking. Since our inception we have always featured a differentiated culinary approach, utilizing
classical cooking techniques and prepping ingredients throughout the day to customize every dish to our
guests’ liking — whether they wish to add naturally raised pork, swap onions for broccoli, or substitute
our gluten-free fusilli noodle into their favorite dish. We showcased our ability to customize dishes early
in 2015 through the introduction of our BUFF Bowls, which doubled the vegetables, were topped with
protein and substituted spinach instead of noodles in four of our most popular dishes, giving our guests the
opportunity to create their own high-protein meal.

Finally…REAL Flavors.

Noodles & Company’s genesis was the opportunity to provide a world of flavors under one roof,
which has helped us to maintain our menu’s position as being truly differentiated in today’s competitive
restaurant industry. Whether one is in the mood for our classic Wisconsin Mac & Cheese, Penne Rosa or
our sweet and tangy Korean BBQ Meatballs, we are tremendously proud of the variety and complexity of
flavors that are featured on our World Kitchen menu. In 2016, we expect to continue this legacy through
improvements and introductions to our Asian category, as well as enhancements of flavors throughout our
menu. From spicy to savory, healthy to indulgent, we believe our menu can accommodate a wide variety
of tastes for our guests—representing a unique and powerful strength of the Brand.

While the core tenets of Noodles & Company have not changed much over the years, in 2015 we took
important steps to better capitalize on the natural strengths of the Brand, including people, menu and
marketing initiatives.

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We start with the 10,000 plus team members throughout the country who deliver our dining experience
to thousands of guests each and every day. In 2015, we reinvigorated our Mission Statement to our
team. “To always nourish and inspire every team member, guest and community we serve.” Internally, we
introduced a new development program to allow our team members to better understand their career
path at Noodles & Company and to develop the future leaders of our restaurants. Externally, we developed
a partnership with No Kid Hungry to raise awareness of childhood hunger, a partnership through which we
strive to provide one million meals to kids who need them.

In conjunction with our partnership with No Kid Hungry, in 2015 we also introduced a new Kids Meal. Our
Kids Meal allows children to design their meal, any way they want. It includes options such as Wisconsin
Mac & Cheese, Spaghetti & Meatballs, Buttered Noodles or Grilled Chicken, with the opportunity to add
two sides such as broccoli, carrots, fresh fruit or applesauce. Together with a beverage that includes
organic juice and milk offerings, and served for only $5. Our Kids Meal has been incredibly well received
with our core target guest — the growing demographic of Millennial families.

As we look to grow our Brand and capitalize on our strength with families, we also began in 2015 to
increase our investment in media to better communicate our Brand Story. In select markets throughout
the country, we invested in integrated marketing communications more than ever and have been very
encouraged by our initial results. While these efforts are intended primarily to build brand awareness,
we are proud of the campaign’s focus on showcasing our REAL Food menu ingredient and culinary
innovation stories. We look to extend this campaign to additional markets in 2016 while continuing to
evolve and improve upon our national marketing strategies in promotion, local relationship marketing
and digital media.

We are proud of all that has been accomplished since Aaron Kennedy and the team opened the doors at
Cherry Creek twenty years ago. From those humble beginnings, as of the end of 2015 we operated 492
restaurants system-wide in 35 states, as well as Washington D.C. and Toronto, where we opened our first
international location this past summer.

In 2015, we made Nation’s Restaurant News’ Top 100 list for system-wide sales in the United States for
the first time, and in 2016 we expect to serve over 60 million guests throughout the year.

2016 will be an exciting year as we continue to inspire our teams, build the Brand, optimize our menu and
meet guests’ needs through the development of off premise sales with our catering, online ordering and
delivery platforms.

I am proud to be part of such a unique and special brand with such tremendous potential. Noodles &
Company continues to hold a differentiated position in the high-growing fast casual space, and our
attractive core base of millennial families is one of the fastest growing demographics in the country.

We certainly recognize that we would not have been able to make this twenty year journey without the
efforts of our suppliers, franchisees and shareholders. Thank you for your continued support and I can’t
wait to see what the next twenty years will bring to Noodles & Company.

Sincerely,

Kevin Reddy
Chairman and Chief Executive Officer

MADE.
DIFFERENT.

FOOD

N O A R T I F I C I A L
F L A V O R S , S W E E T E N E R S ,
C O L O R S O R P R E S E R V A T I V E S * .

COOKING

O U R K I T C H E N S A R E
B U S T L I N G . 1 4 F R E S H
V E G E T A B L E S A R E P R E P P E D
T H R O U G H O U T T H E D A Y A N D
E V E R Y D I S H I S H A N D C R A F T E D
T O Y O U R T A S T E .

FLAVORS

O U R F L AV O R S A R E
C R E A T E D W I T H R E C I P E S
F R O M A R O U N D T H E W O R L D ,
B Y H A N D , O N E U N I Q U E D I S H
A T A T I M E .

Read more at
Noodles.com/GetReal
*Excludes select beverages, cookies and rice crispies.

Made. Different.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 29, 2015

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35987

NOODLES & COMPANY

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of
incorporation or organization)

520 Zang Street, Suite D

Broomfield, CO

(Address of Principal Executive Offices)

84-1303469

(IRS Employer
Identification No.)

80021

(Zip Code)

Registrant’s telephone number, including area code: (720) 214-1900

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common stock, par value $0.01 per share

Name of each exchange on which registered
NASDAQ (Global Select Market)

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934

during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).

Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See

the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer

Accelerated filer

Non-accelerated filer
(do not check if a
smaller reporting
company)

Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes

The aggregate market value of the voting and non-voting common stock held by non-affiliates as of June 30, 2015, the last business day of the registrant's
most recently completed second fiscal quarter, was $210.1 million. This amount was calculated based on the closing price of the common stock on June 30,
2015 on the NASDAQ Global Select Market. All executive officers and directors of the registrant have been deemed, solely for the purpose of the foregoing
calculation, to be "affiliates" of the registrant.

As of February 25, 2016, there were 26,202,466 shares of the registrant’s Class A common stock, par value of $0.01 per share, and 1,522,098 shares of the

registrant's Class B common stock, par value $0.01 per share, outstanding.

Portions of the registrant's proxy statement relating to its 2016 Annual Meeting of Stockholders, to be held on or about May 5, 2016, are incorporated by

reference into Part III of this Annual Report on Form 10-K, where so indicated. Such proxy statement will be filed with the U.S. Securities and Exchange
Commission within 120 days after the fiscal year end to which this report relates.

DOCUMENTS INCORPORATED BY REFERENCE

TABLE OF CONTENTS

PART I
Business ............................................................................................................................................
Risk Factors.......................................................................................................................................
Unresolved Staff Comments .............................................................................................................
Properties ..........................................................................................................................................
Legal Proceedings .............................................................................................................................
Mine Safety Disclosures ...................................................................................................................
PART II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities ...............................................................................................................................
Selected Financial Data.....................................................................................................................
Management's Discussion and Analysis of Financial Condition and Results of Operations............
Quantitative and Qualitative Disclosures About Market Risk ..........................................................
Financial Statements and Supplementary Data.................................................................................
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...........
Controls and Procedures ...................................................................................................................
Other Information .............................................................................................................................
PART III
Directors, Executive Officers and Corporate Governance................................................................
Executive Compensation...................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters ..............................................................................................................................................
Certain Relationships and Related Transactions, and Director Independence..................................
Principal Accounting Fees and Services ...........................................................................................
PART IV
Exhibits, Financial Statement Schedules ..........................................................................................

Page

44
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ITEM 1.

ITEM 1A.

ITEM 1B.

ITEM 2.

ITEM 3.

ITEM 4.

ITEM 5.

ITEM 6.

ITEM 7.

ITEM 7A.
ITEM 8.

ITEM 9.

ITEM 9A.

ITEM 9B.

ITEM 10.

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ITEM 13.

ITEM 14.

ITEM 15.

SIGNATURES

EXHIBITS

ITEM 1.

Business

General

PART I

Noodles & Company is a growing, fast casual restaurant concept offering lunch and dinner within the fast casual segment of
the restaurant industry. We opened our first location in Denver, Colorado in 1995, offering noodle and pasta dishes, staples of many
cuisines, with the goal of delivering fresh ingredients and flavors from around the world under one roof. Today, our globally inspired
menu includes a wide variety of high quality, cooked-to-order dishes, including noodles and pasta, soups, salads, sandwiches and
appetizers, which are served on china by our friendly team members. In conjunction with our 20th Anniversary in October 2015, we
built on our commitment to provide our customers high quality dishes and announced our Made. Different. brand positioning, detailing
our Real Food, Real Cooking and Real Flavors initiatives. As part of this brand positioning, we also announced the removal of all
artificial colors, flavors, preservatives and sweeteners from our core menu, including noodles, sauces, soups, condiments, bread and
dressings, but excluding beverages, cookies and rice crispies. We also committed to offer meat and poultry never given antibiotics
or hormones by 2017. We believe that we offer our customers value, with per person spend of $8.55 for the fiscal year ended
December 29, 2015. We have 492 restaurants, comprised of 422 company-owned and 70 franchised locations, across 35 states, the
District of Columbia and one Canadian province as of December 29, 2015.

We offer more than 25 globally inspired Asian, Mediterranean and American dishes together on a single menu. We believe we
will continue to benefit from trends in consumer preferences, wider availability of international cuisines and increasingly adventurous
consumer tastes. At many restaurants, people are limited to a particular ethnic cuisine or type of dish, such as a sandwich, burrito or
burger. At Noodles & Company, we aim to eliminate the "veto vote" by satisfying the preferences of a wide range of customers,
whether a mother with kids, a group of coworkers, an individual or a large party.

We believe that we are the only national fast casual restaurant concept offering a menu with a wide variety of noodle and pasta
dishes, soups, salads, sandwiches and appetizers inspired by global flavors. We believe our attributes—global flavors, variety, dishes
prepared-to-order and fast service—allow us to compete against multiple segments throughout the restaurant industry and provide
us a larger addressable market for lunch and dinner than competitors who focus on a single cuisine. We believe we provide a pleasant
dining experience by quickly delivering fresh food with friendly service at a price point we believe is attractive to our customers.

Noodles & Company is a Delaware corporation that was organized in 2002. Noodles & Company and its subsidiaries are

sometimes referred to as "we," "us," "our," and the "Company" in this report.

Our Concept and Business Strengths

Variety. We have purposefully chosen a range of healthy to indulgent dishes to satisfy carnivores and vegetarians. Our menu
encourages customers to customize their meals to meet their tastes and nutritional preferences with our selection of 14 fresh vegetables
and six proteins–marinated steak, naturally raised pork, chicken, meatballs, shrimp and organic tofu.

All of our dishes are cooked-to-order with fresh, high quality ingredients sourced from our carefully selected suppliers. Our
commitment to the freshness of our ingredients is further demonstrated by our use of seasonal ingredients and healthy add-in options
(such as organic tofu). Our culinary team strives to develop new dishes and limited time offerings ("LTOs") to further reinforce our
Made. Different. brand positioning and regularly provide our customers additional options. For example, in Spring of 2015 we
introduced BUFF Bowls: four of Noodles & Company's most popular pasta bowls—Japanese Pan, Whole Grain Tuscan Fresca,
Pesto Cavatappi and Bangkok Curry—in the buff—to showcase the customization available to customers designing dishes to their
dietary or nutritional preferences. Each BUFF Bowl features a double portion of veggies, topped with protein and served on a bed
of spinach in place of the noodles, for a low-carb dish that is full of flavor and under 400 calories. This focus on culinary innovation,
combined with our commitment to Real cooking, allows us to prepare and serve high quality food.

Value. The value we offer, the quality of our food and the welcoming ambiance of our restaurants creates an overall customer
experience that we believe is second-to-none. Our per person spend of $8.55 for the twelve months ended December 29, 2015 is
competitive not only within the fast casual segment, but also within the quick-service segment. We deliver value by combining a
family-friendly dining environment with the opportunity to enjoy many dishes containing ingredients like our award-winning slow-
braised, naturally raised pork. In October of 2015 we also introduced Kids Meals which, at a fixed low price, offers the opportunity

for parents to feed their children a balanced meal which includes sides such as broccoli, carrots, fruit, applesauce, and a smaller
portion of our housemade rice crispy treat.

Our Restaurant Experience. We design each location individually, which we believe creates an inviting restaurant environment.
We believe the ambiance is warm and welcoming, with muted lighting and colors, comfortable seating and our own custom music
mix, which is intended to make our customers feel relaxed and at home. We also enhance the experience by featuring Coca-Cola
Freestyle® machines in all our restaurants, offering our customers over 100 drink choices to complement their meal—again putting
control in the customers’ hands, so that they can create or match their drink to their meal.

We believe we deliver an exceptional overall dining experience. We think that our customers should expect not only great food
from our restaurants, but also warm hospitality and attentive service. Whether you are a mother with kids or a businessperson with
a laptop, you simply order your food, grab a drink and take a seat. We cook each dish to order in approximately five minutes and
bring the food right to your table. Our customers may enjoy a relaxed meal or just eat and run.

Consistent with our culture of enhanced customer service, we seek to hire individuals who will deliver prompt, attentive service
by engaging customers the moment they enter our restaurants. Our training philosophy empowers both our restaurant managers and
team members to add a personal touch when serving our customers, such as coming out from behind the counter to explain our menu
and guide customers to the right dish. Our restaurant managers are critical to our success, as we believe that their entrepreneurial
spirit and outreach efforts build our brand in our communities. We call our cashiers "Noodle Ambassadors" to highlight their role in
helping our customers explore our global menu.

After our customers order at the counter, their food is served on china and delivered to their table by our friendly team members.
To further enhance our customers’ dining experience, we check on them throughout their meal. We offer them drink refills, a glass
of wine or dessert, so they do not have to leave their seats. No trash cans are visible to our customers in our restaurants: following
the meal, our team quickly clears the table.

Restaurant Unit Growth

We believe we have significant growth potential because of our brand positioning, strong unit economics, financial results and
broad customer appeal. We have more than doubled our restaurant base in the last six years to 492 locations in 35 states, the District
of Columbia and one Canadian province as of December 29, 2015, including the 51 company-owned restaurants and 19 franchise
restaurants opened in 2015. During 2015 we also purchased one restaurant from a franchisee and closed 16 company-owned restaurants
and one franchise restaurant. We believe we are at an early stage of nationwide expansion, and that we can grow up to 2,500 restaurants
over the next 15 to 20 years across the United States based on our scalable infrastructure, broad appeal and flexible and portable real
estate model, but this growth rate is not guaranteed. Our restaurants are typically 2,600 to 2,700 square feet and are located in end-
cap, inline or free-standing locations across a variety of urban and suburban markets. Our near-term growth strategy will involve
opening units primarily in existing markets.

Although we expect the majority of our expansion to continue to be from company-owned restaurants, we are strategically
expanding our base of franchise restaurants. Our franchise program is a low-cost and high-return model that allows us to expand our
footprint and build brand awareness in markets that we do not plan to enter with company-owned restaurants in the short to medium
term. As of December 29, 2015, we have 70 franchise units in 15 states operated by 12 franchisees. We look for experienced, well-
capitalized franchise partners who are able to leverage their existing infrastructure and local knowledge in a manner that benefits
both our franchisees and ourselves. As of December 29, 2015, a total of`11 area developers have signed development agreements
providing for the opening of 145 restaurants in their respective territories.

Site Development and Expansion

We consider our site selection and development process critical to our long-term success. We use a combination of our own
development team and outside real estate consultants to locate, evaluate and negotiate new sites using various criteria. In addition,
because we offer a mix of dishes and a dining experience that differs from many other restaurant concepts, we believe our restaurants
are highly sought after by real estate owners and developers. Also, we learn of opportunities early in their development process,
allowing us to secure optimal locations.

In making site selection decisions, we also use several analytical tools designed to uncover the key site, demographic, business,
retail, competitive and traffic characteristics that drive successful locations. These tools have been customized to leverage existing
real estate information to project sales at a potential location and to assist in the development of local marketing plans.

Our ability to succeed in several different kinds of trade areas and real estate types has allowed us flexibility in our market
development strategy. While we typically target end-cap or freestanding locations, we also have seen success in inline locations.
Moreover, we perform well in various market sizes, from smaller markets to suburbs to central business districts. This flexibility
also allows us to manage risk in our development portfolio by balancing higher cost locations—typically seen in urban areas—with
those that are lower cost—typically seen in smaller markets.

Once a location has been approved by our executive-level selection committee, we begin a design process to match the
characteristics and feel of the location to the trade area. For example, in a trade area with a high percentage of families we will utilize
additional booth seating in the dining room, and in an urban location we will typically alter our kitchen design to enhance throughput
for the busy lunch hours.

Restaurant Management and Operations

Friendly People. We believe our genuine, nice people separate us from our competitors. We value the individuality of our team
members, which we believe results in a management, operations and training philosophy distinct from that of our competitors. We
make an effort to hire team members who share a passion for food, have a competitive spirit and will operate our restaurants in a
way that is consistent with our high standards. We seek to hire individuals who will deliver prompt, attentive service by engaging
customers the moment they enter our restaurants. We empower our team members to enrich the experience of our customers and
directly address any concerns that may arise in a manner that contributes to the success of our business.

Restaurant Management and Employees. Each restaurant typically has a restaurant manager, an assistant manager and as many
as 15 to 25 team members. We cross-train our employees in an effort to create a depth of competency in our critical restaurant
functions. Consistent with our emphasis on customer interaction, we encourage our restaurant managers and team members to
welcome and interact with customers throughout the day. To lead our restaurant management teams, we have area managers (each
of whom is responsible for between five and 12 restaurants), as well as market directors (each of whom is responsible for between
50 and 80 restaurants).

Training and Career Development. We believe that our training efforts create a culture of continuous learning and professional
growth that allows our team members to continue their career development with us. Within each restaurant, two to four team members
are designated to lead the training efforts and ensure a consistent approach to team member development. We produce training
materials that encourage individual contributions and participation from our team members, rather than providing rote, step-by-step
scripts or rigid and extensively detailed policy manuals.

Food Preparation and Quality. Our teams use classic professional cooking methods, including hand-chopping, par boiling and
sautéing many of our vegetables, in full kitchens resembling those of full service restaurants. All team members, including our
restaurant managers, spend their first several days working solely with food and learning these techniques, and we spend a significant
amount of time ensuring that each team member learns how to prepare and cook our food properly. Despite our more labor-intensive
method of food preparation, we believe that we produce food with an efficiency that enables us to compete effectively.

The majority of our restaurants have exhibition-style kitchens. This design demonstrates our commitment to cooking fresh food
in an accessible manner. We provide each customer with individual attention and make every effort to respond to customer suggestions
and concerns in a personal and hospitable way.

We do real cooking in our restaurants, which requires that all of our dishes are cooked to order at food safe temperatures or, in
the case of salads, subject to our produce washing protocols, which helps us to ensure that the food that we serve to our customers
is safe. We have designed our food safety and quality assurance programs to maintain high standards for our food and food preparation
procedures. Our quality assurance manager oversees comprehensive restaurant and supplier audits based upon the potential food
safety risk of each food. We also consider food safety and quality assurance when selecting our distributors and suppliers. Our
suppliers are inspected by federal, state and local regulators or other reputable, qualified inspection services, which helps ensure
their compliance with all federal food safety and quality guidelines. We regularly inspect our suppliers to ensure that the ingredients
we buy conform to our quality standards and that the prices we pay are competitive. We also rely on our own recipes, specifications
and protocols to ensure that our food is consistently the best quality possible when served, including a physical examination of

ingredients when they arrive at our restaurants. We train our employees to pay detailed attention to food quality at every stage of the
food preparation cycle, and we have developed a daily checklist that our employees use to assess the freshness and quality of food
supplies. Finally, we encourage our customers to provide feedback regarding our food quality so that we can identify and resolve
problems or concerns as quickly as possible.

Restaurant Marketing

Our marketing efforts seek to increase sales through a variety of channels and initiatives. Community-based restaurant marketing,
as well as online, social and other media tools, highlight our competitive strengths, including our varied and healthy menu offerings
and the value we offer our customers.

•

Local Relationship Marketing. We differentiate our business through an innovative, community-based approach
to building brand awareness and customer loyalty. We use a wide range of local marketing initiatives to increase
the frequency of and occasions for visits, and to encourage people to get to know us better, try our food and bring
their friends. We empower our local restaurant managers to selectively organize events to bring new customers
into our restaurants. For example, we offer fundraising nights to build our partnerships with our community
organizations and schools, and we hold "Appreciation Days" for our customers to showcase our menu offerings.

Outdoor, Radio, and Digital Advertising. In select markets where we have economies of scale, we utilize traditional
advertising methods such as outdoor billboards and transit stations, as well as radio placement. Additionally, we
use targeted digital advertising in many of our markets. We believe these efforts help to increase top of mind
awareness with potential customers and drive both frequency and trial. In addition, digital advertising provides us
with the opportunity to promote specific product platforms and offerings such as online ordering.

Our Menu Offerings. We focus some of our marketing efforts on new menu offerings to broaden our appeal to our
customers. We promote these items through a variety of formats including market-wide public relations events,
social media marketing, radio promotions, tastings and email blasts to our e-club. In addition to increasing brand
awareness, these promotions also encourage prompt consumer action, resulting in more immediate increases in
our customer traffic.

Online, Social and Other Media Tools. We rely on our website, www.noodles.com, to promote our business and
increase brand awareness. The information on or available through our website is not, and should not be considered,
a part of this report. Our customers are encouraged to sign up to receive email communication or Noodlegrams,
updating them on new menu offerings and promotional opportunities. As of December 29, 2015, more than
1,300,000 of our customers have signed up to receive Noodlegrams. We also communicate with our customers
using social media, such as our Facebook and Instagram pages, our YouTube channel and our Twitter feed. Our
media tools also include editorial placements in local, regional and national print/online media.

Creating New Meal Occasions. We also focus on ways Noodles & Company can serve customers at different times
and in new places. For example, with our core demographic target being the career-minded millennial parent, we
introduced a new Kids Meal menu in fall of 2015. Created for the future foodies of the world, children aged ten
and under are invited to design their own meal made fresh-to-order, with quality ingredients, by choosing their
entrée, two sides and a drink for just $5. Customers who want to feed a large group can enjoy our three catering
options: NoodlesBar, serving buffet style meals for 20 or more people comprised of main entrées, sides and desserts;
A La Carte individual pans that serve up to 10 people each and are great for adding variety to larger spreads or
feeding a small get together; and Square Bowls, which are family-style take-out offerings of our noodles, pastas
and salads that generally feed up to four people. We market these offerings in a variety of ways, including through
in-restaurant posters, email Noodlegrams, Facebook posts and other communications outside of our restaurants.

Making Noodles & Company Easier to Use. Some of our marketing efforts focus on making our restaurants easier
to use. We seek to deliver superior customer service at every opportunity, generating consumer awareness of menu
offerings with in-restaurant communications by providing displays of our menu offerings and beer and wine
selection that are visible upon entry, chalkboards featuring new menu offerings and fresh ingredients and table top
cards that highlight healthy food offerings. By providing multiple points of access to our wide variety of menu
offerings, we seek to optimize our customers’ in-restaurant experience to increase the frequency of our customers’
visits. Our efforts also utilize tools like online ordering.

Suppliers

Maintaining a high degree of quality in our restaurants depends in part on our ability to acquire fresh ingredients and other
necessary supplies that meet our specifications from reliable suppliers. We carefully select suppliers based on quality and their
understanding of our brand, and we seek to develop mutually beneficial long-term relationships with them. We work closely with
our suppliers and use a mix of forward, fixed and formula pricing protocols. We have tried to increase, in some cases, the number
of suppliers for our ingredients, which we believe can help mitigate pricing volatility, and we monitor industry news, trade issues,
weather, crises and other world events that may affect supply prices.

Seasonality

Seasonal factors and the timing of holidays cause our revenue to fluctuate from quarter to quarter. Our revenue per restaurant
is typically lower in the first and fourth quarters due to reduced winter and holiday traffic and higher in the second and third quarters.

Competition

We face competition from the casual dining, quick-service and fast casual segments of the restaurant industry. These segments
are highly competitive with respect to taste, price, food quality and presentation, service, location and the ambience and condition
of each restaurant, among other things. Our competition includes a variety of locally owned restaurants and national and regional
chains who offer dine-in, carry-out and delivery services. Many of our competitors have existed longer and have a more established
market presence with substantially greater financial, marketing, personnel and other resources than we have. Among our competitors
are a number of multi-unit, multi-market fast casual restaurant concepts, some of which are expanding nationally. As we expand, we
will face competition from these concepts and new competitors that strive to compete with our market segments.

We believe we are the only national fast casual restaurant concept offering a menu with a wide variety of noodle and pasta dishes,
soups, salads and sandwiches inspired by global flavors. We believe our attributes—global flavors, variety and fast service—allow
us to compete against multiple segments throughout the restaurant industry and provide us a larger addressable market for lunch and
dinner than competitors who focus on a single cuisine. We believe we provide a pleasant dining experience by quickly delivering
fresh food with friendly service at a price point we believe is attractive to our customer.

Franchising

We had 12 franchisees who operated 70 franchise restaurants in 15 states as of December 29, 2015. A total of 11 area developers
have signed area development agreements as of December 29, 2015, providing for the opening of 145 additional restaurants in their
respective territories. We expect to continue to offer development rights in markets where we do not intend to build company-owned
restaurants. We may offer such rights to larger developers who commit to open 10 or more units, or to smaller developers who may
commit to open significantly fewer restaurants. We do not currently intend to offer single-unit franchises. We believe the strength
and attractiveness of our brand and unit growth opportunities in attractive undeveloped markets will attract experienced and well-
capitalized area developers.

Intellectual Property and Trademarks

We own a number of trademarks and service marks registered or pending with the U.S. Patent and Trademark Office ("PTO").
We have registered the following marks with the PTO: Noodles & Company, the Noodles & Company logo, Your World Kitchen,
Square Bowl, Noodlegram, Crave Card and Wisconsin Mac & Cheese. We also have certain trademarks registered or pending in
certain foreign countries. In addition, we have registered the Internet domain name www.noodles.com. The information on, or that
can be accessed through, our website is not part of this report. We believe that our trademarks, service marks and other intellectual
property rights have significant value and are important to the marketing of our brand, and it is our policy to protect and defend
vigorously our rights to such intellectual property.

Governmental Regulation and Environmental Matters

We are subject to extensive and varied federal, state and local government regulation, including regulations relating to public
and occupational health and safety, sanitation and fire prevention. We operate each of our restaurants in accordance with standards
and procedures designed to comply with applicable codes and regulations. However, an inability to obtain or retain health department
or other licenses could adversely affect our operations. Although we have not experienced, and do not anticipate, any significant

difficulties, delays or failures in obtaining required licenses, permits or approvals, any such problem could delay or prevent the
opening of, or adversely impact the viability of, a particular restaurant or group of restaurants.

In addition, in order to develop and construct restaurants, we need to comply with applicable zoning, land use and environmental
regulations. Federal and state environmental regulations have not had a material effect on our operations to date, but more stringent
and varied requirements of local governmental bodies with respect to zoning, land use and environmental factors could delay or even
prevent construction and increase development costs for new restaurants. We are also required to comply with the accessibility
standards mandated by the U.S. Americans with Disabilities Act ("ADA"), which generally prohibits discrimination in accommodation
or employment based on disability. We may in the future have to modify restaurants, for example by adding access ramps or redesigning
certain architectural fixtures, to provide service to or make reasonable accommodations for disabled persons. While these expenses
could be material, our current expectation is that any such actions will not require us to expend substantial funds.

A small percentage of our revenues is attributable to the sale of alcoholic beverages. Alcoholic beverage control regulations
require each of our restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license that
must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to
numerous aspects of daily operations of our restaurants, including the minimum age of patrons and employees, hours of operation,
advertising, trade practices, wholesale purchasing, other relationships with alcohol manufacturers, wholesalers and distributors,
inventory control and handling and storage and dispensing of alcoholic beverages. We are also subject in certain states to "dram
shop" statutes, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment
that wrongfully served alcoholic beverages to the intoxicated person. We carry liquor liability coverage as part of our existing
comprehensive general liability insurance. A small number of our restaurants do not have liquor licenses, typically because of the
cost of a liquor license in jurisdictions having liquor license quotas.

In addition, we are subject to the U.S. Fair Labor Standards Act, the U.S. Immigration Reform and Control Act of 1986, the
Occupational Safety and Health Act and various other federal and state laws governing similar matters including minimum wages,
overtime, workplace safety and other working conditions. Our failure to fully comply with these laws could subject us to potential
litigation and liability. We are also subject to various laws and regulations relating to our current and any future franchise operations.

We are subject to federal, state and local environmental laws and regulations concerning waste disposal, pollution, protection
of the environment, and the presence, discharge, storage, handling, release and disposal of, or exposure to, hazardous or toxic
substances ("environmental laws"). These environmental laws can provide for significant fines and penalties for non-compliance
and liabilities for remediation, sometimes without regard to whether the owner or operator of the property knew of, or was responsible
for, the release or presence of the hazardous or toxic substances. Third parties may also make claims against owners or operators of
properties for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such substances.
We are not aware of any environmental laws that will materially affect our earnings or competitive position, or result in material
capital expenditures relating to our restaurants. However, we cannot predict what environmental laws will be enacted in the future,
how existing or future environmental laws will be administered, interpreted or enforced, or the amount of future expenditures that
we may need to make to comply with, or to satisfy claims relating to, environmental laws. It is possible that we will become subject
to environmental liabilities at our properties, and any such liabilities could materially affect our business, financial condition or
results of operations.

Management Information Systems

All of our restaurants use computerized management information systems, which we believe are scalable to support our future
growth plans. We use point-of-sale computers designed specifically for the restaurant industry. The system provides a touch screen
interface, a graphical order confirmation display and integrated, high-speed credit card and gift card processing. The point-of-sale
system is used to collect daily transaction data, which generates information about daily sales, product mix and average check that
we actively analyze. All products sold and prices at our company-owned restaurants are programmed into the system from our central
support office.

Our in-restaurant back office computer system is designed to assist in the management of our restaurants and provide labor and
food cost management tools. These tools provide corporate and restaurant operations management quick access to detailed business
data and reduces restaurant managers’ administrative time. The system provides our restaurant managers the ability to submit orders
electronically with our distribution network. The system also supplies sales, bank deposit and variance data to our accounting
department on a daily basis. We use this data to generate daily sales information and weekly consolidated reports regarding sales

and other key measures, as well as preliminary weekly detailed profit and loss statements for each location with final reports following
the end of each period.

Franchisees use similar point of sale systems and are required to report sales on a daily basis through an on-line reporting network

and submit their restaurant-level financial statements on a quarterly or annual basis.

Financial Information About Segments

We operate as a single accounting segment. Financial information related to our business is included in Item 8 of this Annual

Report on Form 10-K.

Employees

As of December 29, 2015, we had approximately 10,600 employees, including approximately 1,000 salaried employees and
approximately 9,600 hourly employees. None of our employees are unionized or covered by a collective bargaining agreement, and
we consider our current employee relations to be good.

Available Information

We maintain a website at www.noodles.com, including an investor relations section at investor.noodles.com, on which we routinely
post important information, such as webcasts of quarterly earnings calls, and any related materials. You may access our Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports and other
reports relating to us that are filed with or furnished to the SEC, free of charge in the investor relations section of our website as soon
as reasonably practicable after such material is electronically filed with or furnished to the SEC. The public may also read and copy
materials we file with the SEC at the SEC’s Public Reference Room, which is located at 100 F Street, NE, Room 1580, Washington,
DC 20549. You can obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC also maintains a website that contains reports, proxy and information statements and other information regarding issuers that
file electronically with the SEC at www.sec.gov.

The contents of the websites mentioned above are not incorporated into and should not be considered a part of this report. The

references to the URLs for these websites are intended to be inactive textual references only.

Executive Officers of the Registrant

Name
Kevin Reddy..................................................................

Age(1)
58

Dave Boennighausen .....................................................

Mark Mears ...................................................................

Phil Petrilli.....................................................................

Paul Strasen ...................................................................

Kathy Lockhart..............................................................

38
54

46
59

Position

Chairman and Chief Executive Officer

Chief Financial Officer

Executive Vice President and Chief Marketing Officer

Executive Vice President of Operations

Executive Vice President, General Counsel and Secretary

Vice President and Controller

_____________
(1)

As of March 1, 2016

Kevin Reddy has served as our Chief Executive Officer since April 2006. He became a member of our board of directors in May
2006, and Chairman of the Board in May 2008. Mr. Reddy was our President and Chief Operating Officer from April 2005 to April
2006, continuing to serve as our President until July 2012. Prior to joining us, he was the Chief Operating Officer, Chief Operations
Officer and Restaurant Support Officer for Chipotle Mexican Grill. Mr. Reddy began his professional career with McDonald’s
Corporation in 1983 as a regional controller and progressed into positions of escalating responsibility. Mr. Reddy has received a
number of awards in connection with his role as our Chief Executive Officer, including being named "Entrepreneur of the Year" by
Restaurant Business Magazine in 2009 and was most recently included on the Nation's Restaurant News 2014 Builders List, created
to feature people who are taking restaurant brands to the next level. He currently serves on the executive advisory board to the Daniels
School of Business at the University of Denver. He received a BS degree in Accounting from Duquesne University.

Dave Boennighausen has served as our Chief Financial Officer since July 2012. He became a member of our board of directors
in August 2015. Mr. Boennighausen has been with the Company since 2004, and served as our Vice President of Finance from
October 2007 to March 2011, and as our Executive Vice President of Finance from April 2011 to June 2012. He began his career
with May Department Stores. He received a BS degree in Finance and Marketing from Truman State University and holds an MBA
from the Stanford Graduate School of Business.

Mark Mears has served as our Executive Vice President and Chief Marketing Officer since July 2015. Prior to joining us, Mr.
Mears was Chief Marketing Officer for Schlotzsky's Bakery-Café, an international sandwich restaurant chain, from January 2014
to July 2015. Prior to that time, he served as the President and Chief Concept Officer for Mimi's Café, a US restaurant company,
from April 2011 to February 2013, and he served as the Chief Marketing Officer for The Cheesecake Factory, Inc., a US restaurant
company, from July 2008 to March 2011. He received a BS degree in Journalism from the University of Kansas and an MS degree
in Advertising from Northwestern University.

Phil Petrilli has served as our Executive Vice President of Operations since May 2012. Prior to joining us, he worked for Chipotle
Mexican Grill, an international restaurant chain, in multiple operations positions from June 1999 to May 2012, most recently as
Regional Director-Northeast Region from 2008 to 2012, where he led a region of 268 restaurants. He received a BA degree in
Psychology from the University of Illinois-Chicago.

Paul Strasen has served as our Executive Vice President, Secretary and General Counsel since January 2008. Prior to joining
our company, Mr. Strasen was the Vice President, General Counsel and Secretary of Houlihan’s Restaurants, Inc. and served as the
General Counsel of Einstein/Noah Bagel Corp. He began his career at Bell Boyd & Lloyd, now part of K & L Gates. Mr. Strasen
received a BA degree in Humanities and Political Science from Valparaiso University and received a JD from The University of
Chicago Law School.

Kathy Lockhart has served as our Vice President and Controller since August 2006. Prior to joining us, Ms. Lockhart served as
the Vice President and Controller of several public and private restaurant and retail companies, including Einstein/Noah Bagel Corp.,
Boston Market, VICORP (parent company of Village Inn and Bakers Square restaurants) and Ultimate Electronics. She received a
BA degree in Business Administration and Political Science from Western State College, and she is a Certified Public Accountant
and a member of the American Institute of Certified Public Accountants.

ITEM 1A.

Risk Factors

Special Note Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that
involve risks and uncertainties, including but not limited to the risks and uncertainties discussed under Item 1A. "Risk Factors," Item
7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and Item 1. "Business." In some cases,
you can identify forward-looking statements by terms such as "may," "might," "will," "objective," "intend," "should," "could," "can,"
"would," "expect," "believe," "design," "estimate," "predict," "potential," "plan" or the negative of these terms, and similar expressions
intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements to be materially different from any future results, performances or
achievements expressed or implied by the forward-looking statements. We discuss these risks, uncertainties and other factors in
greater detail below. These statements reflect our current views with respect to future events and are based on currently available
operating, financial and competitive information. Unless required by United States federal securities laws, we do not intend to update
any of these forward-looking statements to reflect circumstances or events that occur after the statement is made.

Risks Related to Our Business and Industry

Our sales growth rate depends on our ability to open new restaurants and increase comparable restaurant sales, both of which
are subject to many unpredictable factors.

One of the key means of achieving our growth strategy will be through opening new restaurants and operating those restaurants
on a profitable basis. We expect this to be the case for the foreseeable future. In 2015, we opened 51 company-owned restaurants,
and 19 franchise restaurants, while we closed 16 company-owned restaurants and one franchise restaurant. We expect to open
approximately 50 restaurants system-wide in 2016. We may not be able to open new restaurants as quickly as planned. In the past,
we have experienced delays in opening some restaurants and that could happen again. Delays or failures in opening new restaurants

could materially and adversely affect our growth strategy and our expected results. As we operate more restaurants, our rate of
expansion relative to the size of our restaurant base will decline.

The level of comparable restaurant sales, which represent the change in year-over-year sales for restaurants open for at least 18
full periods, will also affect our sales growth and will continue to be a critical factor affecting profit growth because the profit margin
on comparable restaurant sales growth is generally higher than the profit margin on new restaurant sales. Our ability to increase
comparable restaurant sales depends in part on our ability to successfully implement our initiatives to build sales. It is possible that
such initiatives will not be successful, that we will not achieve our target comparable restaurant sales growth or that the change in
comparable restaurant sales could be negative, which may cause a decrease in sales and profit growth that could materially adversely
affect our business, financial condition or results of operations.

Our ability to open new restaurants also depends on other factors, including:

•

site selection;

negotiating leases with acceptable terms;

identifying, hiring and training qualified employees in each local market;

the state of the labor market in each local market and the presence of heightened minimum wage or enhanced healthcare
regulations;

timely delivery of leased premises to use from our landlords and punctual commencement of our build-out construction
activities;

• managing construction and development costs of new restaurants, particularly in competitive markets;

•

avoiding the impact of inclement weather, natural disasters and other calamities;

obtaining construction materials and labor at acceptable costs, particularly in urban markets;

securing required governmental approvals, permits and licenses (including construction and other permits) in a timely
manner and responding effectively to any changes in local, state or federal laws and regulations that could adversely
affect our costs or ability to open new restaurants; and

•

accessing sufficient capital, which is expected to come from cash flow from operations and third party funding.

Our progress in opening new restaurants from quarter to quarter may occur at an uneven rate. If we do not open new restaurants
in the future according to our current plans, the delay could materially adversely affect our business, financial condition or results
of operations.

Our long-term success is highly dependent on our ability to effectively identify appropriate new markets and secure appropriate
sites for new restaurants.

We intend to develop new restaurants in our existing markets, expand our footprint into adjacent markets and selectively enter
into new markets. In order to build new restaurants, we must first identify target markets where we can enter or expand our footprint,
taking into account numerous factors, including the location of our current restaurants, local economic trends, population density,
area demographics and geography. The selection of target markets is challenging, and we have had to close restaurants in some
markets that we had previously believed would be successful. We also must locate and secure appropriate sites for new restaurants,
which is one of our biggest challenges. There are numerous factors involved in identifying and securing an appropriate site, including:

•

identification and availability of locations with the appropriate size, traffic patterns, local retail and business attractions
and infrastructure that will drive high levels of customer traffic and sales per unit;

demographics of the populations surrounding the restaurant sites;

competition in new markets, including competition for restaurant sites;

•

financial conditions affecting developers and potential landlords, such as the effects of macro-economic conditions and
the credit market, which could lead to these parties delaying or canceling development projects (or renovations of
existing projects), in turn reducing the number of appropriate locations available;

developers and potential landlords obtaining licenses or permits for development projects on a timely basis;

proximity of potential development sites to an existing location;

anticipated commercial, residential and infrastructure development near our new restaurants; and

availability of acceptable lease arrangements.

We may not be able to successfully develop critical market presence for our brand in new geographical markets, as we may be
unable to find and secure attractive locations, build name recognition or attract new customers. If we are unable to fully implement
our development plan, our business, financial condition or results of operations could be materially adversely affected.

Our expansion into new markets may present increased risks.

We plan to open restaurants in markets where we have little or no operating experience. Restaurants we open in new markets
may take longer to reach expected sales and profit levels on a consistent basis, if ever, and may have higher construction, occupancy
or operating costs than restaurants we open in existing markets, thereby affecting our overall profitability. New markets may have
competitive conditions, consumer tastes and discretionary spending patterns that are more difficult to predict or satisfy than our
existing markets. We may need to make greater investments than we originally planned in advertising and promotional activity in
new markets to build brand awareness. We may find it more difficult in new markets to hire, motivate and keep qualified employees
who share our vision, passion and business culture. We may not be able to successfully develop critical market presence for our
brand in new geographical markets, as we may be unable to find and secure attractive locations, build name recognition or attract
new customers. We may also incur higher costs from entering new markets, if, for example, we assign area managers to manage
comparatively fewer restaurants than we assign in more developed markets. As a result, these new restaurants may be less successful
or may achieve target average unit volumes ("AUVs") at a slower rate. In the event that we encounter these types of challenges,
some or all of the restaurants we opened in a new market may be closed. If we do not successfully execute our plans to enter new
markets, our business, financial condition or results of operations could be materially adversely affected.

New restaurants, once opened, may not be profitable, and the increases in average restaurant sales and comparable restaurant
sales that we have experienced in the past may not be indicative of future results.

Our new restaurants typically open with above–average volumes, which then decline after the initial sales surge that comes with
interest in a restaurant’s grand opening. Historically openings have stabilized in sales after approximately 32 to 36 weeks of operation,
at which time the restaurant’s sales typically begin to grow on a consistent basis. In new markets, the length of time before average
sales for new restaurants stabilize is less predictable and can be longer as a result of our limited knowledge of these markets and
consumers’ limited awareness of our brand. New restaurants may not be profitable and their sales performance may not follow
historical patterns. In addition, our average restaurant sales and comparable restaurant sales may not increase at the rates achieved
over the past several years. Our ability to operate new restaurants profitably and increase average restaurant sales and comparable
restaurant sales will depend on many factors, some of which are beyond our control, including:

•

consumer awareness, understanding and support of our brand;

general economic conditions, which can affect restaurant traffic, local labor costs and prices we pay for the food
products and other supplies we use;

changes in consumer preferences, including the types of food that are popular and concerns about healthy eating,
and discretionary spending;

competition, either from our competitors in the restaurant industry or our own restaurants;

temporary and permanent site characteristics of new restaurants; and

changes in government regulation.

If our new restaurants do not perform as planned, our business and future prospects could be harmed. In addition, if we are
unable to achieve our expected average restaurant sales, our business, financial condition or results of operations could be materially
adversely affected.

Our strategies and initiatives to increase comparable restaurant sales may not be successful.

The level of comparable restaurant sales we achieve will affect our sales growth and will continue to be a critical factor affecting
profit growth. We have implemented strategies such as introducing catering options and enhanced marketing efforts in an effort to
increase overall sales. For example, catering introduces new operating procedures to our restaurants, and we may not successfully
execute these procedures, which could adversely impact the customer experience in our restaurants and thereby harm our sales and
customer perception of our brand. In addition, our catering program or our enhanced marketing efforts may not increase our sales
to the degree we expect, and these programs and efforts may require the time and attention of our management and require substantial
funding. In 2015, we did not achieve comparable restaurant sales growth and we may not do so in the future.

We believe our culture—from the restaurant level up through management—is an important contributor to our success. As we
grow and as time passes, however, we may have difficulty maintaining our culture or adapting it sufficiently to meet the needs of
our operations. Among other important factors, our culture depends on our ability to attract, retain and motivate employees who
share our enthusiasm and dedication to our concept. Our comparable restaurant sales, and more broadly, our business, financial
condition or results of operations, could be materially adversely affected if we do not maintain our infrastructure and culture as we
grow.

It is possible that our initiatives will not be successful, and that we will not achieve our target comparable restaurant sales growth
or that the change in comparable restaurant sales could be negative, which may cause a decrease in sales and profit growth that could
materially adversely affect our business, financial condition or results of operations.

We rely heavily on information technology, and any material failure, weakness, interruption or breach of security could
prevent us from effectively operating our business.

We rely heavily on information systems, including point-of-sale processing in our restaurants, for management of our supply
chain, payment of obligations, collection of cash, credit and debit card transactions and other processes and procedures. Our ability
to efficiently and effectively manage our business and its growth depends significantly on the reliability and capacity of these systems.
Our operations depend upon our ability to protect our computer equipment and systems against damage from physical theft, fire,
power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches, viruses
and other disruptive problems. In addition, managing our growth effectively will require us to continue to enhance these systems,
procedures and controls and to hire, train and retain managers and team members. The failure of these systems to operate effectively,
maintenance problems, upgrading or transitioning to new platforms, or a breach in security of these systems could result in delays
in customer service and reduce efficiency in our operations. Remediation of such problems could result in significant, unplanned
capital investments and harm our business, financial condition or results of operations.

Opening new restaurants in existing markets may negatively affect sales at our existing restaurants.

The consumer target area of our restaurants varies by location, depending on a number of factors, including population density,
other local retail and business attractions, area demographics and geography. As a result, opening a new restaurant in or near markets
in which we already have restaurants could adversely affect the sales of these existing restaurants. Existing restaurants could also
make it more difficult to build our consumer base for a new restaurant in the same market. Our core business strategy does not entail
opening new restaurants that we believe will materially affect sales at our existing restaurants, but we may selectively open new
restaurants in and around areas of existing restaurants that are operating at or near capacity to effectively serve our customers. Sales
cannibalization between our restaurants may become significant in the future as we continue to expand our operations and could
affect our sales growth, which could, in turn, materially adversely affect our business, financial condition or results of operations.

Competition from other restaurant companies could adversely affect us.

market presence with substantially greater financial, marketing, personnel and other resources than we have. Among our competitors
are a number of multi-unit, multi-market fast casual restaurant concepts, some of which are expanding nationally. As we expand, we
will face competition from these concepts and new competitors that strive to compete with our market segments. For example,
additional competitive pressures come from the deli sections and in-store cafés of grocery store chains, as well as from convenience
stores and online meal preparation sites. These competitors may have, among other things, lower operating costs, food offerings
more responsive to consumer preferences, better locations, better facilities, better management, more effective marketing and more
efficient operations.

Several of our competitors compete by offering menu items that are specifically identified as low in carbohydrates, gluten-free,
rich in protein or healthier for consumers. In addition, many of our competitors emphasize lower-cost value options or meal packages
or have loyalty programs, strategies we do not currently pursue. Any of these competitive factors may materially adversely affect
our business, financial condition or results of operations.

Negative publicity relating to one of our restaurants, including our franchised restaurants, could reduce sales at some or all of
our other restaurants.

Our success is dependent in part upon our ability to maintain and enhance the value of our brand, consumers’ connection to our
brand and positive relationships with our franchisees. We may, from time to time, be faced with negative publicity relating to food
quality, restaurant facilities, customer complaints or litigation alleging illness or injury, health inspection scores, integrity of our or
our suppliers’ food processing, employee relationships or other matters, regardless of whether the allegations are valid or whether
we are held to be responsible. The negative impact of adverse publicity relating to one restaurant may extend far beyond the restaurant
or franchise involved to affect some or all of our other restaurants. The risk of negative publicity is particularly great with respect
to our franchised restaurants because we are limited in the manner in which we can regulate them, especially on a real-time basis.
Negative publicity generated by such incidents may be amplified by the use of social media. A similar risk exists with respect to
unrelated food service businesses, if consumers associate those businesses with our own operations or are concerned with the food
safety of the broader restaurant industry.

Additionally, employee claims against us based on, among other things, wage and hour violations, discrimination, harassment
or wrongful termination may also create negative publicity that could adversely affect us and divert our financial and management
resources that would otherwise be used to benefit the future performance of our operations. A significant increase in the number of
these claims or an increase in the number or scope of successful claims could materially adversely affect our business, financial
condition or results of operations. Consumer demand for our products and our brand’s value could diminish significantly if any such
incidents or other matters create negative publicity or otherwise erode consumer confidence in us or our products, or in the restaurant
industry as a whole, which would likely result in lower sales and could materially adversely affect our business, financial condition
or results of operations.

Food safety and foodborne illness concerns could have an adverse effect on our business.

We cannot guarantee that our internal controls and training will be fully effective in preventing all food safety issues at our
restaurants, including any occurrences of foodborne illnesses such as salmonella, E. coli, listeria and Hepatitis A. The risk of illnesses
associated with our food might also increase in connection with the expansion of our catering business or other situations in which
our food is served in conditions that we cannot control. Furthermore, we and our franchisees rely on third-party vendors, making it
difficult to monitor food safety compliance and increasing the risk that foodborne illness would affect multiple locations rather than
a single restaurant. Some foodborne illness incidents could be caused by third-party vendors and transporters outside of our control.
New illnesses resistant to our current precautions may develop in the future, or diseases with long incubation periods could arise,
that could give rise to claims or allegations on a retroactive basis. One or more instances of foodborne illness in any of our restaurants
or markets or related to food products we sell could negatively affect our restaurant sales nationwide if highly publicized on national
media outlets or through social media. This risk exists even if it were later determined that the illness was wrongly attributed to us
or one of our restaurants.

A number of other restaurant chains have experienced incidents related to foodborne illnesses that have had a material adverse
effect on their operations, including the recent E. coli and listeria outbreaks at other fast casual concepts. These incidents at other
restaurants could cause some customers to have a negative perception of fast casual concepts generally, which can negatively affect
our restaurants. The occurrence of a similar incident at one or more of our restaurants, or negative publicity or public speculation
about an incident, could materially adversely affect our business, financial condition or results of operations.

Adverse weather conditions could affect our sales.

Adverse weather conditions, such as regional winter storms, floods and hurricanes, could affect our sales at restaurants in locations
that experience these weather conditions, which could materially adversely affect our business, financial condition or results of
operations. It is possible that weather conditions may impact our business more than other businesses in our industry because of the
significant concentration of our restaurants in the Upper Midwest, Rocky Mountain and Mid-Atlantic states.

Governmental regulation may adversely affect our ability to open new restaurants or otherwise adversely affect our business,
financial condition or results of operations.

We are subject to various federal, state and local regulations, including those relating to building and zoning requirements and
those relating to the preparation and sale of food. Our restaurants are also subject to state and local licensing and regulation by health,
alcoholic beverage, sanitation, food and occupational safety and other agencies. We may experience material difficulties or failures
in obtaining the necessary licenses, approvals or permits for our restaurants, which could delay planned restaurant openings or affect
the operations at our existing restaurants. In addition, stringent and varied requirements of local regulators with respect to zoning,
land use and environmental factors could delay or prevent development of new restaurants in particular locations.

We are subject to the ADA and similar state laws that give civil rights protections to individuals with disabilities in the context
of employment, public accommodations and other areas, including our restaurants. We may in the future have to modify restaurants,
for example, by adding access ramps or redesigning certain architectural fixtures, to provide service to or make reasonable
accommodations for disabled persons. The expenses associated with these modifications could be material.

Our operations are also subject to the U.S. Occupational Safety and Health Act, which governs worker health and safety, the
U.S. Fair Labor Standards Act, which governs such matters as minimum wages and overtime, and a variety of similar federal, state
and local laws that govern these and other employment law matters. In addition, federal, state and local proposals related to paid
sick leave or similar matters could, if implemented, materially adversely affect our business, financial condition or results of operations.

Changes in employment laws may adversely affect our business.

Various federal and state labor laws govern the relationship with our employees and affect operating costs. These laws include
employee classification as exempt/non-exempt for overtime and other purposes, minimum wage requirements, unemployment tax
rates, workers’ compensation rates, mandatory health benefits, immigration status and other wage and benefit requirements. Some
jurisdictions, including some of those in which we operate, have recently increased their minimum wage by a significant amount,
and other jurisdictions are considering similar actions. Significant additional government-imposed increases in the following areas
could materially affect our business, financial condition, operating results or cash flow:

•

overtime rules;

mandatory health benefits;

vacation accruals;

paid leaves of absence, including paid sick leave; and

tax reporting.

In addition, various states in which we operate are considering or have already adopted new immigration laws or enforcement
programs, and the U.S. Congress and Department of Homeland Security from time to time may consider and implement changes to
federal immigration laws, regulations or enforcement programs as well. Some of these changes may increase our obligations for
compliance and oversight, which could subject us to additional costs and make our hiring process more cumbersome, or reduce the
availability of potential employees. Although we require all workers to provide us with government-specified documentation
evidencing their employment eligibility, some of our employees may, without our knowledge, be unauthorized workers. We currently
participate in the "E-Verify" program, an Internet-based, free program run by the United States government to verify employment
eligibility, in all of our restaurants and in our corporate support office. However, use of the "E-Verify" program does not guarantee
that we will properly identify all applicants who are ineligible for employment. Unauthorized workers are subject to deportation and
may subject us to fines or penalties, and if any of our workers are found to be unauthorized we could experience adverse publicity

that negatively impacts our brand and may make it more difficult to hire and keep qualified employees. Termination of a significant
number of employees who were unauthorized employees may disrupt our operations, cause temporary increases in our labor costs
as we train new employees and result in additional adverse publicity. We could also become subject to fines, penalties and other costs
related to claims that we did not fully comply with all recordkeeping obligations of federal and state immigration compliance laws.
These factors could materially adversely affect our business, financial condition or results of operations.

Compliance with environmental laws may negatively affect our business.

We are subject to federal, state and local laws and regulations concerning waste disposal, pollution, protection of the environment,
and the presence, discharge, storage, handling, release and disposal of, and exposure to, hazardous or toxic substances. These
environmental laws provide for significant fines and penalties for noncompliance and liabilities for remediation, sometimes without
regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of hazardous toxic
substances. Third parties may also make claims against owners or operators of properties for personal injuries and property damage
associated with releases of, or actual or alleged exposure to, such hazardous or toxic substances at, on or from our restaurants.
Environmental conditions relating to releases of hazardous substances at prior, existing or future restaurant sites could materially
adversely affect our business, financial condition or results of operations. Further, environmental laws, and the administration,
interpretation and enforcement thereof, are subject to change and may become more stringent in the future, each of which could
materially adversely affect our business, financial condition or results of operations.

We rely heavily on certain vendors, suppliers and distributors, which could adversely affect our business.

Our ability to maintain consistent price, quality and safety throughout our restaurants depends in part upon our ability to acquire
specified food products and supplies in sufficient quantities from third-party vendors, suppliers and distributors at a reasonable cost.
We do not control the businesses of our vendors, suppliers and distributors and our efforts to specify and monitor the standards under
which they perform may not be successful. Furthermore, certain food items are perishable, and we have limited control over whether
these items will be delivered to us in appropriate condition for use in our restaurants

If any of our distributors or suppliers performs inadequately, or our distribution or supply relationships are disrupted for any
reason, our business, financial condition, results of operations or cash flows could be adversely affected. Although we often enter
into contracts for the purchase of food products and supplies, we do not have long-term contracts for the purchase of all of such food
products and supplies. As a result, we may not be able to anticipate or react to changing food costs by adjusting our purchasing
practices or menu prices, which could cause our operating results to deteriorate. If we cannot replace or engage distributors or
suppliers who meet our specifications in a short period of time, that could increase our expenses and cause shortages of food and
other items at our restaurants, which could cause a restaurant to remove items from its menu. If that were to happen, affected restaurants
could experience significant reductions in sales during the shortage or thereafter, if customers change their dining habits as a result.
Our focus on a limited menu would make the consequences of a shortage of a key ingredient more severe. In addition, because we
provide moderately priced food, we may choose not to, or may be unable to, pass along commodity price increases to consumers.
These potential changes in food and supply costs could materially adversely affect our business, financial condition or results of
operations.

In addition, we use various third-party vendors to provide, support and maintain most of our management information systems.
We also outsource certain accounting, payroll and human resource functions to business process service providers. The failure of
such vendors to fulfill their obligations could disrupt our operations. Additionally, any changes we may make to the services we
obtain from our vendors, or new vendors we employ, may disrupt our operations. These disruptions could materially adversely affect
our business, financial condition or results of operations.

The effect of changes to healthcare laws in the United States increased the number of employees who have elected to participate
in our healthcare plans, which increased our healthcare costs, and may further significantly increase our healthcare costs and
negatively impact our financial results in future periods.

The Patient Protection and Affordable Care Act of 2010 (the "PPACA") requires health care coverage for many previously
uninsured individuals and expands coverage for those already insured. We began offering such benefits in July 2015, and as a
consequence we are incurring additional expenses for employee healthcare. If we fail to continue to offer such benefits, or the benefits
we elect to offer do not meet the applicable requirements, we may incur penalties. Since the PPACA also requires individuals to
obtain coverage or face individual penalties, employees who are currently eligible for but elect not to participate in our healthcare
plans may find it advantageous to do so in the future, particularly as the level of individual penalties increases over time. It is also

possible that by making changes or failing to make changes in the healthcare plans we offer, we will become less competitive in the
market for our labor. Finally, continuing to implement the requirements of the PPACA is likely to impose additional administrative
costs. The future costs and other effects of these new healthcare requirements cannot be determined with certainty, but they may
continue to significantly increase our healthcare coverage costs and could materially adversely affect our, business, financial condition
or results of operations.

Unionization activities or labor disputes may disrupt our operations and affect our profitability.

Although none of our employees are currently covered under collective bargaining agreements, our employees may elect to be
represented by labor unions in the future. If a significant number of our employees were to become unionized and collective bargaining
agreement terms were significantly different from our current compensation arrangements, it could adversely affect our business,
financial condition or results of operations. In addition, a labor dispute involving some or all of our employees may harm our
reputation, disrupt our operations and reduce our revenues, and resolution of disputes may increase our costs. Potential changes in
labor laws, including the possible passage of legislation designed to make it easier for employees to unionize, could increase the
likelihood of some or all of our employees being subjected to greater organized labor influence, and could have an adverse effect on
our business and financial results by imposing requirements that could potentially increase our costs, reduce our flexibility and impact
our employee culture.

As an employer, we may be subject to various employment-related claims, such as individual, class action or government
enforcement actions relating to alleged employment discrimination, employee classification and related withholding, wage-hour,
labor standards or healthcare and benefit issues. Such actions, if brought against us and successful in whole or in part, may affect
our ability to compete or could materially adversely affect our business, financial condition or results of operations.

We rely in part on our franchisees, and if our franchisees cannot develop or finance new restaurants, build them on suitable sites
or open them on schedule, our growth and success may be affected.

We rely in part on our franchisees and the manner in which they operate their locations to develop and promote our business.
Although we have developed criteria to evaluate and screen prospective franchisees, we cannot be certain that our franchisees will
have the business acumen or financial resources necessary to operate successful franchises in their franchise areas and state franchise
laws may limit our ability to terminate or modify these franchise arrangements. Moreover, despite our training, support and monitoring,
franchisees may not successfully operate restaurants in a manner consistent with our standards and requirements, or may not hire
and train qualified managers and other restaurant personnel. The failure of our franchisees to operate their franchises successfully
could have a material adverse effect on us, our reputation, our brand and our ability to attract prospective franchisees and could
materially adversely affect our business, financial condition or results of operations.

Franchisees may not have access to the financial or management resources that they need to open the restaurants contemplated
by their agreements with us, or be able to find suitable sites on which to develop them, or they may elect to cease development for
other reasons. Franchisees may not be able to negotiate acceptable lease or purchase terms for the sites, obtain the necessary permits
and government approvals or meet construction schedules. Any of these problems could slow our growth and reduce our franchise
revenues. Additionally, our franchisees typically depend on financing from banks and other financial institutions, which may not
always be available to them, in order to construct and open new restaurants. The lack of adequate financing could adversely affect
the number and rate of new restaurant openings by our franchisees and could materially adversely affect our future franchise revenues.

A franchisee bankruptcy could have a substantial negative impact on our ability to collect payments due under such franchisee’s
franchise arrangements. In a franchisee bankruptcy, the bankruptcy trustee may reject its franchise arrangements pursuant to
Section 365 under the United States bankruptcy code, in which case there would be no further royalty payments from such franchisee,
and there can be no assurance as to the proceeds, if any, that may ultimately be recovered in a bankruptcy proceeding of such franchisee
in connection with a damage claim resulting from such rejection.

Failure to support our expanding franchise system could have a material adverse effect on our business, financial condition or
results of operations.

Our strategy depends in part on our franchise network, which requires enhanced business support systems, management
information systems, financial controls and other systems and procedures as well as additional management, franchise support and
financial resources. We may not be able to manage our franchise system effectively. Failure to provide our franchisees with adequate
support and resources could materially adversely affect both our new and existing franchisees as well as cause disputes between us

and our franchisees and potentially lead to material liabilities. Any of the foregoing could materially adversely affect our business,
financial condition or results of operations.

We have limited control over our franchisees and our franchisees could take actions that could harm our business.

Franchisees are independent contractors and are not our employees, and we do not exercise control over their day-to-day
operations. We provide training and support to franchisees, but the quality of franchised restaurant operations may be diminished by
any number of factors beyond our control. Consequently, franchisees may not successfully operate restaurants in a manner consistent
with our standards and requirements, or may not hire and train qualified managers and other restaurant personnel. If franchisees do
not meet our standards and requirements, our image and reputation, and the image and reputation of other franchisees, may suffer
materially and system-wide sales could decline significantly.

Franchisees, as independent business operators, may from time to time disagree with us and our strategies regarding the business
or our interpretation of our, and their, rights and obligations under franchise and development agreements. This may lead to disputes
with our franchisees in the future. These disputes may divert the attention of our management and our franchisees from operating
our restaurants and affect our image and reputation and our ability to attract franchisees in the future, which could materially adversely
affect our business, financial condition or results of operations.

If we or our franchisees face labor shortages or increased labor costs, our growth and operating results could be adversely affected.

Labor is a primary component in the cost of operating our restaurants. If we or our franchisees face labor shortages or increased
labor costs because of increased competition for employees, higher employee turnover rates, increases in the federal, state or local
minimum wage or other employee benefits costs (including costs associated with health insurance coverage), our operating expenses
could increase and our growth could be adversely affected. In addition, our success depends in part upon our and our franchisees’
ability to attract, motivate and retain a sufficient number of well-qualified restaurant operators and management personnel, as well
as a sufficient number of other qualified employees, including customer service and kitchen staff, to keep pace with our expansion
schedule. Qualified individuals needed to fill these positions are in short supply in some geographic areas, and the national
unemployment rate, as well as the unemployment rates in many of the areas in which we operate, has continued to fall over the past
few years. In addition, restaurants have traditionally experienced relatively high employee turnover rates. Although we have not yet
experienced significant problems in recruiting or retaining employees, our and our franchisees’ ability to recruit and retain such
individuals may delay the planned openings of new restaurants or result in higher employee turnover in existing restaurants, which
could have a material adverse effect on our business, financial condition or results of operations.

If we or our franchisees are unable to continue to recruit and retain sufficiently qualified individuals at wages comparable to
those we currently pay, our business and our growth could be adversely affected. Competition for these employees could require us
or our franchisees to pay higher wages, which could result in higher labor costs. In addition increases in the minimum wage, which
have become more common and more material in size in recent years, would increase our labor costs. Additionally, costs associated
with workers’ compensation are rising, and these costs may continue to rise in the future. We may be unable to increase our menu
prices in order to pass these increased labor costs on to consumers, in which case our margins would be negatively affected, which
could materially adversely affect our business, financial condition or results of operations.

We might require additional capital, and this capital might be senior to existing equity holders, dilute existing equity holders or
include unfavorable restrictions.

In the future we might require additional funds to operate our business. Accordingly, we might need to engage in equity or debt
financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities,
our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and
privileges superior to those of holders of our Class A common stock. Any debt financing we secure in the future could involve
restrictive covenants relating to our capital-raising activities and other financial and operational matters, which might make it more
difficult for us to obtain additional capital and to pursue business opportunities. Moreover, if we issue new debt securities, the debt
holders would have rights senior to Class A common stockholders to make claims on our assets.

We may not be able to raise capital on acceptable terms.

Operating and developing our business requires significant capital. To meet our capital needs, we rely and expect to continue
to rely on our cash flow from operations and third-party financing. Third-party financing in the future may not, however, be available

on terms favorable to us, or at all. Our ability to obtain additional funding will be subject to various factors, including market
conditions, our operating performance and liquidity, lender sentiment and our ability to incur additional debt in compliance with
other contractual restrictions such as financial covenants under our credit facility or other debt documents. These factors may make
the timing, amount, terms and conditions of additional financings unattractive. Our inability to raise or access capital could impede
our growth and could materially adversely affect our business, financial condition or results of operations.

We depend on the services of key executives, the loss of which could materially harm our business.

Our senior executives have been instrumental in setting our strategic direction, operating our business, identifying, recruiting
and training key personnel, identifying expansion opportunities and arranging necessary financing. Losing the services of any of
these individuals could materially adversely affect our business until a suitable replacement is found. We believe that these individuals
cannot easily be replaced with executives of equal experience and capabilities. Although we have an employment agreement with
our Chief Executive Officer, we cannot prevent him from terminating his employment with us.

Changes in economic conditions could materially affect our ability to maintain or increase sales at our restaurants or open new
restaurants.

The restaurant industry depends on consumer discretionary spending. The United States in general or the specific markets in
which we operate may suffer from depressed economic activity, recessionary economic cycles, higher fuel or energy costs, low
consumer confidence as a result of stock market volatility and other reasons, high levels of unemployment, reduced home values,
increases in home foreclosures, investment losses, personal bankruptcies, reduced access to credit or other economic factors that
may affect consumers' discretionary spending. Economic conditions may remain volatile and may depress consumer confidence and
discretionary spending. Traffic in our restaurants could decline if consumers choose to dine out less frequently or reduce the amount
they spend on meals while dining out. Negative economic conditions (including negative economic conditions resulting from war,
terrorist activities, global economic occurrences or trends or other geo-political events) might cause consumers to make long-term
changes to their discretionary spending behavior, including dining out less frequently or at lower priced restaurants on a permanent
basis. If restaurant sales decrease, our profitability would decline as we spread fixed costs across a lower level of sales. Reductions
in staff levels, additional asset impairment charges and additional restaurant closures could result from prolonged negative restaurant
sales, which could materially adversely affect our business, financial condition or results of operations.

Changes to estimates related to our property, fixtures and equipment or operating results that are lower than our current estimates
at certain restaurant locations may cause us to incur impairment charges on certain long-lived assets, which may materially
adversely affect our results of operations.

In accordance with accounting guidance as it relates to the impairment of long-lived assets, we make certain estimates and
projections with regard to individual restaurant operations, as well as our overall performance, in connection with our impairment
analyses for long-lived assets. When impairment triggers are deemed to exist for any location, the estimated undiscounted future
cash flows are compared to its carrying value. If the carrying value exceeds the undiscounted cash flows, an impairment charge equal
to the difference between the carrying value and the fair value is recorded. The projections of future cash flows used in these analyses
require the use of judgment and a number of estimates and projections of future operating results. If actual results differ from our
estimates, additional charges for asset impairments may be required in the future. If future impairment charges are significant, this
could have a material adverse effect on our results of operations.

Health concerns arising from outbreaks of viruses may have an adverse effect on our business.

The United States and other countries have experienced, or may experience in the future, outbreaks of neurological diseases or
other diseases or viruses, such as norovirus, influenza, H1N1 and Ebola. If a virus is transmitted by human contact, our employees
or customers could become infected, or could choose, or be advised, to avoid gathering in public places, any one of which could
materially adversely affect our business, financial condition or results of operations.

Changes in food and supply costs could adversely affect our results of operations.

Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs. Shortages or interruptions
in the availability of certain supplies caused by seasonal fluctuations, unanticipated demand, problems in production or distribution,
food contamination, product recalls, government regulations, inclement weather or other conditions could adversely affect the
availability, quality and cost of our ingredients, which could harm our operations. Weather related issues, such as freezes, heavy rains

or drought, may also lead to temporary spikes in the prices of some ingredients such as produce or meats. Increasing weather volatility
or other long-term changes in global weather patterns, including any changes associated with global climate change, could have a
significant impact on the price, availability and timing of delivery of some of our ingredients. Any increase in the prices of the food
products most critical to our menu, such as pasta, beef, chicken, wheat flour, cheese and other dairy products, tofu and vegetables,
could adversely affect our operating results. Although we try to manage the impact that these fluctuations have on our operating
results, we remain susceptible to increases in food costs as a result of factors beyond our control, such as general economic conditions,
seasonal fluctuations, weather conditions, demand, food safety concerns, generalized infectious diseases, product recalls and
government regulations. For example, when fuel prices were higher, surcharges on the delivery of commodities to our distributors
were sometimes imposed, and generally passed on to us to the extent permitted under our arrangements with them.

Failure to receive frequent deliveries of fresh food ingredients and other supplies could harm our operations.

Our ability to maintain our menu depends in part on our ability to acquire ingredients that meet our specifications from reliable
suppliers. We currently import ingredients from many different countries. Shortages or interruptions in the supply of ingredients
caused by unanticipated demand, problems in production or distribution, food contamination, inclement weather or other conditions
could adversely affect the availability, quality and cost of our ingredients, which could harm our operations. If any of our distributors
or suppliers performs inadequately, or our distribution or supply relationships are disrupted for any reason, our business, financial
condition or results of operations could be adversely affected. If we cannot replace or engage distributors or suppliers who meet our
specifications in a short period of time, that could increase our expenses and cause shortages of food and other items at our restaurants,
which could cause a restaurant to remove items from its menu. If that were to happen, affected restaurants could experience significant
reductions in sales during the shortage or thereafter, if customers change their dining habits as a result. Our focus on a limited menu
would make the consequences of a shortage of a key ingredient more severe. This reduction in sales could materially adversely affect
our business, financial condition or results of operations.

New information or attitudes regarding diet and health could result in changes in regulations and consumer consumption habits
that could adversely affect our results of operations.

Regulations and consumer eating habits may change as a result of new information or attitudes regarding diet, health and safety.
Such changes may include federal, state and local regulations and recommendations from medical and diet professionals pertaining
to the ingredients and nutritional content of the food and beverages we offer. The success of our restaurant operations is dependent,
in part, upon our ability to effectively respond to changes in any consumer health regulations and our ability to adapt our menu
offerings to trends in food consumption. If consumer health regulations or consumer eating habits change significantly, we may
choose or be required to modify or delete certain menu items, which may adversely affect the attractiveness of our restaurants to
new or returning customers. To the extent we are unwilling or unable to respond with appropriate changes to our menu offerings, it
could materially affect consumer demand and could have an adverse impact on our business, financial condition or results of operations.

Government regulation and consumer eating habits may impact our business as a result of changes in attitudes regarding diet
and health or new information regarding the adverse health effects of consuming certain menu offerings. These changes have resulted
in, and may continue to result in, laws and regulations requiring us to disclose the nutritional content of our food offerings, and they
have resulted, and may continue to result in, laws and regulations affecting permissible ingredients and menu offerings. For example,
a number of states, counties and cities have enacted menu labeling laws requiring multi-unit restaurant operators to disclose to
consumers certain nutritional information, or have enacted legislation restricting the use of certain types of ingredients in restaurants.
These requirements may be different or inconsistent with requirements under the PPACA, which establishes a uniform, federal
requirement for certain restaurants to post nutritional information on their menus. Specifically, the PPACA requires chain restaurants
with 20 or more locations operating under the same name and offering substantially the same menus to publish the total number of
calories of standard menu items on menus and menu boards, along with a statement that puts this calorie information in the context
of a total daily calorie intake. Inconsistencies among state laws with respect to presentation of nutritional content could be challenging
for us to comply with in an efficient manner. The PPACA also requires covered restaurants to provide to consumers, upon request,
a written summary of detailed nutritional information for each standard menu item, and to provide a statement on menus and menu
boards about the availability of this information upon request. An unfavorable report on, or reaction to, our menu ingredients, the
size of our portions or the nutritional content of our menu items could negatively influence the demand for our offerings.

Compliance with current and future laws and regulations regarding the ingredients and nutritional content of our menu items
may be costly and time-consuming. Additionally, if consumer health regulations or consumer eating habits change significantly, we
may be required to modify or discontinue certain menu items, and we may experience higher costs associated with the implementation
of those changes. The risks and costs associated with nutritional disclosures on our menus could also impact our operations, particularly

given differences among applicable legal requirements and practices within the restaurant industry with respect to testing and
disclosure, ordinary variations in food preparation among our own restaurants, and the need to rely on the accuracy and completeness
of nutritional information obtained from third-party suppliers.

We may not be able to effectively respond to changes in consumer health and safety perceptions or to successfully implement
the nutrient content disclosure requirements and adapt our menu offerings to trends in eating habits. The imposition of additional
menu labeling laws could materially adversely affect our business, financial condition or results of operations, as well as our position
within the restaurant industry in general.

We are subject to all of the risks associated with leasing space subject to long-term non-cancelable leases.

We do not own any real property. Payments under our operating leases account for a significant portion of our operating expenses
and we expect the new restaurants we open in the future will similarly be leased. Our leases generally have an initial term of ten
years and generally can be extended only in five-year increments (at increased rates). All of our leases require a fixed annual rent,
although some require the payment of additional rent if restaurant sales exceed a negotiated amount. Generally, our leases are "net"
leases, which require us to pay all of the cost of insurance, taxes, maintenance and utilities. We generally cannot cancel these leases.
Additional sites that we lease are likely to be subject to similar long-term non-cancelable leases. If an existing or future restaurant
is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease
including, among other things, paying the base rent for the balance of the lease term. In addition, as each of our leases expires, we
may fail to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to pay increased occupancy
costs or to close restaurants in desirable locations. These potential increased occupancy costs and closed restaurants could materially
adversely affect our business, financial condition or results of operations.

We may not be able to adequately protect our intellectual property, which could harm the value of our brand and could adversely
affect our business.

Our intellectual property is material to the conduct of our business and our marketing efforts. Our ability to implement our
business plan successfully depends in part on our ability to further build brand recognition using our trademarks, service marks, trade
dress and other proprietary intellectual property, including our name and logos and the unique ambience of our restaurants. While it
is our policy to protect and defend vigorously our rights to our intellectual property, we cannot predict whether steps taken by us to
protect our intellectual property rights will be adequate to prevent misappropriation of these rights or the use by others of restaurant
features based upon, or otherwise similar to, our concept. It may be difficult for us to prevent others from copying elements of our
concept and any litigation to enforce our rights will likely be costly and may not be successful. Although we believe that we have
sufficient rights to all of our trademarks and service marks, we may face claims of infringement that could interfere with our ability
to market our restaurants and promote our brand. Any such litigation may be costly and divert resources from our business. Moreover,
if we are unable to successfully defend against such claims, we may be prevented from using our trademarks or service marks in the
future, may be liable for damages and may have to change our marketing efforts, which in turn could materially adversely affect our
business, financial condition or results of operations.

We may incur costs resulting from breaches of security of confidential consumer information related to our electronic processing
of credit and debit card transactions.

The majority of our restaurant sales are by credit or debit cards. Other restaurants and retailers have experienced security breaches
in which credit and debit card information has been stolen. We may in the future become subject to claims for purportedly fraudulent
transactions arising out of the actual or alleged theft of credit or debit card information, and we may also be subject to lawsuits or
other proceedings relating to these types of incidents. In addition, most states have enacted legislation requiring notification of
security breaches involving personal information, including credit and debit card information. Any such claim or proceeding could
cause us to incur significant unplanned expenses, which could have an adverse impact on our financial condition and results of
operations. Further, adverse publicity resulting from these allegations may have a material adverse effect on us and our restaurants.

We could be party to litigation that could adversely affect us by distracting management, increasing our expenses or subjecting
us to material money damages and other remedies.

Our customers occasionally file complaints or lawsuits against us alleging we caused an illness or injury they suffered at or after
a visit to our restaurants, or that we have problems with food quality or operations. These kinds of complaints or lawsuits may be
more common in a period in which the public is focused on health safety issues, as it has been recently as a result of the extensive

media coverage of an E. coli outbreak at another fast casual restaurant brand. We are also subject to a variety of other claims arising
in the ordinary course of our business, including personal injury claims, contract claims and claims alleging violations of federal and
state law regarding workplace and employment matters, equal opportunity, discrimination and similar matters, and we could become
subject to class action or other lawsuits related to these or different matters in the future. Regardless of whether any claims against
us are valid, or whether we are ultimately held liable, claims may be expensive to defend and may divert time and money away from
our operations and hurt our performance. A judgment in excess of our insurance coverage for any claims could materially and
adversely affect our financial condition or results of operations. Any adverse publicity resulting from these allegations, even if proven
to be false, may also materially and adversely affect our reputation or prospects, which in turn could materially adversely affect our
business, financial condition or results of operations.

We are subject to state and local "dram shop" statutes, which may subject us to uninsured liabilities. These statutes generally
allow a person injured by an intoxicated person to recover damages from an establishment that wrongfully served alcoholic beverages
to the intoxicated person. Because a plaintiff may seek punitive damages, which may not be fully covered by insurance, this type of
action could have an adverse impact on our financial condition or results of operations. A judgment in such an action significantly
in excess of, or not covered by, our insurance coverage could adversely affect our business, financial condition or results of operations.
Further, adverse publicity resulting from any such allegations may adversely affect us and our restaurants taken as a whole.

In addition, the restaurant industry has been subject to a growing number of claims based on the nutritional content of food
products sold and disclosure and advertising practices. We may in the future also be subject to this type of proceeding or to publicity
about these matters (particularly those directed at the quick-service or fast casual segments of the industry) may harm our reputation
and could materially adversely affect our business, financial condition or results of operations.

Our current insurance may not provide adequate levels of coverage against claims.

There are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to
insure against. Such losses could have a material adverse effect on our business and results of operations. In addition, we self-insure
a significant portion of expected losses under our workers’ compensation, general liability, employee health and property insurance
programs. Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses
could result in materially different amounts of expense under these programs, which could have a material adverse effect on our
financial condition, results of operations and liquidity. Failure to obtain and maintain adequate directors’ and officers’ insurance
could materially adversely affect our ability to attract and retain qualified officers and directors.

The Company is subject to the risks presented by acquisitions.

As part of our expansion efforts, the Company has acquired some of its franchised restaurants in the past. In the future, the
Company may, from time to time, consider opportunistic acquisitions of restaurants operated by franchisees or other operators. Any
future acquisitions will be accompanied by the risks commonly encountered in acquisitions. These risks include among other things:

•

the difficulty of integrating operations and personnel;

the potential disruption to our ongoing business;

the potential distraction of management, the inability to maintain uniform standards, controls procedures and policies;
and

•

the impairment of relations with team members and customers as a result of changes in ownership and management.

These impacts could materially adversely affect our business, financial condition or results of operation.

Failure to obtain and maintain required licenses and permits or to comply with alcoholic beverage or food control regulations
could lead to the loss of our liquor and food service licenses and, thereby, harm our business.

The restaurant industry is subject to various federal, state and local government regulations, including those relating to the sale
of food and alcoholic beverages. Such regulations are subject to change from time to time. The failure to obtain and maintain these
licenses, permits and approvals could adversely affect our operating results. Typically, licenses must be renewed annually and may
be revoked, suspended or denied renewal for cause at any time if governmental authorities determine that our conduct violates

applicable regulations. Difficulties or failure to maintain or obtain the required licenses and approvals could adversely affect our
existing restaurants and delay or result in our decision to cancel the opening of new restaurants, which could adversely affect our
business.

Alcoholic beverage control regulations generally require our restaurants to apply to a state authority and, in certain locations,
county or municipal authorities for a license that must be renewed annually and may be revoked or suspended for cause at any time.
Alcoholic beverage control regulations relate to numerous aspects of daily operations of our restaurants, including the minimum age
of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcohol
manufacturers, wholesalers and distributors, inventory control and handling and storage and dispensing of alcoholic beverages. Any
future failure to comply with these regulations and obtain or retain liquor licenses could adversely affect our business, financial
condition or results of operations.

Changes to accounting rules or regulations may adversely affect our results of operations.

Changes to existing accounting rules or regulations may impact our future results of operations or cause the perception that we
are more highly leveraged. Other new accounting rules or regulations and varying interpretations of existing accounting rules or
regulations have occurred and may occur in the future. For instance, accounting regulatory authorities have implemented a requirement
that lessees will capitalize operating leases in their financial statements beginning in 2019. Such change will require us to record
significant capital lease obligations on our balance sheet and make other changes to our financial statements. This and other future
changes to accounting rules or regulations could materially adversely affect our financial condition or results of operations.

Failure of our internal control over financial reporting could adversely affect our business and financial results.

Our management is responsible for establishing and maintaining effective internal control over financial reporting under Section
404 of the Sarbanes-Oxley Act of 2002. Internal control over financial reporting is a process to provide reasonable assurance regarding
the reliability of financial reporting for external purposes in accordance with GAAP. Because of its inherent limitations, internal
control over financial reporting is not intended to provide absolute assurance that we would prevent or detect a misstatement of our
financial statements or fraud. Any failure to maintain an effective system of internal control over financial reporting could limit our
ability to report our financial results accurately and timely or to detect and prevent fraud. The identification of a material weakness
could indicate a lack of controls adequate to generate accurate financial statements that, in turn, could cause a loss of investor
confidence and decline in the market price of our common stock. We cannot assure you that we will be able to timely remediate any
material weaknesses that may be identified in future periods or maintain all of the controls necessary for continued compliance.
Likewise, we cannot assure you that we will be able to retain sufficient skilled finance and accounting personnel, especially in light
of the increased demand for such personnel among publicly traded companies.

Under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our
internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until we are no longer an "emerging
growth company." We could be an "emerging growth company" until the end of our 2018 fiscal year.

Our principal stockholders and their affiliates own a substantial portion of our outstanding equity, and their interests may not
always coincide with the interests of the other holders.

As of December 29, 2015, L Catterton, certain of its affiliates and Argentia Private Investments, Inc. ("Argentia," and together
with L Catterton, our "Equity Sponsors") beneficially owned in the aggregate shares representing approximately 51.8% of our
outstanding voting power, assuming no conversion of Class B common stock into common stock. Persons associated with L Catterton
currently serve on our board of directors. L Catterton and certain of its affiliates beneficially own, in the aggregate, shares representing
approximately 24.7% of our outstanding equity interests and approximately 26.1% of our outstanding voting power as of December 29,
2015. Argentia beneficially owns shares representing approximately 29.8% of our outstanding equity interests and approximately
25.7% of our outstanding voting power as of December 29, 2015. As a result, L Catterton, certain of its affiliates and Argentia could
continue to potentially have significant influence over all matters presented to our stockholders for approval, including election and
removal of our directors and change in control transactions. The interests of L Catterton, certain of its affiliates and Argentia may
not always coincide with the interests of the other holders of our common stock.

Our stock price is subject to volatility.

The stock market in general is highly volatile. As a result, the market price of our common stock is similarly volatile. The price
of our Class A common stock could be subject to wide fluctuations in response to a number of factors, some of which may be beyond
our control. These factors include actual or anticipated fluctuations in our operating results, changes in, or our ability to achieve,
estimates of our operating results by analysts, investors or management, analysts’ recommendations regarding our stock or our
competitors’ stock, actions or announcements by us or our competitors, the maintenance and growth of the value of our brand,
litigation, legislation or other regulatory developments affecting us or our industry, natural disasters, terrorist acts, war or other
calamities and changes in general market and economic conditions.

We do not intend to pay dividends for the foreseeable future.

We have never declared or paid any cash dividends on our common stock, except for the Class C common stock dividend paid
to Argentia, the previous holder of the one outstanding share of our Class C common stock, which was redeemed in connection with
our initial public offering ("IPO"). For the foreseeable future, we intend to retain any earnings to finance the development and
expansion of our business, and we do not anticipate paying any cash dividends on our common stock. See Item 5. "Market for the
Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities-Dividends."

Provisions in our charter documents and Delaware law may delay or prevent our acquisition by a third party.

Our amended and restated certificate of incorporation and second amended and restated bylaws, and Delaware law, contain
several provisions that may make it more difficult for a third party to acquire control of us without the approval of our board of
directors. For example, we have a classified board of directors with three-year staggered terms, which could delay the ability of
stockholders to change membership of a majority of our board of directors. These provisions may make it more difficult or expensive
for a third party to acquire a majority of our outstanding equity interests. These provisions also may delay, prevent or deter a merger,
acquisition, tender offer, proxy contest or other transaction that might otherwise result in our stockholders receiving a premium over
the market price for their common stock.

ITEM 1B.

Unresolved Staff Comments

None.

ITEM 2.

Properties

As of December 29, 2015, we and our franchisees operated 492 restaurants in 35 states, the District of Columbia and one Canadian
province. Our restaurants are typically 2,600 to 2,700 square feet and are located in a variety of suburban, urban and small markets.
We lease the property for our central support office and all of the properties on which we operate restaurants. The chart below shows
the locations of our company-owned and franchised restaurants as of December 29, 2015.

State
Arizona .......................................................................................................
California....................................................................................................
Colorado .....................................................................................................
Connecticut.................................................................................................
Delaware.....................................................................................................
District of Columbia...................................................................................
Florida ........................................................................................................
Idaho...........................................................................................................
Illinois.........................................................................................................
Indiana ........................................................................................................
Iowa ............................................................................................................
Kansas ........................................................................................................
Kentucky ....................................................................................................
Maryland ....................................................................................................
Massachusetts.............................................................................................
Michigan.....................................................................................................
Minnesota ...................................................................................................
Missouri......................................................................................................
Montana......................................................................................................
Nebraska.....................................................................................................
New Hampshire..........................................................................................
New Jersey .................................................................................................
New York....................................................................................................
North Carolina............................................................................................
North Dakota ..............................................................................................
Ohio............................................................................................................
Oklahoma ...................................................................................................
Oregon ........................................................................................................
Pennsylvania...............................................................................................
South Dakota ..............................................................................................
Tennessee....................................................................................................
Texas...........................................................................................................
Utah ............................................................................................................
Virginia.......................................................................................................
Washington.................................................................................................
Wisconsin ...................................................................................................
Canada ........................................................................................................

Company-
owned

Franchised

Total

2
22
60
—
3
1
5
5
53
21
10
9
2
27
—
—
44
4
—
—
—
4
1
16
—
19
2
8
12
—
5
3
14
32
1
36
1
422

—
—
—
3
—
—
—
—
5
—
1
—
4
—
6
19
1
8
2
6
2
—
5
—
3
—
—
—
—
2
—
—
—
—
—
3
—
70

2
22
60
3
3
1
5
5
58
21
11
9
6
27
6
19
45
12
2
6
2
4
6
16
3
19
2
8
12
2
5
3
14
32
1
39
1
492

We are obligated under non-cancelable leases for our restaurants and our central support office. Our restaurant leases generally
have initial terms of 10 years with two or more five-year extensions. Our restaurant leases generally have renewal options and may
require us to pay a proportionate share of real estate taxes, insurance, common area maintenance charges and other operating costs.
Some restaurant leases provide for contingent rental payments based on sales thresholds, although we generally do not expect to pay
significant contingent rent on these properties based on the thresholds in those leases.

ITEM 3.

Legal Proceedings

As previously disclosed in prior reports filed with the SEC, the Company is named as a defendant in an action filed in the
Superior Court of Delaware in New Castle County (the "Court"), entitled The State of Delaware, William French v. Card Compliant,
LLC, et. al. The case was filed under seal in June 2013 and was unsealed on March 26, 2014. The complaint in this case alleges that
a number of large retailers and restaurant companies, including the Company, knowingly refused to fulfill obligations under Delaware's
Abandoned Property Law by failing to report and deliver "unclaimed gift card funds" to the State of Delaware, and knowingly made,
used or caused to be made or used, false statements and records to conceal, avoid or decrease an obligation to pay or transmit money
to Delaware in violation of the Delaware False Claims and Reporting Act. The complaint seeks an order that we cease and desist
from violating the Delaware Abandoned Property Law, monetary damages (including treble damages under the False Claims and
Reporting Act), penalties, and attorneys' fees and costs. On November 23, 2015, the Court ruled on a motion to dismiss the complaint
that the defendants—including the Company—had filed. While the Court granted the motion to dismiss with respect to a claim
alleging that the defendants intended to defraud the government or willfully concealed property owed to the government and for
which a certificate or receipt was provided, it did not dismiss the other claims alleging that the defendants knowingly made false
statements to avoid transmitting money to the government. The trial date with respect to this matter is set for January 8, 2018. We
have recorded a loss contingency accrual based on a reasonable estimate of the probable losses that might arise from this matter; this
loss contingency accrual did not have a material effect on our results of operation. We intend to continue to vigorously defend this
action.

On February 10, 2016, Tammie Carter, a former employee of the Company, filed a purported collective and class action lawsuit
against the Company alleging violations of the Fair Labor Standards Act and the Colorado Wage Order (the "Labor Laws") in the
United States District Court for the District of Colorado. The plaintiff filed the case on her behalf and on behalf of all assistant general
managers employed by us during the past three years whom we classified as exempt employees, and she alleges that we violated the
Labor Laws by not paying overtime compensation to our assistant general managers. The plaintiff is seeking, on behalf of herself
and members of the putative class, unpaid overtime compensation, damages (including liquidated and/or punitive damages), a
declaratory judgment, an injunction, and attorneys’ fees and costs. This case is at an early stage, and we are therefore unable to make
a reasonable estimate of the probable loss or range of losses, if any, that might arise from this matter. We intend to vigorously defend
this action.

In the normal course of business, we are subject to other proceedings, lawsuits and claims. Such matters are subject to many
uncertainties, and outcomes are not predictable with assurance. Consequently, we are unable to ascertain the ultimate aggregate
amount of monetary liability or financial impact with respect to these matters as of December 29, 2015. These matters could affect
the operating results of any one financial reporting period when resolved in future periods. We believe that an unfavorable outcome
with respect to these matters is remote or a potential range of loss is not material to our consolidated financial statements. Significant
increases in the number of these claims, or one or more successful claims that result in greater liabilities than they currently anticipate,
could materially adversely affect our business, financial condition, results of operations or cash flows.

ITEM 4.

Mine Safety Disclosures

Not applicable.

PART II

ITEM 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities

Our common stock has traded on the Nasdaq Global Select Market under the symbol NDLS since it began trading on June 28,
2013, the date of our IPO. The following table sets forth, for the periods indicated, the high and low sales prices per share of our
common stock as reported on the Nasdaq Global Select Market.

Fiscal Year 2015
First quarter (December 31, 2014 - March 31, 2015)............................................................
Second quarter (April 1, 2015 - June 30, 2015) ....................................................................
Third quarter (July 1, 2015 - September 29, 2015) ...............................................................
Fourth quarter (September 30, 2015 - December 29, 2015)..................................................
Fiscal Year 2014
First quarter (January 1, 2014 - April 1, 2014)......................................................................
Second quarter (April 2, 2014 - July 1, 2014) .......................................................................
Third quarter (July 2, 2014 - September 30, 2014) ...............................................................
Fourth quarter (October 1, 2014 - December 30, 2014) ........................................................

High

Low

28.02

21.41

15.88

14.95

41.54

39.30

34.32

27.00

17.18

14.28

11.20

10.02

33.40

30.28

17.15

18.58

As of February 25, 2016, there were approximately 45 holders of record of our common stock. The number of holders of record
is based upon the actual numbers of holders registered at such date and does not include holders of shares in "street name" or persons,
partnerships, associates, corporations or other entities in security position listings maintained by depositories.

Purchases of Equity Securities by the Issuer

We had no share repurchases during the fourth quarter of 2015.

Sales of Unregistered Securities by the Issuer

None.

Stock Performance Graph

The following graph compares the cumulative total shareholder return on our common stock from June 28, 2013 (using the price
of which our shares of common stock were initially sold to the public) to December 29, 2015 to that of the total return of the Nasdaq
Composite and the S&P 600 Restaurants Index. The comparison assumes $100 was invested in our common stock on June 28, 2013
and in each of the forgoing indices on June 28, 2013 and assumes the reinvestment of dividends. This graph is furnished and not
"filed" with the Securities and Exchange Commission or "soliciting material" under the Securities Exchange Act of 1934 and shall
not be incorporated by reference into any such filings, irrespective of any general incorporation contained in such filing.

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

Dividends

No dividends have been declared or paid on our shares of equity interests, except for the Class C common stock dividend paid
to the previous holder of the one outstanding share of our Class C common stock, which we redeemed upon our IPO. We do not
anticipate paying any cash dividends on any of our shares of common stock in the foreseeable future. We currently intend to retain
any earnings to finance the development and expansion of our business. Any future determination to pay dividends will be at the
discretion of our board of directors and will be dependent upon then-existing conditions, including our earnings, capital requirements,
results of operations, financial condition, business prospects and other factors that our board of directors considers relevant. Further,
the Company's credit facility contains provisions that limit its ability to pay dividends on its common stock. See "Management’s
Discussion and Analysis of Financial Condition and Results of Operations" and "Certain Relationships and Related Transactions,
and Director Independence" for additional information regarding our financial condition.

ITEM 6.

Selected Financial Data

The following table summarizes the consolidated historical financial and operating data for the periods indicated. The statements
of income data for the fiscal years ended December 29, 2015, December 30, 2014 and December 31, 2013, and the balance sheet
data as of December 29, 2015 and December 30, 2014 have been derived from our audited consolidated financial statements included
in Item 8. "Financial Statements and Supplementary Data," and the statements of income data from the fiscal years ended January 1,
2013 and January 3, 2012, and the balance sheet data as of December 31, 2013, January 1, 2013 and January 3, 2012 have been
derived from our audited consolidated financial statements not included in this report.

The historical results presented below are not necessarily indicative of the results to be expected for any future period. This
information should be read in conjunction with "Risk Factors," "Management’s Discussion and Analysis of Financial Condition and
Results of Operations" and our audited consolidated financial statements and the related notes included elsewhere in this report.

We operate on a 52- or 53-week fiscal year ending on the Tuesday closest to December 31. Fiscal year 2011, which ended on
January 3, 2012, contained 53 weeks, and all other fiscal years presented below contained 52 weeks. We refer to our fiscal years as
2015, 2014, 2013, 2012 and 2011. Our fiscal quarters each contain thirteen weeks, with the exception of the fourth quarter of a 53-
week fiscal year, which contains fourteen weeks.

Fiscal Year Ended

December 29,
2015

December 30,
2014

December 31,
2013

January 1,
2013

January 3,
2012

(dollars in thousands)

Statements of Income Data:

Revenue:

Restaurant revenue ...................................................................................................

450,482

398,993

347,140

297,264

253,467

Franchising royalties and fees..................................................................................

Total revenue.....................................................................................................

4,969

455,451

4,748

403,741

3,784

350,924

3,146

300,410

2,599

256,066

Costs and Expenses:

Restaurant operating costs (exclusive of depreciation and amortization, shown

separately below):

Cost of sales ......................................................................................................

Labor .................................................................................................................

Occupancy .........................................................................................................

Other restaurant operating costs ........................................................................
General and administrative(1) ...................................................................................

Depreciation and amortization .................................................................................

Pre-opening ..............................................................................................................

Restaurant impairments, closure costs and asset disposals......................................

Total costs and expenses....................................................................................

(Loss) income from operations .......................................................................................

Debt extinguishment expense ..................................................................................

Interest expense........................................................................................................

(Loss) income before income taxes ................................................................................

(Benefit) provision for income taxes ..............................................................................

120,455

143,145

50,300

63,549

37,244

27,802

4,407

29,616

476,518

(21,067)

—

1,432

(22,499)

(8,734)

107,217

120,492

42,540

52,580

31,394

24,787

4,425

1,391

384,826

18,915

—

365

18,550

7,122

91,892

104,040

35,173

44,078

35,893

20,623

3,809

1,164

336,672

14,252

624

2,196

11,432

4,767

78,997

89,435

29,323

36,380

29,081

16,719

3,145

1,278

284,358

16,052

2,646

5,028

8,378

3,215

Net (loss) income ............................................................................................................

(13,765)

11,428

6,665

5,163

66,419

75,472

25,208

32,031

26,463

14,501

2,327

1,629

244,050

12,016

275

6,132

5,609

1,780

3,829

_____________
(1)

2013 included $0.5 million, and 2012 and 2011 each included $1.0 million of management fee expense, respectively, in accordance with our management services agreement
and through the Class C common stock dividend paid to the holder of the one outstanding share of our Class C common stock. In connection with our IPO, the management
services agreement expired, and the one share of Class C common stock was redeemed. In the second quarter of 2013, we incurred $5.7 million of IPO-related expenses: $2.0
million of stock-based compensation related to accelerated vesting of outstanding stock options, $1.2 million of stock-based compensation related to stock options granted to
our Chief Executive Officer and then-President and Chief Operating Officer of which 50% were vested at grant, $1.7 million of transaction bonuses and related payroll taxes
and $0.8 million in transaction payments to our Equity Sponsors. Additionally, we incurred $0.7 million of expenses related to our follow-on offering which closed in December
of 2013.

Fiscal Year Ended

December 29,
2015

December 30,
2014

December 31,
2013

January 1,
2013

January 3,
2012

(in thousands, except share and per share data and restaurants)

(Loss) earnings per Class A and Class B common share, combined:

Basic.........................................................................................................................

Diluted......................................................................................................................

(0.48)

0.38

0.37

0.25

0.24

0.22

0.16

Weighted average Class A and Class B common shares outstanding, combined:

Basic.........................................................................................................................

28,938,901

Diluted......................................................................................................................

28,938,901

29,717,304

31,001,099

26,406,904

27,688,629

23,238,984

23,265,542

23,237,698

Selected Operating Data:

Company-owned restaurants at end of period.................................................................

Franchise-owned restaurants at end of period.................................................................

422

386

318

276

Company-owned:

Average unit volumes(1) ...........................................................................................
Comparable restaurant sales(2) .................................................................................
Restaurant contribution(3) ................................................................................................

as a percentage of restaurant revenue.......................................................................

1,103

(0.2)%

73,032

16.2 %

1,147

0.3%

76,165

19.1%

1,179

3.4%

71,957

20.7%

1,178

5.2%

63,129

21.2%

239

1,147

4.2%

54,337

21.4%

As of

December 29,
2015

December 30,
2014

December 31,
2013

January 1,
2013

January 3,
2012

(in thousands)

Balance Sheet Data:

Total current assets..........................................................................................................
Total assets(4) ...................................................................................................................

Total current liabilities ....................................................................................................
Total long-term debt(4).....................................................................................................
Total liabilities(4)..............................................................................................................

Temporary equity............................................................................................................

Total stockholders' equity................................................................................................

25,401

22,776

18,333

16,154

239,961

32,914

67,732

146,189

—

93,772

238,539

187,350

25,831

27,136

98,424

—

24,165

5,860

62,877

—

140,115

124,473

155,957

23,760

92,693

141,949

3,601

10,407

12,879

122,814

20,557

74,012

115,291

2,572

4,951

_____________
(1)

AUVs consist of average annualized sales of all company-owned restaurants over the trailing 12 periods in a typical operating year.

(2)

(3)

(4)

Comparable restaurant sales represent year-over-year sales for restaurants open for at least 18 full periods.

Restaurant contribution represents restaurant revenue less restaurant operating costs which are cost of sales, labor, occupancy and other restaurant operating costs.

As of December 29, 2015, the Company early adopted Accounting Standards Update ("ASU") 2015-03 "Interest-Imputation of Interest (Subtopic 835-30)." The adoption was
retrospective to all prior periods presented. Total assets, long-term debt and total liabilities have been reduced by $0.4 million, $0.5 million, $1.0 million and $3.5 million as
of December 30, 2014, December 31, 2013, January 1, 2013 and January 3, 2012, respectively.

ITEM 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with
Item 6. "Selected Financial Data" and our consolidated financial statements and related notes included in Item 8. "Financial
Statements and Supplementary Data." In addition to historical information, this discussion and analysis contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-
looking statements as a result of certain factors including, but not limited to, those discussed in Item 1A. "Risk Factors" and elsewhere
in this report.

We operate on a 52- or 53-week fiscal year ending on the Tuesday closest to December 31. Fiscal years 2015 and 2014, which
ended on December 29, 2015 and December 30, 2014, respectively, each contained 52 weeks. Fiscal year 2011, which ended on
January 3, 2012, contained 53 weeks. We refer to our fiscal years as 2015, 2014 and 2013. Our fiscal quarters each contained 13
operating weeks, with the exception of the fourth quarter of 2011, which had 14 operating weeks.

Overview

NOODLES & COMPANY
World Kitchen

Noodles & Company is a high growth, fast casual restaurant concept offering lunch and dinner within a fast growing segment
of the restaurant industry. We opened our first location in 1995, offering noodle and pasta dishes, staples of many cuisines, with the
goal of delivering fresh ingredients and flavors from around the world under one roof. Today, our globally inspired menu includes
a wide variety of high quality, cooked-to-order dishes, including noodles and pasta, soups, salads and sandwiches, which are served
on china by our friendly team members. We believe we offer our customers value with per person spend of approximately $8.55 in
2015.

2015 Highlights and Trends

Restaurant Development. New restaurants have contributed substantially to our revenue growth. In 2015, we opened 51 company-
owned restaurants and 19 franchise restaurants for a total of 70 restaurants opened system-wide. We also purchased from franchisees
19 restaurants in 2014 and one restaurant from a franchise in 2015, and we closed 16 company-owned restaurants and one franchise
restaurant in 2015. As of December 29, 2015, we had 422 company-owned restaurants and 70 franchise restaurants in 35 states, the
District of Columbia and one Canadian province. In 2016, we expect to open approximately 50 restaurants system-wide.

Comparable Restaurant Sales. Comparable restaurant sales decreased by 0.3% system-wide in 2015. Comparable restaurant

sales represent year-over-year sales comparisons for restaurants open for at least 18 full periods.

Brand positioning. During the fall of 2015, we launched a new brand positioning and food platform — "Made.Different. —
Real Food. Real Cooking. Real Flavors." We also announced the removal of all artificial colors, flavors, preservatives and sweeteners
from our core menu, including noodles, sauces, soups, condiments, bread and dressings, but excluding beverages, cookies and rice
crispies.

Key Measures We Use to Evaluate Our Performance

To evaluate the performance of our business, we utilize a variety of financial and performance measures. These key measures
include revenue, average unit volumes ("AUVs"), comparable restaurant sales, restaurant contribution, EBITDA and adjusted
EBITDA.

Revenue

Restaurant revenue represents sales of food and beverages in company-owned restaurants. Several factors affect our restaurant

revenue in any period, including the number of restaurants in operation and per restaurant sales.

Franchise royalties and fees represent royalty income and initial franchise fees. While we expect that the majority of our revenue
and net income growth will be driven by company-owned restaurants, our franchise restaurants remain an important part of our
financial success.

Seasonal factors cause our revenue to fluctuate from quarter to quarter. Our revenue per restaurant is typically lower in the first
and fourth quarters due to reduced winter and holiday traffic and higher in the second and third quarters. As a result of these factors,
our quarterly and annual operating results and comparable restaurant sales may fluctuate significantly.

Average Unit Volumes ("AUVs")

AUVs consist of the average annualized sales of all company-owned restaurants for the trailing 12 periods. AUVs are calculated
by dividing restaurant revenue by the number of operating days within each time period and multiplying by 361, which is equal to
the number of operating days we have in a typical year. This measurement allows management to assess changes in consumer traffic
and per person spending patterns at our restaurants.

Comparable Restaurant Sales

Comparable restaurant sales refer to year-over-year sales comparisons for the comparable restaurant base. We define the
comparable restaurant base to include restaurants open for at least 18 full periods. As of the end of 2015, 2014 and 2013, there were
322, 295 and 248 restaurants, respectively, in our comparable restaurant base for company-owned locations. This measure highlights
performance of existing restaurants, as the impact of new restaurant openings is excluded. Changes in comparable restaurant sales
are generated by changes in traffic, which we calculate as the number of entrées sold, or changes in per person spend, calculated as
sales divided by traffic. Per person spend can be influenced by changes in menu prices and the mix and number of items sold per
person.

Measuring our comparable restaurant sales allows us to evaluate the performance of our existing restaurant base. Various factors

impact comparable restaurant sales, including:

•

consumer recognition of our brand and our ability to respond to changing consumer preferences;

overall economic trends, particularly those related to consumer spending;

our ability to operate restaurants effectively and efficiently to meet consumer expectations;

pricing;

per person spend and average check amount;

marketing and promotional efforts;

local competition;

trade area dynamics;

introduction of new and seasonal menu items and limited time offerings; and

opening of new restaurants in the vicinity of existing locations.

As a result of the 53-week fiscal year 2011, our fiscal year 2012 began one week later than our fiscal year 2011. Consistent with
common industry practice, we present comparable restaurant sales on a calendar-adjusted basis that aligns current year sales weeks
with comparable periods in the prior year, regardless of whether they belong to the same fiscal period or not. Since opening new
company-owned and franchise restaurants will be a significant component of our revenue growth, comparable restaurant sales are
only one measure of how we evaluate our performance.

Restaurant Contribution

Restaurant contribution is defined as restaurant revenue less restaurant operating costs which are cost of sales, labor, occupancy
and other restaurant operating costs. We expect restaurant contribution to increase in proportion to the number of new restaurants
we open and our comparable restaurant sales growth. Fluctuations in restaurant contribution margin can also be attributed to those
factors discussed above for the components of restaurant operating costs.

EBITDA and Adjusted EBITDA

We define EBITDA as net (loss) income before interest expense, (benefit) provision for income taxes and depreciation and
amortization. We define Adjusted EBITDA as net (loss) income before interest expense, debt extinguishment expense, (benefit)
provision for income taxes, restaurant impairments, closure costs and asset disposals, depreciation and amortization, stock-based
compensation, management fees, IPO-related expenses, follow-on offering expenses, transaction costs and litigation reserves.

EBITDA and Adjusted EBITDA provide clear pictures of our operating results by eliminating certain atypical and non-cash
expenses that are not reflective of the underlying business performance. We use these metrics to facilitate a comparison of our
operating performance on a consistent basis from period to period and to analyze the factors and trends affecting our business. In
addition, we use these measures to monitor compliance with our bank covenants.

The following table presents a reconciliation of net (loss) income to EBITDA and Adjusted EBITDA:

Fiscal Year Ended

December 29,
2015

December 30,
2014

December 31,
2013

January 1,
2013

January 3,
2012

(in thousands)

Net (loss) income.......................................................................................

(13,765) $

11,428

6,665

5,163

Depreciation and amortization ..................................................................

Interest expense .........................................................................................

(Benefit) provision for income taxes.........................................................

27,802

1,432

(8,734)

24,787

365

7,122

20,623

2,196

4,767

16,719

5,028

3,215

3,829

14,501

6,132

1,780

EBITDA.....................................................................................................

6,735

43,702

34,251

30,125

26,242

Debt extinguishment expense....................................................................

Restaurant impairments, closure costs and asset disposals .......................
Management fees(a)....................................................................................
Stock-based compensation expense ..........................................................
IPO-related expenses(b)..............................................................................
Follow-on offering expenses(c) ..................................................................
Transaction costs(d) ....................................................................................

Litigation reserves .....................................................................................

—

29,616

—

1,469

—

200

—

1,391

—

1,330

—

100

—

624

1,164

500

1,127

5,667

696

—

2,646

1,278

1,000

1,234

—

275

1,629

1,014

1,328

—

Adjusted EBITDA.....................................................................................

38,020

46,523

44,029

36,283

30,488

_____________
(a)

Fiscal year 2013 included $0.5 million in management fee expense, and fiscal years 2012 and 2011 each included $1.0 million of management fee
expense, in accordance with our management services agreement and through the Class C common stock dividend paid to the holder of the one
outstanding share of our Class C common stock. In connection with our IPO, the management services agreement expired and the one share of Class C
common stock was redeemed.

(b)

(c)

(d)

Reflects certain expenses incurred in conjunction with the closing of our IPO. This amount includes $2.0 million of stock-based compensation related
to accelerated vesting of outstanding stock options, $1.2 million of stock-based compensation related to stock options granted to our Chief Executive
Officer and then-President and Chief Operating Officer of which 50% were vested at grant, $1.7 million of transaction bonuses and related payroll tax
and $0.8 million in transaction payments to our Equity Sponsors.

Reflects $0.7 million of offering expenses related to our follow-on offering completed in December of 2013.

Expenses related to the purchase of 19 franchise restaurants. See Note 2-Business Combinations in the consolidated financial statements.

Key Financial Definitions

Cost of Sales

Cost of sales includes the direct costs associated with the food, beverage and packaging of our menu items. Cost of sales also
includes any costs related to discounted menu items. Cost of sales is a substantial expense and can be expected to grow proportionally
as our restaurant revenue grows. Fluctuations in cost of sales are caused primarily by volatility in the cost of commodity food items
and related contracts for such items. Other important factors causing fluctuations in cost of sales include seasonality, discounting
activity and restaurant level management of food waste.

Labor Costs

Labor costs include wages, payroll taxes, workers' compensation expense, benefits and bonuses paid to our management teams.
Like other expense items, we expect labor costs to grow proportionally as our restaurant revenue grows. Factors that influence
fluctuations in our labor costs include minimum wage and payroll tax legislation, the frequency and severity of workers' compensation
claims, health care costs and the performance of our restaurants.

Occupancy Costs

Occupancy costs include rent, common area maintenance and real estate tax expense related to our restaurants and is expected

to grow proportionally as we open new restaurants.

Other Restaurant Operating Costs

Other restaurant operating costs include the costs of utilities, restaurant-level marketing, credit card processing fees, restaurant
supplies, repairs and maintenance and other restaurant operating costs. Like other costs, it is expected to grow proportionally as
restaurant revenue grows.

General and Administrative Expense

General and administrative expense is composed of payroll, other compensation, travel, marketing, accounting fees, legal fees
and other expenses related to the infrastructure required to support our restaurants. General and administrative expense also includes
the non-cash stock compensation expense related to our employee stock incentive plan. General and administrative expense can be
expected to grow as we grow, including incremental legal, accounting, insurance and other expenses incurred as a public company.

Depreciation and Amortization

Our principal depreciation and amortization charges relate to depreciation of fixed assets, including leasehold improvements

and equipment, from restaurant construction and ongoing maintenance.

Pre-Opening Costs

Pre-opening costs relate to the costs incurred prior to the opening of a restaurant. These include management labor costs, staff
labor costs during training, food and supplies utilized during training, marketing costs and other related pre-opening costs. Pre-
opening costs also include rent recorded between date of possession and opening date for our restaurants.

Restaurant impairments, closure costs and asset disposals

Restaurant impairments, closure costs and asset disposals include the loss on disposal of assets related to retirements and

replacement of leasehold improvements or equipment, restaurant closure and impairment charges.

Debt Extinguishment

In 2013, we amended our credit facility to extend the maturity date and to reduce interest rates on borrowings. As a result of

these amendments, a portion of the existing and new fees were treated as debt extinguishment.

Interest Expense

Interest expense consists primarily of interest on our outstanding indebtedness and amortization of debt issuance costs over the

life of the related debt reduced by capitalized interest.

(Benefit) Provision for Income Taxes

(Benefit) provision for income taxes consists of federal, foreign, state and local taxes on our income.

Restaurant Openings, Closures and Relocations

The following table shows restaurants opened, closed or relocated in the years indicated.

Fiscal Year Ended

December 29,
2015

December 30,
2014

December 31,
2013

Company-Owned Restaurant Activity
Beginning of period ............................................................................................
Openings .............................................................................................................
Acquisitions(1) .....................................................................................................
Closures and relocations(2) ..................................................................................
Restaurants at end of period ...............................................................................
Franchise Restaurant Activity
Beginning of period ............................................................................................
Openings .............................................................................................................
Divestitures(1) ......................................................................................................
Closures and relocations(2) ..................................................................................
Restaurants at end of period ...............................................................................
Total restaurants..................................................................................................

_____________
(1)

Represents franchise restaurants acquired by the Company.

(2)

We account for relocated restaurants under both restaurant openings and closures and relocations.

386

51
1
(16)
422

19
(1)
(1)
70

492

318

49
19

—

386

10
(19)
—

439

276

43
—

(1)

318

—

380

Results of Operations

The following table summarizes key components of our results of operations for the periods indicated as a percentage of our
total revenue, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenue.
Fiscal years 2015, 2014 and 2013 each contained 52 operating weeks.

Revenue:

Restaurant revenue ..............................................................................................
Franching royalties and fees................................................................................
Total revenue ..................................................................................................

98.9 %

98.8%

98.9%

1.1

100.0

1.2

100.0

1.1

100.0

Fiscal Year Ended

December 29,
2015

December 30,
2014

December 31,
2013

Costs and expenses:

Restaurant operating costs (exclusive of depreciation and amortization, shown

separately below):(1)
Cost of sales....................................................................................................
Labor...............................................................................................................
Occupancy ......................................................................................................
Other restaurant operating costs .....................................................................
General and administrative(2)...............................................................................
Depreciation and amortization ............................................................................
Pre-opening..........................................................................................................
Restaurant impairments, closure costs and asset disposals .................................
Total costs and expenses.................................................................................
(Loss) income from operations ................................................................................
Debt extinguishment expense..............................................................................
Interest expense ...................................................................................................
(Loss) income before income taxes..........................................................................
(Benefit) provision for income taxes........................................................................
Net (loss) income .....................................................................................................

_____________
(1)

As a percentage of restaurant revenue.

26.7

31.8

11.2

14.1

8.2

6.1

1.0

6.5

104.6

(4.6)

—

0.3

(4.9)

(1.9)

26.9

30.2

10.7

13.2

7.8

6.1

1.1

0.3

95.3

4.7

—

0.1

4.6

1.8

26.5

30.0

10.1

12.7

10.2

5.9

1.1

0.3

95.9

4.1

0.2

0.6

3.3

1.4

(3.0)%

2.8%

1.9%

(2)

Fiscal year 2013 included $500,000 of management fee expense, in accordance with our management services agreement and through the Class C
common stock dividend paid to the holder of the one outstanding share of our Class C common stock. In connection with our IPO, the management
services agreement expired, and the one share of Class C common stock was redeemed. Additionally, we incurred $0.7 million of expenses related to
our follow-on offering which closed in December of 2013.

Fiscal Year Ended December 29, 2015 compared to Fiscal Year Ended December 30, 2014

Fiscal years 2015 and 2014 contained 52 operating weeks. The table below presents our operating results for 2015 and 2014,

and the related year-over-year changes:

Fiscal Year Ended

Increase / (Decrease)

December 29,
2015

December 30,
2014

(dollars in thousands)

Statements of Income Data:
Revenue:

Restaurant revenue ............................................................
Franchising royalties and fees...........................................
Total revenue..............................................................

450,482

398,993

51,489

4,969

455,451

4,748

403,741

221

51,710

Costs and Expenses:

Restaurant operating costs (exclusive of depreciation
and amortization, shown separately below):
Cost of sales ...............................................................
Labor ..........................................................................
Occupancy..................................................................
Other restaurant operating costs.................................
General and administrative ...............................................
Depreciation and amortization ..........................................
Pre-opening .......................................................................
Restaurant impairments, closure costs and asset
disposals ............................................................................
Total costs and expenses............................................
(Loss) income from operations ..............................................
Interest expense.................................................................
(Loss) income before income taxes .......................................
(Benefit) provision for income taxes .....................................
Net (loss) income ...................................................................

_____________
*

Not meaningful.

Revenue

120,455

143,145

50,300

63,549

37,244

27,802

4,407

29,616

476,518
(21,067)
1,432
(22,499)
(8,734)
(13,765) $

107,217

120,492

42,540

52,580

31,394

24,787

4,425

1,391

384,826

18,915

365

18,550

7,122

11,428

13,238

22,653

7,760

10,969

5,850

3,015
(18)

28,225

91,692
(39,982)
1,067
(41,049)
(15,856)
(25,193)

12.9%

4.7

12.8

12.3

18.8

18.2

20.9

18.6

12.2

(0.4)

23.8

Restaurant revenue increased by $51.5 million in 2015 compared to 2014. Restaurants not in the comparable restaurant base
accounted for $52.3 million of this increase, partially offset by a slight decline in comparable restaurant sales, as well as the impact
of closing 16 restaurants in the fourth quarter of 2015. Comparable restaurant sales decreased by $0.8 million or 0.2% in 2015 due
to a decrease in traffic, offset by a modest price increase. AUV's decreased to $1.103 million from $1.147 million in the prior year.

Franchise royalties and fees increased by $0.2 million in 2015 due to 19 new restaurant openings, the cancellation of an area
development agreement offset by decreased comparable restaurant sales of 0.9% and the loss of royalties and fees from franchise
restaurants purchased by the Company during 2014.

Cost of Sales

Cost of sales increased by $13.2 million in 2015 compared to 2014, due primarily to the increase in restaurant revenue in 2015.
As a percentage of restaurant revenue, cost of sales decreased to 26.7% in 2015 from 26.9% in 2014. This decrease as a percentage
of restaurant revenue was primarily the result of price increases partially offset by modest commodity inflation.

Labor Costs

Labor costs increased by $22.7 million in 2015 compared to 2014, due primarily to the increase in restaurant revenue in 2015.
As a percentage of restaurant revenue, labor costs increased to 31.8% in 2015 from 30.2% in 2014. The increase as a percentage of
restaurant revenue was primarily due to deleverage on lower average unit volumes, wage inflation and the implementation of the
PPACA.

Occupancy Costs

Occupancy costs increased by $7.8 million in 2015 compared to 2014, due primarily to new restaurants. As a percentage of
restaurant revenue, occupancy costs increased to 11.2% in 2015, from 10.7% in 2014. The increase was due to deleverage on lower
average unit volumes.

Other Restaurant Operating Costs

Other restaurant operating costs increased by $11.0 million in 2015 compared to 2014, due primarily to the increase in restaurant
revenue in 2015. As a percentage of restaurant revenue, other restaurant operating costs increased to 14.1% in 2015 from 13.2% in
2014. The increase in other restaurant operating cost percentage was primarily due to deleverage on lower average unit volumes, as
well as increased marketing initiative costs in 2015.

General and Administrative Expense

General and administrative expense increased by $5.9 million in 2015 compared to 2014, primarily due to the support of additional
restaurants, particularly in new markets, and marketing initiatives. As a percentage of revenue, general and administrative expense
increased to 8.2% in 2015 from 7.8% in 2014.

Depreciation and Amortization

Depreciation and amortization increased by $3.0 million in 2015 compared to 2014, due primarily to an increased number of
restaurants offset by the impairment of 39 restaurants throughout 2015. As a percentage of revenue, depreciation and amortization
remained flat at 6.1% in 2015 and 2014.

Pre-Opening Costs

Pre-opening costs decreased by $18,000 in 2015 compared to 2014. As a percentage of revenue, pre-opening costs decreased

to 1.0% in 2015 from 1.1% in 2014.

Restaurant Impairments, Closure Costs and Asset Disposals

Restaurant impairments, closure costs and asset disposals increased by $28.2 million in 2015 compared to 2014 due primarily
to the impairment of 39 restaurants in 2015, including six restaurants in the fourth quarter, as a result of our current assessment of
expected future cash flows. The under performance of these 39 restaurants, compounded by the higher than average construction
costs of some of these restaurants, resulted in the recording of an impairment of the fixed assets. Additionally, 16 restaurants were
closed in the fourth quarter of 2015, of which 15 were previously impaired during 2015. The majority of the $3.1 million in closing
costs were related to the non-cash reserves for lease obligations.

Each quarter we evaluate possible impairment of fixed assets at the restaurant level and record an impairment loss whenever
we determine that the fair value of these assets is less than their carrying value. There can be no assurance that such evaluations will
not result in additional impairment costs in future periods.

Interest Expense

Interest expense increased by $1.1 million in 2015 compared to 2014. The increase was the result of higher average borrowings
used to fund our share repurchase program, and an increase in the interest rate on our credit facility during 2015 compared to 2014.

(Benefit) Provision for Income Taxes

In 2015, we had a benefit for income taxes of $8.7 million in 2015 compared to a provision for income taxes of $7.1 million in
2014, due to a shift from pre-tax net income in 2014 to a pre-tax loss in 2015, as well as an increase in our effective income tax rate.
The effective tax rate increased to 38.8% in 2015 from 38.4% in 2014 primarily due to an increase in employment credits, which
causes an increase to the effective tax rate when applied to a period with a pre-tax book loss.

Fiscal Year Ended December 30, 2014 compared to Fiscal Year Ended December 31, 2013

Fiscal year 2014 and 2013 each contained 52 operating weeks. The table below presents our operating results for 2014 and 2013,

and the related year-over-year changes:

Fiscal Year Ended

Increase / (Decrease)

December 30,
2014

December 31,
2013

(dollars in thousands)

Statements of Income Data:
Revenue:

398,993

347,140

51,853

4,748

403,741

3,784

350,924

964

52,817

Costs and Expenses:

Restaurant operating costs (exclusive of depreciation
and amortization, shown separately below):
Cost of sales ...............................................................
Labor ..........................................................................
Occupancy..................................................................
Other restaurant operating costs.................................
General and administrative(1) ............................................
Depreciation and amortization ..........................................
Pre-opening .......................................................................
Restaurant impairments, closure costs and asset
disposals ............................................................................
Total costs and expenses............................................
Income from operations .........................................................
Debt extinguishment expense ...........................................
Interest expense.................................................................
Income before income taxes ..................................................
Provision for income taxes.....................................................
Net income .............................................................................

_____________
*

Not meaningful.

107,217

120,492

42,540

52,580
31,394

24,787

4,425

1,391

384,826

18,915

—

365

18,550

7,122

91,892

104,040

35,173

44,078
35,893

20,623

3,809

1,164

336,672

14,252

624

2,196

11,432

4,767

11,428

6,665

15,325

16,452

7,367

8,502
(4,499)
4,164

616

227

48,154

4,663
(624)
(1,831)
7,118

2,355

4,763

14.9%

25.5

15.1

16.7

15.8

20.9

19.3
(12.5)

20.2

16.2

19.5

14.3

32.7

(83.4)

62.3

49.4

71.5%

(1)

Fiscal year 2013 included $500,000 of management fee expense, in accordance with our management services agreement and through the Class C
common stock dividend paid to the holder of the one outstanding share of our Class C common stock. In connection with our IPO, the management
services agreement expired and the one share of Class C common stock was redeemed. Additionally, we incurred $0.7 million of expenses related to
our follow-on offering which closed in December of 2013.

Revenue

Restaurant revenue increased by $51.9 million in 2014 compared to 2013. Restaurants not in the comparable restaurant base
accounted for $51.0 million of this increase, with the balance attributed to growth in comparable restaurant sales. Comparable
restaurant sales increased by $0.9 million or 0.3% in 2014, composed of an increase in price and product mix, offset by a decrease
in traffic partially attributable to abnormally severe weather in the first quarter of 2014.

Franchise royalties and fees increased by $1.0 million in 2014 due to 10 new restaurant openings, the cancellation of an area
development agreement and an increase in marketing administrative fees from 0.5% in 2013 to 1.0% in 2014, offset by decreased
comparable restaurant sales of 0.4% and the loss of royalties and fees from franchise restaurants purchased by the Company.

Cost of Sales

Cost of sales increased by $15.3 million in 2014 compared to 2013, due primarily to the increase in restaurant revenue in 2014.
As a percentage of restaurant revenue, cost of sales increased to 26.9% in 2014 from 26.5% in 2013. This increase as a percentage
of restaurant revenue was the result of increased promotional activity and an increase in ingredient costs.

Labor Costs

Labor costs increased by $16.5 million in 2014 compared to 2013, due primarily to the increase in restaurant revenue in 2014.
As a percentage of restaurant revenue, labor costs increased to 30.2% in 2014 from 30.0% in 2013. The increase as a percentage of
restaurant revenue was the result of an increased percentage of non-comparable base restaurants, which on average have higher labor
costs as a percentage of revenue.

Occupancy Costs

Occupancy costs increased by $7.4 million in 2014 compared to 2013, due primarily to new restaurants. As a percentage of
restaurant revenue, occupancy costs increased to 10.7% in 2014, from 10.1% in 2013. The increase was due to an increase in the
percentage of restaurants not in the comparable base which, due to not reaching mature volumes, on average have higher occupancy
costs as a percentage of revenue.

Other Restaurant Operating Costs

Other restaurant operating costs increased by $8.5 million in 2014 compared to 2013, due primarily to the increase in restaurant
revenue in 2014. As a percentage of restaurant revenue, other restaurant operating costs increased to 13.2% in 2014 from 12.7% in
2013. The increase in other restaurant operating cost percentage was due to costs of restaurants not in the comparable base, as well
as increased utility and maintenance costs in 2014.

General and Administrative Expense

General and administrative expense decreased by $4.5 million in 2014 compared to 2013, due primarily to $5.7 million of
expenses related to the closing of our IPO in the second quarter of 2013 and $0.7 million of expenses related to the closing of our
follow-on offering in the fourth quarter of 2013, offset by our biennial All Managers Conference, which was held during 2014, as
well as increased spend in 2014 due to inflation and the support of additional restaurants. The $5.7 million of expenses related to
the closing of our IPO was comprised of $2.0 million of stock-based compensation related to accelerated vesting of outstanding
stock options, $1.2 million of stock-based compensation related to stock options granted to our Chief Executive Officer and then-
President and Chief Operating Officer, of which 50% were vested at grant, $1.7 million of transaction bonuses and related payroll
taxes and $0.8 million in transaction payments to our Equity Sponsors.

Excluding the impact of the $5.7 million of IPO-related expense and $0.7 million of follow-on offering costs, general and
administrative expense as a percentage of revenue decreased to 8.4% in 2013. The decrease to 7.8% in 2014 from 8.4% in 2013 was
due to increasing revenue without proportionate increases in general and administrative costs or administrative personnel as well as
a decrease in incentive compensation in 2014. General and administrative expense included $1.5 million and $4.3 million of stock-
based compensation expense in 2014 and 2013, respectively, and $500,000 of management fees in 2013.

Depreciation and Amortization

Depreciation and amortization increased by $4.2 million in 2014 compared to 2013, due primarily to an increased number of
restaurants. As a percentage of revenue, depreciation and amortization increased to 6.1% in 2014 from 5.9% in 2013, due to
depreciation on restaurants not in the comparable base that, on average, have a higher cost basis of assets, as well as investments in
technology.

Pre-Opening Costs

Pre-opening costs increased by $0.6 million in 2014 compared to 2013, due to 49 restaurant openings in 2014 compared to 43

in 2013. As a percentage of revenue, pre-opening costs remained flat at 1.1% in 2014 and 2013.

Restaurant Impairments, Closure Costs and Asset Disposals

Restaurant impairments, closure costs and asset disposals increased by $0.2 million in 2014 compared to 2013 due primarily to
a $0.5 million expense for the disposal of furniture and fixture inventory related to the dissolving of a relationship with an overseas
vendor, offset by decreased disposals of other assets.

Debt Extinguishment

In 2013, debt extinguishment expense was $0.6 million as a result the November 2013 amendment to our credit facility that
extended the maturity date and reduced the interest rates on borrowings. A portion of the existing and new fees were treated as debt
extinguishment expense.

Interest Expense

Interest expense decreased by $1.8 million in 2014 compared to 2013. The decrease was primarily due to lower average borrowings

in 2014 due to the payoff of the majority of our outstanding debt in conjunction with our IPO in 2013.

Provision for Income Taxes

Provision for income taxes increased by $2.4 million in 2014 compared to 2013, due to an increase in pre-tax net income in
2014, offset by a decrease to our effective income tax rate. Our effective tax rate decreased to 38.4% in 2014 from 41.7% in 2013
primarily due to the impact of non-deductible follow-on offering transaction costs in 2013, offset by increased employment credits
in 2014.

Quarterly Financial Data

The following table presents select historical quarterly consolidated statements of operations data and other operations data for
fiscal years 2015 and 2014. The operating results for any quarter are not necessarily indicative of the results for any subsequent
quarter. Results from the quarters ended March 31, 2015, September 29, 2015 and December 29, 2015 include the impact of significant
impairments described elsewhere in this report and these impairments may or may not impact our results in future quarters. Each
fiscal quarter contained 13 weeks.

December 29,
2015

September 29,
2015

June 30,
2015

March 31,
2015

December 30,
2014

September 30,
2014

July 1,
2014

April 1,
2014

(dollars in thousands, unaudited)

Quarter Ended

Total revenue .........................

$117,128

$117,328

$115,233

$105,761

$108,546

$106,216

$99,459

$89,519

Net (loss) income...................

(4,254)

(9,821)

3,062

(2,752)

3,535

2,943

3,527

1,424

Selected Operating Data:

Company-owned restaurants
at end of period......................

Franchise-owned restaurants
at end of period......................

Company-owned:

Average unit volumes.......
Comparable restaurant
sales ..................................

Restaurant contribution as a
percentage of restaurant
revenue(1) .......................

422

424

411

399

386

370

343

331

1,103

1,111

1,123

1,136

1,147

1,152

1,156

1,163

(0.9)%

(0.7)%

0.1%

0.8%

1.3%

1.6%

(0.6)%

(1.4)%

14.9 %

15.2 %

18.6%

16.2%

20.0%

18.6%

20.4 %

17.3 %

_____________
(1)

Restaurant contribution represents restaurant revenue less restaurant operating costs which are cost of sales, labor, occupancy and other restaurant
operating costs.

Liquidity and Capital Resources

Our primary sources of liquidity and cash flows are operating cash flows and borrowings on our revolving line of credit. We
use this cash to fund capital expenditures for new restaurant openings, reinvest in our existing restaurants, invest in infrastructure
and information technology and maintain working capital. Our working capital position benefits from the fact that we generally
collect cash from sales to customers the same day, or in the case of credit or debit card transactions, within several days of the related
sale, and we typically have at least 30 days to pay our vendors. We believe that expected cash flow from operations and planned
borrowing capacity are adequate to fund debt service requirements, operating lease obligations, capital expenditures and working
capital obligations for the next year.

While operations continue to provide cash, our primary use of cash is new restaurant development. Our total capital expenditures
for 2015 were $50.1 million, and we expect to incur capital expenditures of between $45 million and $50 million in 2016, of which
$35 million to $40 million relates to our construction of new restaurants before any reductions for landlord reimbursements, and the
remainder relates primarily to reinvestment in existing restaurants and investments in technology. In 2015, excluding two atypical
freestanding sites, we spent on average $757,000 in development and construction costs per restaurant, net of landlord reimbursements.
For new restaurants to be opened in 2016, we anticipate average development costs per restaurant of between $750,000 and $775,000,
net of landlord reimbursements. Additionally, we anticipate using cash from operations and our credit facility to support the costs
associated with the 16 restaurants closed in 2015, primarily consisting of payments to landlords to terminate leases.

Cash flows from operating, investing and financing activities are shown in the following table:

Fiscal Year Ended

December 29,
2015

December 30,
2014

December 31,
2013

Net cash provided by operating activities ...........................................................
Net cash used in investing activities ...................................................................
Net cash provided by financing activities ...........................................................
Effect of exchange rate changes on cash.............................................................
Net increase in cash and cash equivalents...........................................................

44,506
(50,721)
6,355
(134)
6

(in thousands)
49,027
$
(72,060)
23,971

—

938

43,634
(54,429)
11,182

—

387

Operating Activities

Net cash provided by operating activities of $44.5 million for 2015 resulted primarily from net income, adjusted for non-cash
items such as depreciation and amortization, impairments and stock-based compensation expense. The $4.5 million decrease in 2015
over 2014 was primarily driven by the decrease in net income adjusted for taxes and impairments, partially offset by increases in
working capital changes.

Net cash provided by operating activities increased in 2014 from 2013 primarily due to increased net income, adjusted for items
such as depreciation and amortization and stock-based compensation expense. The increase was primarily driven by an increase in
net income and the timing of payments in accounts payable, offset by the timing of accrued incentive compensation payments as
well as investments in inventory items for catering.

Investing Activities

Net cash used in investing activities was primarily related to new restaurant capital expenditures for the opening of 51, 49 and
43 restaurants in 2015, 2014 and 2013, respectively, as well as infrastructure improvements. The decrease in investing activities from
2015 to 2014 was due to the purchase of 19 franchise restaurants in 2014 and lower average constructions costs in 2015. We used
approximately $15.7 million of cash flows for acquisitions in 2014, when we acquired substantially all of the assets of 16 restaurants
from our Indiana franchisee and an additional three restaurants from our New Jersey franchisee. See Note 2-Business Combinations
to the consolidated financial statements for further information with respect to our acquisition activity in 2014.

Financing Activities

Net cash provided by financing activities was $6.4 million and $24.0 million in 2015 and 2014, respectively. The decrease over

the prior year is primarily due to the borrowings in 2014 we used to fund the acquisition of 19 franchise locations.

On July 2, 2013, we closed our IPO in which we sold 6,160,714 shares of Class A common stock at $18.00 per share and received
net proceeds of approximately $100.2 million (after underwriting discounts, commissions and offering expenses). These net proceeds
were used to pay off our outstanding term loan and repay all but $0.2 million of our revolving line of credit.

Share Repurchase Program

In June 2015, the Company announced a share repurchase program of up to $35.0 million of the Company's Class A common
stock. Under this program, the Company purchased shares of the Company's Class A common stock in the open market (including
in pre-arranged stock trading plans in accordance with the guidelines specified in Rule 10b5-1 under the Securities Exchange Act
of 1934, as amended ("the Exchange Act")) or in privately negotiated transactions. During fiscal year 2015, the Company repurchased
2,423,871 shares of its common stock for $35.0 million in open market transactions and completed the repurchase program.
Repurchased shares are included as treasury stock in the consolidated balance sheets.

Credit Facility

We maintain a $100.0 million revolving line of credit under our credit facility. The revolving line of credit includes a swing line
loan of $10.0 million used to fund working capital requirements. On June 4, 2015, we amended our credit facility to increase our
borrowing capacity on the revolving line of credit from $45.0 million to $75.0 million and extended its term from November 2018
to June 2020. All other material terms and covenants remained the same. The revolving line of credit of $10.0 million remained in
place. On November 24, 2015, we entered into a second amendment and restatement to our credit facility to extend borrowing
capacity from $75.0 million to $100.0 million and to make certain favorable changes to the covenants. We had $68.2 million of
outstanding indebtedness, $2.8 million of outstanding letters of credit and $29.0 million available for borrowing under our revolving
line of credit as of December 29, 2015. Borrowings under our amended and restated credit facility bear interest, at our option, at
either (i) LIBOR plus 1.00 to 2.00%, based on the lease-adjusted leverage ratio or (ii) the highest of the following rates plus zero to
1.00%: (a) the federal funds rate plus 0.50%; (b) the Bank of America prime rate or (c) the one month LIBOR plus 1.00%. The
facility includes a commitment fee of 0.125 to 0.30%, based on the lease-adjusted leverage ratio, per year on any unused portion of
the facility. We also maintain outstanding letters of credit to secure obligations under our workers’ compensation program and certain
lease obligations.

Availability of borrowings under the revolving line of credit is conditioned on our compliance with specified covenants, including
a maximum lease-adjusted leverage ratio and a minimum consolidated fixed charge coverage ratio. We are subject to a number of
other customary covenants, including limitations on additional borrowings, acquisitions, dividend payments and lease commitments.
As of December 29, 2015, we were in compliance with all of our debt covenants.

Our credit facility is secured by a pledge of stock of substantially all of our subsidiaries and a lien on substantially all of the

personal property assets of the Company and its subsidiaries.

Contractual Obligations

Our contractual obligations at December 29, 2015 were as follows:

Total

1 Year

Lease obligations(1) ...................................................................
Purchase obligations(2) ..............................................................
Long-term debt(3) ......................................................................
Other liabilities(4) ......................................................................
Total contractual obligations...............................................

$ 512,019
41,148
68,246
1,600
$ 623,013

$ 49,555
24,856
—
458
$ 74,869

Payments Due by Period
2 - 3
Years

4 - 5
Years

After 5
Years

(in thousands)
$ 91,766
8,544
—
223
$100,533

$ 84,382
7,748
68,246
419
$160,795

286,316
—
—
500
286,816

_____________
(1)

We are obligated under non-cancelable leases for our restaurants, administrative offices and equipment. Some restaurant leases provide for contingent
rental payments based on sales thresholds, which are excluded from this table. We also include capital leases for computer equipment of approximately
$400,000.

(2)

(3)

We enter into various purchase obligations in the ordinary course of business. Our binding purchase obligations relate to volume commitments for beverage
and food products, as well as binding commitments for the construction of new restaurants.

Reflects full payment of our long-term debt at maturity of our credit facility in 2020. Amounts related to interest expense on our revolving credit facility
are not included in the table above because the interest rate is variable. See "Liquidity and Capital Resources” for a discussion of the terms of the revolving
credit facility.

(4)

Reflects the expected payments associated with our commitment under our non-qualified deferred compensation plan.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements or obligations as of December 29, 2015.

Critical Accounting Policies and Estimates

Our consolidated financial statements and accompanying notes are prepared in accordance with US GAAP. Preparing
consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenue and expenses. These estimates and assumptions are affected by the application of our accounting policies. Our significant
accounting policies are described in Note 1 to our consolidated financial statements. Critical accounting estimates are those that
require application of management’s most difficult, subjective or complex judgments, often as a result of matters that are inherently
uncertain and may change in subsequent periods. While we apply our judgment based on assumptions believed to be reasonable
under the circumstances, actual results could vary from these assumptions. It is possible that materially different amounts would be
reported using different assumptions. We believe the critical accounting policies described below affect our more significant judgments
and estimates used in the preparation of our financial statements.

Impairment of Long-Lived Assets

We review long-lived assets, such as property and equipment and intangibles, subject to amortization, for impairment when
events or circumstances indicate the carrying value of the assets may not be recoverable. In determining the recoverability of the
asset value, an analysis is performed at the individual restaurant level and primarily includes an assessment of historical cash flows
and other relevant factors and circumstances. The other factors and circumstances include changes in the economic environment,
changes in the manner in which assets are used, unfavorable changes in legal factors or business climate, incurring excess costs in
construction of the asset, overall restaurant operating performance and projections for future performance. These estimates result in
a wide range of variability on a year to year basis due to the nature of the criteria. Negative restaurant-level cash flow over the
previous 24 to 36 periods is considered a potential impairment indicator. In such situations, we evaluate future undiscounted cash
flow projections in conjunction with qualitative factors and future operating plans. Our impairment assessment process requires the
use of estimates and assumptions regarding the future undiscounted cash flows and operating outcomes, which are based upon a
significant degree of management's judgment.

In performing our impairment testing, we forecast our future undiscounted cash flows by looking at recent restaurant level
performance, restaurant level operating plans, sales trends and cost trends for cost of sales, labor and operating expenses. We believe
that this combination of information gives us a fair benchmark to estimate future undiscounted cash flows. We compare this cash
flow forecast to the asset's carrying value at the restaurant. Based on this analysis, if the carrying amount of the assets is greater than
the estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount
exceeds the fair value.

Business Combinations and Intangible Assets Including Goodwill

We account for acquisitions using the purchase method of accounting. Accordingly, assets acquired and liabilities assumed are
recorded at their estimated fair values at the acquisition date. The excess of purchase price over fair value of net assets acquired,
including the amount assigned to identifiable intangible assets, is recorded as goodwill. Given the time it takes to obtain pertinent
information to finalize the acquired company's balance sheet, it may be several quarters before we are able to finalize those initial
fair value estimates. Accordingly, it is not uncommon for the initial estimates to be subsequently revised. The results of operations
of acquired businesses are included in the consolidated financial statements from the acquisition date. Our recorded identifiable
intangible assets primarily include the estimated value assigned to certain
assets, primarily favorable or unfavorable
lease arrangements, which are amortized on a straight-line basis over the remaining lease terms. At December 29, 2015, we had

goodwill recorded in conjunction with franchise acquisitions of $6.4 million. Under the accounting rules, goodwill is not amortized.
Instead, goodwill is subject to annual reviews for impairment on the first day of the fourth fiscal quarter.

Self-Insurance Programs

We are self-insured for health, workers' compensation, general and liability and property damage. Predetermined loss limits
have been arranged with insurance companies to limit our per occurrence cash outlay. Estimated costs to settle reported claims and
incurred but unreported claims for health and workers' compensation self-insured plans are recorded in accrued payroll and benefits
and for general and liability and property damage in accrued expenses and other liabilities.

Restaurant Closing Costs

We record restaurant closing costs consisting of future lease commitments, net of anticipated sublease rentals and expected
ancillary costs. We record a liability for the net present value of any remaining lease obligations, net of estimated sublease income,
at the date we cease using a property. Subsequent adjustments to the liability as a result of changes in estimates of sublease income
or lease terminations are recorded in the period incurred. The estimates we make related to sublease income are subject to a high
degree of judgment and may differ from actual sublease income due to changes in economic conditions, desirability of the sites and
other factors.

Rent

We record rent expense for our leases, which generally have escalating rentals over the term of the lease, on a straight-line basis
over the lease term. The lease term includes renewal options that are reasonably assured. Rent expense begins when we have the
right to control the use of the property, which is typically before rent payments are due under the lease. We record the difference
between the rent expense and rent paid as deferred rent in the consolidated balance sheet. Rent expense for the period prior to the
restaurant opening is reported as pre-opening expense in the consolidated statements of income. Tenant incentives used to fund
leasehold improvements are recorded in deferred rent and amortized as reductions of rent expense over the term of the lease.

Certain of our operating leases contain clauses that provide additional contingent rent based on a percentage of sales greater
than certain specified target amounts. We recognize contingent rent expense when the achievement of specified targets is considered
probable.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updated ("ASU")No. 2014-09,
"Revenue from Contracts with Customers." The pronouncement was issued to clarify the principles for recognizing revenue and to
develop a common revenue standard and disclosure requirements for U.S. GAAP and International Financial Reporting Standards.
The pronouncement is effective for reporting periods beginning after December 15, 2016. The adoption of ASU 2014-09 is not
expected to significantly affect the Company’s consolidated financial position or results of operations.

In August 2014, the FASB issued ASU, "Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure
of Uncertainties about an Entity’s Ability to Continue as a Going Concern." This update requires management of the Company to
evaluate whether there is substantial doubt about the Company’s ability to continue as a going concern. This update is effective for
the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. The
Company does not expect this standard to have an impact on the Company’s consolidated financial position or results of operations.

In April 2015, the FASB issued ASU No. 2015-05, "Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40):
Customer's Accounting for Fees Paid in a Cloud Computing Arrangement." The pronouncement was issued to provide guidance
concerning accounting for fees in a cloud computing arrangement. The update is effective for reporting periods beginning after
December 15, 2015. The adoption of this standard is not expected to have a material effect on the Company's consolidated financial
statements.

In July 2015, the FASB issued ASU No. 2015-11, "Inventory (Topic 330)." The pronouncement was issued to simplify the
measurement of inventory and changes the measurement from lower of cost or market to lower of cost and net realizable value. This
pronouncement is effective for reporting periods beginning after December 15, 2016. The adoption of ASU 2015-11 is not expected
to have a significant impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-06, "Leases." The pronouncement amends the existing accounting standards
for lease accounting, including requiring lessees to recognize most leases on their balance sheet and making targeted changes to
lessor accounting. The pronouncement will be effective beginning in the first quarter of 2019, with early adoption permitted. The
new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of

initial application, with an option to use certain transition relief. We are currently evaluating the impact of adopting the new leases
standard on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

In April 2015, the FASB issued ASU No. 2015-03, "Interest-Imputation of Interest (Subtopic 835-50): Simplifying the
Presentation of Debt Issuance Costs." This pronouncement requires debt issuance costs related to a recognized debt liability to be
presented in the balance sheet as a direct deduction from the carrying value of that debt liability, consistent with debt discounts. The
pronouncement is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15,
2015. Early adoption is permitted, and the Company adopted this standard effective December 29, 2015. As a result, the Company
has presented debt issuance costs related to long-term debt liabilities as a direct deduction from its related liability in the consolidated
balance sheets. The effects of the standard were applied retrospectively to all prior interim and annual periods within this annual
report. The effect of the change in accounting principle was a reduction of other assets, net and long-term debt by approximately
$0.5 million and $0.4 million for the fiscal years ended December 29, 2015 and December 30, 2014, respectively.

In November 2015, The FASB issued ASU No. 2015-17, "Income Taxes." The pronouncement requires that deferred tax
liabilities and assets be classified as noncurrent in a classified balance sheet. Prior to the issuance of the standard, deferred tax
liabilities and assets were required to be separately classified into a current amount and a noncurrent in the balance sheet. The new
accounting guidance represents a change in accounting principle, and the standard is required to be adopted in annual periods
beginning after December 15, 2016. Early adoption is permitted and the Company elected to early adopt this guidance as of December
29, 2015 and to apply the guidance prospectively. Because the application of this guidance affects classification only, such
reclassifications did not have a material effect on the Company's consolidated financial position or results of operations.

JOBS Act

We qualify as an "emerging growth company" pursuant to the provisions of the JOBS Act. For as long as we are an "emerging
growth company," we may take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not "emerging growth companies," including, but not limited to, not being required to comply with the
auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, exemptions from the requirements of holding advisory "say-on-pay"
votes on executive compensation, shareholder advisory votes on golden parachute compensation and the extended transition period
for complying with the new or revised accounting standards.

In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An
"emerging growth company" can therefore delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. However, we have chosen to "opt out" of such extended transition period and, as a result, we will comply
with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging
growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying
with new or revised accounting standards is irrevocable.

ITEM 7A.

Quantitative and Qualitative Disclosure about Market Risk

Interest Rate Risk

We are exposed to market risk from changes in interest rates on debt. Our exposure to interest rate fluctuations is limited to our
outstanding bank debt, which bears interest at variable rates. As of December 29, 2015 there was $68.2 million in outstanding
borrowings under our credit facility. A plus or minus 1.0% in the effective interest rate applied on these loans would have resulted
in a pre-tax interest expense fluctuation of approximately $682,000 on an annualized basis.

Commodity Price Risk

We purchase certain products that are affected by commodity prices and are, therefore, subject to price volatility caused by
weather, market conditions and other factors which are not considered predictable or within our control. Although these products
are subject to changes in commodity prices, certain purchasing contracts or pricing arrangements contain risk management techniques
designed to minimize price volatility. The purchasing contracts and pricing arrangements we use may result in unconditional purchase
obligations, which are not reflected in our consolidated balance sheets. Typically, we use these types of purchasing techniques to
control costs as an alternative to directly managing financial instruments to hedge commodity prices. In many cases, we believe we
will be able to address material commodity cost increases by adjusting our menu pricing or changing our product delivery strategy.

However, increases in commodity prices, without adjustments to our menu prices, could increase restaurant operating costs as a
percentage of company-owned restaurant revenue.

Inflation

The primary inflationary factors affecting our operations are food, labor costs, energy costs and materials used in the construction
of new restaurants. Increases in the minimum wage directly affect our labor costs. Many of our leases require us to pay taxes,
maintenance, repairs, insurance and utilities, all of which are generally subject to inflationary increases. Finally, the cost of constructing
our restaurants is subject to inflationary increases in the costs of labor and material. Over the past five years, inflation has not
significantly affected our operating results with the exception of increased wage inflation that affected our results in 2015. We expect
wage inflation to continue to effect our results in the near future.

ITEM 8. Financial Statements and Supplementary Data

Noodles & Company

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements

Consolidated Balance Sheets as of December 29, 2015 and December 30, 2014 ....................................................

Consolidated Statements of (Loss)Income for the years ended December 29, 2015, December 30, 2014 and
December 31, 2013....................................................................................................................................................

Consolidated Statements of Comprehensive Income for the years ended December 29, 2015, December 30,
2014 and December 31, 2013....................................................................................................................................

Consolidated Statements of Equity for the years ended December 29, 2015, December 30, 2014 and
December 31, 2013....................................................................................................................................................

Consolidated Statements of Cash Flows for the years ended December 29, 2015, December 30, 2014 and
December 31, 2013....................................................................................................................................................

Notes to Consolidated Financial Statements .............................................................................................................

Report of Independent Registered Public Accounting Firm......................................................................................

See accompanying notes to consolidated financial statements.

Noodles & Company
Consolidated Balance Sheets
(in thousands, except share and per share data)

December 29, 2015

December 30, 2014

Assets

Current assets:

Cash and cash equivalents ..............................................................................
Accounts receivable........................................................................................
Inventories ......................................................................................................
Prepaid expenses and other assets ..................................................................
Income tax receivable .....................................................................................
Total current assets ..............................................................................................
Property and equipment, net ...........................................................................
Deferred tax assets, net ...................................................................................
Goodwill .........................................................................................................
Intangibles, net................................................................................................
Other assets, net ..............................................................................................
Total long-term assets..........................................................................................
Total assets...........................................................................................................
Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable............................................................................................
Accrued payroll and benefits ..........................................................................
Accrued expenses and other current liabilities ...............................................
Deferred tax liabilities, net .............................................................................
Total current liabilities.........................................................................................
Long-term debt ...............................................................................................
Deferred rent...................................................................................................
Deferred tax liabilities, net .............................................................................
Other long-term liabilities...............................................................................
Total liabilities.....................................................................................................
Commitments and contingencies

Stockholders' equity:

Preferred stock—$0.01 par value, authorized 1,000,000 shares as of
December 29, 2015 and December 30, 2014; no shares issued or
outstanding ..................................................................................................

Common stock—$0.01 par value, authorized 180,000,000 shares as of
December 29, 2015 and December 30, 2014; 30,138,672 issued and
27,714,801 outstanding as of December 29, 2015 and 29,820,340 issued
and outstanding as of December 30, 2014 ..................................................

Treasury stock, at cost, 2,423,871 and 67,586 shares as of December 29,

2015 and December 30, 2014, respectively ................................................
Additional paid-in capital ...............................................................................
Accumulated other comprehensive loss .........................................................
Retained earnings............................................................................................
Total stockholders' equity....................................................................................
Total liabilities and stockholders' equity .............................................................

1,912

4,990

10,494

7,185

820

25,401

203,713

664

6,400

1,809

1,974

214,560
239,961

15,073

5,417

12,424

—

32,914

67,732

39,597

—

5,946

146,189

—

301

(35,000)
120,634
(134)
7,971

93,772

239,961

See accompanying notes to consolidated financial statements.

1,906

4,557

9,415

6,271

627

22,776

205,573

—

6,400

1,927

1,863

215,763
238,539

10,865

4,704

8,560

1,702

25,831

27,136

35,498

6,512

3,447

98,424

—

298

(2,848)

120,929

—

21,736

140,115

238,539

Noodles & Company
Consolidated Statements of Income
(in thousands, except share and per share data)

Fiscal Year Ended

December 29,
2015

December 30,
2014

December 31,
2013

Revenue:

Restaurant revenue ..............................................................................................
Franchising royalties and fees.............................................................................
Total revenue..................................................................................................

450,482

398,993

347,140

4,969

455,451

4,748

403,741

3,784

350,924

Costs and expenses:

Restaurant operating costs (exclusive of depreciation and amortization shown

separately below):
Cost of sales ...................................................................................................
Labor ..............................................................................................................
Occupancy ......................................................................................................
Other restaurant operating costs .....................................................................
General and administrative ......................................................................................
Depreciation and amortization.................................................................................
Pre-opening ..............................................................................................................
Restaurant impairments, closure costs and asset disposals......................................
Total costs and expenses.................................................................................
(Loss) income from operations ................................................................................
Debt extinguishment expense ..................................................................................
Interest expense........................................................................................................
(Loss) income before income taxes .........................................................................
(Benefit) provision for income taxes .......................................................................
Net (loss) income .....................................................................................................
(Loss) earnings per Class A and Class B common stock, combined

Basic ...............................................................................................................
Diluted............................................................................................................

120,455

143,145

50,300

63,549

37,244

27,802
4,407

29,616

476,518
(21,067)
—

1,432
(22,499)
(8,734)
(13,765) $

107,217

120,492

42,540

52,580

31,394

24,787
4,425

1,391

384,826

18,915

—

365

18,550

7,122

11,428

(0.48) $
(0.48) $

0.38

0.37

91,892

104,040

35,173

44,078

35,893

20,623
3,809

1,164

336,672

14,252

624

2,196

11,432

4,767

6,665

0.25

0.24

Weighted average Class A and Class B common stock outstanding, combined

28,938,901

29,717,304

26,406,904

28,938,901

31,001,099

27,688,629

See accompanying notes to consolidated financial statements.

Noodles & Company
Consolidated Statements of Comprehensive Income
(in thousands)

Fiscal Year Ended

Net (loss) income.....................................................................................................
Other comprehensive loss:

December 29,
2015
(13,765) $

December 30,
2014

December 31,
2013

11,428

6,665

Foreign currency translation adjustments...........................................................
Other comprehensive loss........................................................................................
Comprehensive (loss) income .................................................................................

(134)
(134)
(13,899) $

—

11,428

6,665

See accompanying notes to consolidated financial statements.

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Noodles & Company
Consolidated Statements of Cash Flows
(in thousands)

Operating activities
Net (loss) income.....................................................................................................
Adjustments to reconcile net income to net cash provided by operating
activities:

Depreciation and amortization............................................................................
(Benefit) provision for income taxes ..................................................................
Excess tax benefit on stock-based compensation ...............................................
Restaurant impairments, closure costs and asset disposals ................................
Amortization of debt issuance costs and debt

extinguishment expense .................................................................................
Stock-based compensation..................................................................................
Other noncash .....................................................................................................
Changes in operating assets and liabilities:

Accounts receivable .......................................................................................
Inventories......................................................................................................
Prepaid expenses and other assets..................................................................
Accounts payable ...........................................................................................
Deferred rent ..................................................................................................
Income taxes ..................................................................................................
Accrued expenses and other liabilities...........................................................
Net cash provided by operating activities ...............................................................
Investing activities
Purchases of property and equipment......................................................................
Acquisition of franchise restaurants ........................................................................
Net cash used in investing activities........................................................................
Financing activities
Proceeds from issuances of long-term debt.............................................................
Payments on long-term debt....................................................................................
Debt issuance costs..................................................................................................
Acquisition of treasury stock...................................................................................
Issuance of common stock, net of transaction expenses .........................................
Proceeds from exercise of stock options, warrants and employee stock purchase
plan ..........................................................................................................................
Excess tax benefit on stock-based compensation....................................................
Other financing activities ........................................................................................
Net cash provided by financing activities ...............................................................
Effect of exchange rate changes on cash.................................................................
Net increase in cash and cash equivalents...............................................................
Cash and cash equivalents
Beginning of year ....................................................................................................
End of year ..............................................................................................................

Fiscal Year Ended

December 29,
2015

December 30,
2014

December 31,
2013

(13,765) $

11,428

6,665

27,802
(8,878)
—

28,927

1,469

—

(437)
(1,058)
(1,025)
2,794

7,143
(193)
1,629

44,506

(50,093)
(628)
(50,721)

425,517
(384,771)
(249)
(35,000)
—

952

—
(94)
6,355
(134)
6

1,906

24,787

6,330
(253)
1,391

101

1,330

—

(75)
(1,840)
(1,768)
2,661

6,390
(24)
(1,431)
49,027

(56,352)
(15,708)
(72,060)

310,479
(289,292)
—
(71)
—

2,676

253
(74)
23,971

—

938

968

1,912

1,906

20,623

4,206

(201)

1,164

710

4,230

(248)

538

(1,181)

(1,518)

(230)

5,833

392

2,651

43,634

(54,429)

—

(54,429)

136,357

(224,526)

(124)

(2,777)

100,069

1,982

201

—
11,182

—

387

581

968

See accompanying notes to consolidated financial statements.

NOODLES & COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Business and Summary of Significant Accounting Policies

Business

Noodles & Company (the "Company" or "Noodles & Company"), a Delaware corporation, develops and operates fast casual
restaurants that serve globally inspired noodle and pasta dishes, soups, salads and sandwiches. As of December 29, 2015, we had
422 company-owned restaurants and 70 franchise restaurants in 35 states, the District of Columbia and one Canadian province. The
Company operates its business as one operating and reportable segment.

On July 2, 2013, the Company completed an initial public offering ("IPO") of shares of Class A common stock at $18.00 per
share. The Company issued 6,160,714 shares of Class A common stock, $0.01 par value, including 803,571 shares sold to the
underwriters in the IPO pursuant to their over-allotment option. After underwriter discounts and commissions and estimated offering
expenses, the Company received net proceeds from the offering of approximately $100.2 million. These proceeds were used to repay
all but $0.2 million of outstanding debt under the Company's credit facility.

On December 5, 2013, the Company completed a follow-on offering of 4,500,000 shares of Class A common stock at a price
of $39.50 per share. All of the shares in the offering were offered by selling stockholders, except for 108,267 shares offered by the
Company, the proceeds of which were used to repurchase the same number of shares from certain officers at the same net price per
share. The Company did not receive any net proceeds from the offering. The selling stockholders paid all of the underwriting discounts
and commissions associated with the sale of the shares; however, the Company incurred approximately $696,000 in costs and expenses
related to this offering.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Noodles & Company and its subsidiaries. All

intercompany balances and transactions are eliminated in consolidation.

Fiscal Year

The Company operates on a 52- or 53-week fiscal year ending on the Tuesday closest to December 31. Fiscal years 2015, 2014
and 2013, which ended on December 29, 2015, December 30, 2014 and December 31, 2013, respectively, each contained 52 weeks.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investment instruments with an initial maturity of three months or less when purchased
to be cash equivalents. Amounts receivable from credit card processors are converted to cash shortly after the related sales transaction
and are considered to be cash equivalents because they are both short-term and highly liquid in nature. Amounts receivable from
credit card processors are considered cash equivalents, and as of December 29, 2015 and December 30, 2014 were $1.3 million and
$1.2 million, respectively, and were offset on the consolidated balance sheets by outstanding checks. Book overdrafts, which are
outstanding checks in excess of cash and cash equivalents, are recorded within accounts payable in the accompanying consolidated
balance sheets and within operating activities in the accompanying statements of cash flows.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

1. Business and Summary of Significant Accounting Policies (continued)

Accounts Receivable

Accounts receivable consist primarily of tenant improvement receivables and vendor rebates receivable, as well as amounts due
from franchisees and other miscellaneous receivables. The Company believes all amounts to be collectible. Accordingly, no allowance
for doubtful accounts has been recorded as of December 29, 2015 or December 30, 2014.

Inventories

Inventories consist of food, beverages, supplies, and smallwares, and are stated at the lower of cost (first-in, first-out method)
or market. Smallwares inventory, which consist of the plates, silverware, and cooking utensils used in the restaurants, are frequently
replaced and are considered current assets. Replacement costs of smallwares inventory are recorded as other restaurant operating
costs and are expensed as incurred. As of December 29, 2015 and December 30, 2014, smallwares inventory of $6.7 million and
$6.2 million, respectively, were included on the consolidated balance sheets.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Expenditures for major renewals and improvements
are capitalized, while expenditures for minor replacements and maintenance and repairs are expensed as incurred. Upon retirement
or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss is reflected in earnings.
Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are
amortized over the shorter of the estimated useful life or the lease term, which generally includes option periods that are reasonably
assured to be exercised. Depreciation and amortization expense on property and equipment, including assets under capital lease, was
$27.8 million in 2015, $24.8 million in 2014 and $20.6 million in 2013.

The estimated useful lives for property and equipment are:

Property and Equipment
Leasehold improvements........................................................... Shorter of lease term or estimated useful life, not to

Estimated Useful Lives

exceed 20 years

Furniture and fixtures ................................................................

3 to 15 years

Equipment..................................................................................

3 to 7 years

The Company capitalizes internal payroll and payroll related costs directly related to the successful acquisition, development,
design and construction of its new restaurants. Capitalized internal costs were $3.0 million, $2.9 million and $2.6 million in 2015,
2014 and 2013, respectively. Interest incurred on funds used to construct company-owned restaurants is capitalized and amortized
over the estimated useful life of the related assets. Capitalized interest totaled $0.4 million in both 2015 and 2014 and $0.3 million
in 2013.

Goodwill

Goodwill represents the excess of purchase price over the fair value of identifiable net assets acquired and is not subject to
amortization. The Company evaluates goodwill annually, on the first day of the Company's fourth fiscal quarter, to determine if there
have been any events or circumstances that would trigger a more-likely-than-not reduction in the fair value of a reporting unit below
its carrying amount.

Goodwill is evaluated for impairment annually or more frequently if indicators of impairment are present. The Company
performed step one of the impairment test on the first day of the Company's fourth fiscal quarter in 2015. Step one of the impairment
test is based upon a comparison of the carrying value of net assets, including goodwill balances, to the fair value of net assets. Fair
value is measured using a combination of the income approach and the market approach. The income approach consists of utilizing
the discounted cash flow method that incorporates the Company's estimates of future revenues and costs, discounted using a risk-
adjusted discount rate. The Company's estimates used in the income approach are consistent with the plans and estimates used to
manage operations. The market approach utilizes multiples of profit measures to estimate the fair value of the assets. The company
evaluates all methods to ensure reasonably consistent results. Additionally, the Company evaluates the key input factors in the model
used to determine whether a moderate change in any input factor or combination of factors would significantly change the results
of the tests. Based on the completion of the step one test, it was determined that goodwill was not impaired as of September 30,
2015. However, an impairment charge may be triggered in the future if the value of the Company's stock declines, sales in the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

1. Business and Summary of Significant Accounting Policies (continued)

Company's restaurants decline significantly, or if there are significant adverse changes in the operating environment of the restaurant
industry. There was no goodwill impairment recorded during fiscal years 2015 and 2014.

Intangibles, net

Intangible, net consist primarily of reacquired franchise rights, favorable lease agreements, trademarks and transferable liquor
licenses. The Company amortizes the fair value of reacquired franchise rights over the remaining contractual terms of the reacquired
franchise area development agreements at the time of acquisition, which ranged from approximately 10 years to 18 years as of
December 29, 2015. The Company amortizes the fair value of favorable lease agreements over the remaining related lease terms at
the time of the acquisition, which ranged from approximately four years to 13 years as of December 29, 2015. Trademark rights are
considered indefinite lived intangibles, the carrying value of which is analyzed for impairment at least annually. Transferable liquor
licenses are carried at the lower of fair value or cost and are reviewed annually for impairment or changes in circumstances that
indicate that the carrying amount may not be recoverable.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of the assets to the
future undiscounted net cash flows expected to be generated by the assets. Identifiable cash flows are measured at the lowest level
for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the restaurant level. If
the assets are determined to be impaired, the amount of impairment recognized is the amount by which the carrying amount of the
assets exceeds their fair value. Estimates of future cash flows are based on the Company's experience and knowledge of local
operations. During 2015, 2014 and 2013, the Company recorded impairment charges of certain long-lived assets which are included
in restaurant impairments, closure costs and asset disposals in the consolidated statements of income. See Note 7-Impairment and
Closed Restaurant Reserve. Fair value of the restaurants was determined using Level 3 inputs (as described in Note 6-Fair Value
Measurements) based on a discounted cash flows method through the estimated date of closure.

Long-term Debt

Effective December 29, 2015, we adopted ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The ASU requires
debt issuance costs related to a recognized liability to be presented in the balance sheet as a direct deduction from the carrying amount
of the debt liability. The effects of this standard were applied retrospectively.

Debt issuance costs include fees and costs incurred to obtain long-term financing. These costs are amortized to Interest Expense
over the term of the related loan. Debt issuance costs of $0.5 million and $0.4 million, net of accumulated amortization of $0.4
million and $0.3 million, as of December 29, 2015 and December 30, 2014, respectively. In 2013, the Company amended and restated
its credit facility. The Company wrote off $0.6 million of debt issuance costs, net of accumulated amortization of $0.3 million in
2013.

Self-Insurance Programs

The Company self-insures for health, workers' compensation, general liability and property damage. Predetermined loss limits
have been arranged with insurance companies to limit the Company's per occurrence cash outlay. Estimated costs to settle reported
claims and incurred but unreported claims for health and workers' compensation self-insured plans are recorded in accrued payroll
and benefits and for general liability and property damage in accrued expenses and other liabilities.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash
equivalents and accounts receivable. The Company's cash balances may exceed federally insured limits. Credit card transactions at
the Company's restaurants are processed by one service provider. Concentration of credit risk related to accounts receivable are
limited, as the Company's receivables are primarily amounts due from landlords for the reimbursement of tenant improvements and
the Company generally has the right to offset rent due for tenant improvement receivables.

Revenue Recognition

Revenue consists of sales from restaurant operations and franchise royalties and fees. Revenue from the operation of company-
owned restaurants are recognized when sales occur. The Company reports revenue net of sales and use taxes collected from customers
and remitted to governmental taxing authorities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

1. Business and Summary of Significant Accounting Policies (continued)

The Company sells gift cards which do not have an expiration date, and it does not deduct non-usage fees from outstanding gift
card balances. The Company recognizes revenue from gift cards when the gift card is redeemed by the customer or the Company
determines the likelihood of the gift card being redeemed by the customer is remote ("gift card breakage"). The determination of the
gift card breakage rate is based upon Company-specific historical redemption patterns. The Company has determined that
approximately 6% of gift cards will not be redeemed, which is recognized ratably over the estimated redemption period of the gift
card, approximately 18 months. The Company recognized gift card breakage in restaurant revenue of $0.3 million in 2015 and $0.2
million in both 2014 and 2013.

Royalties from franchise restaurants are based on a percentage of restaurant revenues and are recognized in the period the related
franchised restaurants' sales occur. Development fees and franchise fees, portions of which are collected in advance, are nonrefundable
and are recognized in income when all material services or conditions relating to the sale of the franchise have been substantially
performed or satisfied by the Company. Both franchise fees and development fees will generally be recognized upon the opening of
a franchise restaurant or upon termination of the agreement(s) between the Company and the franchisee.

As of December 29, 2015, December 30, 2014 and December 31, 2013, there were 70, 53 and 62 franchise restaurants in
operation, respectively. Franchisees opened 19, 10 and 11 restaurants in 2015, 2014 and 2013, respectively. The Company purchased
from franchisees 19 restaurants in 2014 (see Note 2-Business Combinations) and one in 2015.

Pre-Opening Costs

Pre-opening costs, including rent, wages, benefits and travel for the training and opening teams, food, beverage and other

restaurant operating costs, are expensed as incurred prior to a restaurant opening for business.

Advertising and Marketing Costs

Advertising and marketing costs are expensed as incurred and aggregated $8.0 million, $4.4 million and $3.9 million in 2015,
2014 and 2013, respectively. These costs are included in restaurant operating costs, general and administrative expenses and pre-
opening costs based on the nature of the advertising and marketing costs incurred.

Rent

Rent expense for the Company's leases, which generally have escalating rentals over the term of the lease, is recorded on a
straight-line basis over the lease term. The lease term includes renewal options which are reasonably assured of being exercised and
begins when the Company has control and possession of the leased property, which is typically before rent payments are due under
the lease. The difference between the rent expense and rent paid is recorded as deferred rent in the consolidated balance sheets. Rent
expense for the period prior to the restaurant opening is reported in pre-opening costs in the consolidated statements of income.
Tenant incentives used to fund leasehold improvements are recorded in deferred rent and amortized as a reduction of rent expense
over the term of the lease. Certain leases contain rental provisions based on the sales of the underlying restaurants; the Company has
determined that the amount of these provisions is immaterial.

(Benefit) Provision for Income Taxes

Provision (benefit) for income taxes is accounted for under the asset and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those deferred amounts are expected
to be recovered or settled. Valuation allowances are recorded for deferred tax assets that more likely than not will not be realized.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment
date. The Company's policy is to recognize interest to be paid on an underpayment of income taxes in interest expense and any related
statutory penalties in provision (benefit) for income taxes in the consolidated statement of income.

Comprehensive (Loss) Income

Comprehensive (loss) income consists of the net (loss) income and other gains and losses affecting stockholders' equity that,
under accounting principles generally accepted in the United States, are excluded from net (loss) income. Other comprehensive (loss)
income, presented in the consolidated statements of comprehensive income for 2015 consisted of the foreign currency translation
adjustment.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

1. Business and Summary of Significant Accounting Policies (continued)

Stock Compensation Expense

The Company recognizes stock-based compensation using fair value measurement guidance for all share-based payments,
including stock options and warrants. For option awards, expense is recognized ratably over the vesting period in an amount equal
to the fair value of the stock-based awards on the date of grant determined using the Black-Scholes option pricing model. See Note
10-Stock-Based Compensation.

Foreign Currency Translation

The Canadian dollar is the functional currency for our Canadian restaurant operations. Assets and liabilities denominated in
Canadian dollars are translated into U.S. dollars at exchange rates in effect as of the balance sheet date. Income and expense accounts
are translated using the average exchange rates prevailing throughout the period. The resulting translation adjustment is recorded as
a separate component of other comprehensive income (loss). Gain or loss from foreign currency transactions is recognized in our
consolidated statements of income.

(Loss) Earnings Per Share

Basic (loss) earnings per share ("EPS") are calculated by dividing income available to common shareholders by the weighted-
average number of shares of common stock outstanding during each period. Diluted (loss) earnings per share is calculated using
income available to common shareholders divided by diluted weighted-average shares of common stock outstanding during each
period. Potentially dilutive securities include shares of common stock underlying stock options and restricted stock. Diluted EPS
considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential
common shares would have an anti-dilutive effect. See Note 11-(Loss) Earnings Per Share.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation.

These reclassifications had no effect on reported net (loss) income.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09,
"Revenue from Contracts with Customers (Topic 606)." The pronouncement was issued to clarify the principles for recognizing
revenue and to develop a common revenue standard and disclosure requirements for U.S. GAAP and International Financial Reporting
Standards. The pronouncement is effective for annual and interim periods beginning after December 15, 2017, which will require
the Company to adopt these provisions in the first quarter of fiscal 2018. Early adoption is not permitted. This pronouncement permits
the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect this guidance will
have on the Company's consolidated financial statements and related disclosures. The Company has not yet selected a transition
method nor has it determined the effect of the standard on its ongoing financial reporting.

In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40):
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern." This update requires management of the
Company to evaluate whether there is substantial doubt about the Company’s ability to continue as a going concern. This update is
effective for the annual period ending after December 15, 2016 and for annual and interim periods thereafter. Early adoption is
permitted. The Company does not expect this standard to have an impact on the Company’s consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

1. Business and Summary of Significant Accounting Policies (continued)

In February 2016, the FASB issued ASU No. 2016-06, "Leases." The pronouncement amends the existing accounting standards
for lease accounting, including requiring lessees to recognize most leases on their balance sheet and making targeted changes to
lessor accounting. The pronouncement will be effective beginning in the first quarter of 2019, with early adoption permitted. The
initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting the
new leases standard on its consolidated financial statements.

Recently Adopted Accounting Pronouncements

In November 2015, The FASB issued ASU No. 2015-17, "Income Taxes." The pronouncement requires that deferred tax liabilities
and assets be classified as noncurrent in a classified balance sheet. Prior to the issuance of the standard, deferred tax liabilities and
assets were required to be separately classified into a current amount and a noncurrent in the balance sheet. The new accounting
guidance represents a change in accounting principle and the standard is required to be adopted in annual periods beginning after
December 15, 2016. Early adoption is permitted and the Company elected to early adopt this guidance as of December 29, 2015 and
to apply the guidance prospectively. As such, prior year balances were not adjusted retrospectively. Because the application of this
guidance affects classification only, such reclassifications did not have a material effect on the Company's consolidated financial
position or results of operations.

2. Business Combinations

During 2014, the Company acquired 19 restaurants from its franchisees, through two separate transactions. The total cash
purchase price was $15.7 million and the Company incurred acquisition costs related to the transactions of $0.1 million reflected in
General and Administrative expense for the year ended December 30, 2014. The consolidated statements of income include the
results of operations for the restaurants from the date of acquisition. The pro forma impact of the acquisitions is not presented as the
impact was not material to reported results.

The acquisition of the 19 restaurants was accounted for using the purchase method as defined in ASC 805, Business Combination.
The goodwill generated by the acquisitions is not amortizable for book purposes but is amortizable and deductible for tax purposes.
The assets acquired and liabilities assumed were recorded based on their fair values at the time of the acquisitions, as detailed below
(in thousands):

Fair Value at
December 30,
2014

Inventories ...................................................................................................................
Prepaid expenses and other assets ...............................................................................
Deferred tax asset ........................................................................................................
Property and equipment...............................................................................................
Intangibles ...................................................................................................................
Goodwill ......................................................................................................................
Deferred rent and other liabilities................................................................................
Total purchase price.....................................................................................................

352

142

7,564

1,567

6,400
(319)
15,739

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

2. Business Combinations (continued)

Of the $1.6 million of intangible assets, $1.4 million are related to reacquired franchise rights, which will be amortized on a
straight-line basis over an average life of approximately 16 years and $0.2 million are related to favorable leases, which will be
amortized on a straight-line basis over an average life of nine years. The unfavorable leases, which were included in deferred rent
in the accompanying condensed consolidated balance sheets, will be amortized on a straight-line basis over an average period of 11
years. The fair value measurement of tangible and intangible assets and liabilities as of the acquisition date is based on significant
inputs not observed in the market and thus represents a Level 3 measurement that is subject to change.

3. Supplemental Financial Information

Accounts receivable consist of the following (in thousands):

Tenant improvement receivables...................................................................................................
Vendor rebate receivables .............................................................................................................
Franchise and other receivables ....................................................................................................

Prepaid expenses and other assets consist of the following (in thousands):

Prepaid occupancy related costs ...................................................................................................
Other prepaid expenses .................................................................................................................
Other current assets .......................................................................................................................

Property and equipment, net, consist of the following (in thousands):

Leasehold improvements ..............................................................................................................
Furniture, fixtures and equipment .................................................................................................
Construction in progress ...............................................................................................................

Accumulated depreciation and amortization.................................................................................

Accrued payroll and benefits consist of the following (in thousands):

Accrued payroll and related liabilities ..........................................................................................
Accrued bonus...............................................................................................................................
Insurance liabilities .......................................................................................................................

Accrued expense and other current liabilities consist of the following (in thousands):

Gift card liability ...........................................................................................................................
Occupancy related.........................................................................................................................
Utilities..........................................................................................................................................
Other accrued expenses.................................................................................................................

2015

2014

2,705

840

1,445

4,990

2,588

983

986

4,557

2015

2014

4,947

2,019

219

7,185

4,135

1,997

139

6,271

2015
216,474

120,132

11,485

348,091
(144,378)
203,713

2014
208,678

114,148

12,074

334,900

(129,327)

205,573

2015

2014

3,211

774

1,432

5,417

3,022

803

879

4,704

2015

2014

3,348

3,446

1,462

4,168

12,424

2,701

1,477

1,523

2,859

8,560

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

4. Goodwill and Intangible Assets

The following table presents goodwill as of December 29, 2015 and December 30, 2014, (in thousands).

Balance at beginning of year ....................................................................................................
Acquisitions ..............................................................................................................................
Balance at end of year...............................................................................................................

6,400

—

6,400

—

6,400

2015

2014

The Company has had no goodwill impairment losses in the periods presented in the above table.

The following table presents intangible assets subject to amortization as of December 29, 2015 and December 30, 2014, (in

thousands).

Amortized intangible assets:

2015

2014

Reacquired franchise rights ............................................................................................
Favorable leases..............................................................................................................
Less accumulated amortization.......................................................................................

1,306

185
(164)
1,327

Non-amortized intangible assets:

Trademark rights and transferable liquor licenses..........................................................

482

1,809

1,376

190
(45)
1,521

406

1,927

The estimated aggregate future amortization expense as of December 29, 2015 is as follows, (in thousands):

2016...................................................................................................
2017...................................................................................................
2018...................................................................................................
2019...................................................................................................
2020...................................................................................................
Thereafter ..........................................................................................

113

111

110

108

774

1,327

There was approximately $76,000 of impairments to reacquired franchise rights and favorable leases related to two restaurants
impaired in fiscal year 2015 which are discussed in Note 7-Impairments and Closed Restaurant Reserve. No impairment charges
were recorded related to non-amortized intangible assets in fiscal years 2015, 2014 or 2013.

5. Long-Term Debt

Credit Facility

On June 4, 2015, the Company amended its credit facility to increase borrowing capacity on the revolving line of credit from
$45.0 million to $75.0 million and extended its term from November 2018 to June 2020. All other material terms and covenants
remained the same. The revolving line of credit of $10.0 million remained in place. On November 24, 2015, the Company entered
into a second amendment and restatement to the credit facility to extend borrowing capacity on the revolving line of credit from
$75.0 million to $100.0 million and to make certain favorable changes to the covenants.

As of December 29, 2015, the Company had $68.2 million outstanding and $29.0 million available for borrowing under the
credit facility, which is net of outstanding letters of credit aggregating $2.8 million reduce the amount available to borrow. Borrowings
under our amended and restated credit facility bear interest, at our option, at either (i) LIBOR plus 1.00 to 2.00%, based on the lease-
adjusted leverage ratio or (ii) the highest of the following rates plus zero to 1.00%: (a) the federal funds rate plus 0.50%; (b) the

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

5. Long-Term Debt (continued)

Bank of America prime rate or (c) the one month LIBOR plus 1.00%. The facility includes a commitment fee of 0.125 to 0.30%,
based on the lease-adjusted leverage ratio, per year on any unused portion of the facility. The credit facility bore interest at a range
of 3.50% to 4.25% during 2015.

Availability of borrowings under the revolving line of credit is conditioned on compliance with specified covenants, including
a maximum lease-adjusted leverage ratio and a minimum consolidated fixed charge coverage ratio. We are subject to a number of
other customary covenants, including limitations on additional borrowings, acquisitions, dividend payments and lease commitments.
As of December 29, 2015, the Company was in compliance with all of its debt covenants.

The credit facility is secured by a pledge of stock of substantially all of the Company's subsidiaries and a lien on substantially

all of the personal property assets of the Company and its subsidiaries.

6. Fair Value Measurements

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and all other current liabilities
approximate fair values due to the short maturities of these instruments. The carrying amounts of borrowings approximate fair value
as the line of credit and term borrowings vary with market interest rates and negotiated terms and conditions are consistent with
current market rates. Asset impairment charges are recorded at fair value on a nonrecurring basis.

Assets and Liabilities Measured at Fair Value

The fair values are assigned a level within the fair value hierarchy, depending on the source of the inputs into the calculation.

Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted

assets or liabilities.

Level 2—Quoted prices in markets that are not active or inputs that are observable, either directly or indirectly, for substantially

the full term of the asset or liability.

Level 3—Prices or valuation techniques which require inputs that are both significant to the fair value measurement and

unobservable (i.e., supported by little or no market activity).

7. Impairment and Closed Restaurant Reserve

The following table presents restaurant impairments, closure costs and asset disposals for fiscal years 2015, 2014 and 2013 (in

thousands):

Restaurant impairments(1)....................................................................... $
Closure costs(1) .......................................................................................
Loss on disposal of assets and other.......................................................

25,436
3,076

1,104

29,616

57
91

1,243

1,391

54
129

981

1,164

2015

2014

2013

_____________________________

(1)

Restaurant impairments and closure costs can include expenditures related to restaurants previously impaired or closed.

Restaurant Impairments

During fiscal year 2015, the Company recognized restaurant impairment expense, primarily related to management's current
assessment of the expected future cash flows of various restaurants based on recent results. During fiscal year 2015, 39 restaurants
were identified as impaired. Fifteen of the 39 restaurants impaired in fiscal year 2015 were also closed in that year. Impairment
expense is a Level 3 fair value measure and was determined by comparing the carrying value of restaurant assets to the estimated
fair value of the restaurant assets at resale value. These expenses are included in the "Restaurant impairments, closure costs and asset
disposals" line in the consolidated statements of income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

7. Impairment and Closed Restaurant Reserve (continued)

Restaurant Closures

During fiscal year 2015, the Company closed 16 restaurants that operated below acceptable profitability levels. The Company
did not close any restaurants in fiscal year 2014. In fiscal year 2013, one restaurant was closed at the end of its lease term. The
Company recorded minimal closure costs in fiscal years 2014 and 2013 related to previously closed restaurants.

The Company provides for closed property operating lease liabilities using a discount rate of 4.45% to calculate the present
value of the remaining non-cancelable lease payments after the closing date, net of estimated subtenant income. The following table
contains a summary of the changes in the liability for closed properties as of December 29, 2015 and December 30, 2014 (in thousands):

Closed restaurant reserves, beginning of period ...........................................................................
Additions—store closing costs recognized and accretion.............................................................
Decreases—payments ...................................................................................................................
Closed restaurant reserves, end of period .....................................................................................

444

4,518
(216)
4,746

583

(216)

444

2015

2014

The current portion of the liability, $2.4 million and $0.2 million as of December 29, 2015 and December 30, 2014, respectively,
is recorded in accrued expenses and other liabilities, and the long-term portion is reported in other noncurrent liabilities in the
Company's consolidated balance sheets.

8. Income Taxes

The following table presents the domestic and foreign components of (loss) income before income taxes (in thousands):

Domestic(loss) income ................................................................................
Foreign (loss) income ..................................................................................

2015

2014

2013

(21,674)
(825)
(22,499)

18,586
(36)
18,550

11,531

(99)

11,432

The components of the (benefit) provision for income taxes are as follows for 2015, 2014 and 2013 (in thousands):

2015

2014

2013

Current tax provision:

Federal ..........................................................................................................
State ..............................................................................................................
Foreign..........................................................................................................

Deferred tax (benefit) provision:

Total (benefit) provision for income taxes ........................................................

— $

144

—

144

(7,169)
(1,495)
(214)
(8,878)
(8,734) $

792

—

792

5,662

668

—

6,330

7,122

—

561

—

561

3,923

283

—

4,206

4,767

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

8. Income Taxes (continued)

The reconciliation of income tax provision (benefit) that would result from applying the federal statutory rate to pre-tax income

as shown in the accompanying consolidated statements of income is as follows for 2015, 2014 and 2013 (in thousands):

2015

2014

2013

Federal income tax (benefit) expense at federal rate.........................................
State income tax (benefit) expense, net of federal tax.......................................
Other permanent differences .............................................................................
Foreign rate differential.....................................................................................
Tax credits .........................................................................................................
Other items, net .................................................................................................
(Benefit) provision for income taxes.................................................................
Effective income tax rate...................................................................................

(7,650)
(960)
378

66
(423)
(145)
(8,734)
38.8%

6,299

3,887

972

170

6
(241)
(84)
7,122

653

374

(149)

(24)

4,767

38.4%

41.7%

In 2015, 2014 and 2013 the Company recognized tax benefits on option exercises at fair value in excess of those utilized to
record stock-based compensation for book purposes, totaling $0, $253,000 and $201,000, respectively, as a credit to additional paid-
in capital.

The company's total deferred tax assets and liabilities are as follows (in thousands):

Deferred tax assets ........................................................................................................................
Deferred tax liabilities...................................................................................................................
Total deferred tax assets (liabilities), net.......................................................................................

2015

2014

30,748
(30,084)
664

23,001

(31,216)

(8,215)

Deferred income taxes arise because of the differences in the book and tax bases of certain assets and liabilities. Deferred income

tax liabilities and assets consist of the following (in thousands):

2015

2014

Noncurrent deferred tax assets (liabilities):

Loss carry forwards ....................................................................................................................
Deferred rent and franchise revenue...........................................................................................
Property, equipment and intangible assets..................................................................................
Stock-based compensation..........................................................................................................
Tax credit carry forwards............................................................................................................
Inventory smallwares..................................................................................................................
Other accrued expenses ..............................................................................................................
Other ...........................................................................................................................................
Total noncurrent net deferred tax assets (liabilities) .....................................................................
Current deferred tax assets (liabilities):

Inventory smallwares..................................................................................................................
Other ...........................................................................................................................................
Total current deferred tax assets (liabilities).................................................................................
Net deferred tax assets (liability) ..................................................................................................

4,234

15,802
(24,950)
2,833

1,609
(2,589)
2,124

1,601

664

—

664

743

14,454

(26,514)

2,847

897

—

440

621

(6,512)

(2,405)

702

(1,703)

(8,215)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

8. Income Taxes (continued)

At December 29, 2015 and December 30, 2014, net operating loss carry forwards for federal income tax purposes of
approximately $34.4 million and $22.5 million, respectively, were available to offset future taxable income through the year 2035
and 2034, respectively. The net operating loss carry forwards are primarily composed of excess tax deductions for equity compensation.
Although Internal Revenue Code Section 382 generally limits the utilization of net operating losses when there is an ownership
change, the net operating losses as of December 29, 2015 related to prior ownership changes are generally no longer subject to
limitation because the cumulative annual loss limitation plus annual realized built-in-gain now exceeds the original net operating
loss that was subject to limitation. However, before any net operating losses are used in the future, a Section 382 study will be
completed to ensure that no other ownership changes have occurred that cause any limitations in addition to the limitations that we
are aware of as of December 29, 2015. As a result of certain realization requirements of ASC 718, the deferred tax assets shown
above include only realized tax deductions related to equity compensation equal to the equity compensation recognized for financial
reporting during the years ended December 29, 2015 and December 30, 2014. Equity will be increased by up to $7.9 million if and
when the net operating loss is ultimately realized.

Uncertain tax positions are recognized if it is more likely than not that the Company will be able to sustain the tax position taken,
and the measurement of the benefit is calculated as the largest amount that is more than 50% likely to be realized upon resolution
of the benefit. The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income
tax returns, as well as all open tax years in these jurisdictions. There were no uncertain tax positions for the years ended December 29,
2015 or December 30, 2014. The only periods subject to examination for the Company's federal and state returns are 2011 through
2014.

9. Stockholders' Equity

On June 4, 2015, the Company announced a share repurchase program of up to $35.0 million of the Company's Class A common
stock. Under this program, the Company purchased shares of the Company's Class A common stock in the open market (including
in pre-arranged stock trading plans in accordance with the guidelines specified in Rule 10b5-1 under the Securities Exchange Act
of 1934, as amended ) or in privately negotiated transactions. During fiscal year 2015, the Company repurchased 2,423,871 shares
of its common stock for approximately $35.0 million in open market transactions, thereby completing the repurchase program.
Repurchased shares are included as treasury stock in the Condensed consolidated balance sheets.

The Company has 181,000,000 shares of stock authorized, consisting of 150,000,000 shares of Class A common stock, par
value $0.01 per share; 30,000,000 shares of Class B common stock, par value $0.01 and 1,000,000 shares of preferred stock, par
value $0.01 per share. Preferred stock rights will be determined by the Company's Board of Directors in the event that preferred
shares are issued. The following summarizes the rights of common stock:

Voting—Shares of Class A common stock and Class B common stock are entitled to one vote per share in all voting matters,

with the exception that Class B common stock does not vote on the election or removal of directors.

Conversion—Each share of Class A common stock held by either one of L Catterton Partners or Argentia Private Investments
Inc. or their affiliates the (“Equity Sponsors”) is convertible, at the option of the holder, into one share of Class B common stock.
Each share of Class B common stock is convertible, at the option of the holder, into one share of Class A common stock.

Dividends—A Class C dividend agreement was entered in connection with the Merger Agreement between one of the Equity
Sponsors and the Company, which provided that the new investor would receive, in the form of a dividend, an amount equal to the
compensation payable to the other new investor under a management services agreement. In connection with the IPO, the management
services agreement expired, and the one share of Class C common stock was redeemed. See additional information in Note 16-
Related-Party Transactions. Class A common stock and Class B common stock share equally if a dividend is declared or paid to
either class, but they do not have rights to any special dividend.

Liquidation, Dissolution or Winding Up—Class A common stock and Class B common stock share equally in distributions in

liquidation, dissolution or winding up of the corporation.

Registration Rights—The Equity Sponsors have the right to demand registration of 10% or more of the shares of the Company's
common stock held by them. A few shareholders who are also Executive Officers of the Company or members of the Company's
Board of Directors have piggyback registration rights, but they are not required to exercise these rights.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

10. Stock-Based Compensation

The Company's Stock Incentive Plan, as amended and restated in May of 2013, authorizes the grant of nonqualified stock options,
incentive stock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units ("RSUs") and incentive bonuses
to employees, officers, nonemployee directors and other service providers. The number of shares of common stock available for
issuance pursuant to awards granted under the Stock Incentive Plan on or after the IPO shall not exceed 3,750,500 shares. The Plan
is administered by the Compensation Committee of the Company's board of directors (the "Board") or another committee designated
by the Board, or in the absence of any such committee, the Board itself (the "administrator"). Stock options are granted at a price
determined by the administrator at an exercise price that is not less than the fair market value of the underlying stock on the date of
option is grant. The administrator may also grant SARs and RSUs with terms determined by the administrator in accordance with
the Plan. The fair market value of shares prior to the IPO was determined by the Compensation Committee of the Board, or the Board
using historical or current transactions, comparable public company valuations, historical transactions, third-party valuations and
other factors. Stock options generally have a 10-year term and vest equally over four years from the date of grant.

Stock-based compensation expense is generally recognized on a straight-line basis over the service period of the options. In
2015, 2014 and 2013, non-cash stock-based compensation expense of $1.7 million, $1.4 million and $4.3 million, respectively, was
included in general and administrative expense. Stock-based compensation of approximately $229,000, $88,000 and $71,000 was
included in capitalized internal costs in 2015, 2014 and 2013, respectively. Stock-based compensation expense also includes $45,803
related to the Employee Stock Purchase Plan, see Note 12-Employee Benefit Plans.

At December 29, 2015, options available for future share grants totaled 2,360,084. The intrinsic value associated with options

exercised was $4.2 million and $6.0 million for the fiscal years ended December 29, 2015 and December 30, 2014, respectively.

The estimated fair value of each option granted is calculated using the Black-Scholes option-pricing model. Expected volatilities
are based on the historical Company volatility, as well as volatilities from publicly traded companies operating in the Company's
industry. The Company uses historical data to estimate expected employee forfeiture of stock options. The expected life of options
granted is management's best estimate using recent and expected transactions. The risk-free rate for periods within the expected life
of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The weighted-average assumptions used in the model were as follows:

Risk-free interest ...............................................................................................
Expected life (years)..........................................................................................
Expected dividend yield ....................................................................................
Volatility............................................................................................................
Weighted-average Black-Scholes fair value per share at date of grant.............

1.6%

5.0

—

36.8%

1.7%

5.0

—

36.5%

5.04

10.52

1.1%

4.3

—

39.7%

6.04

2015

2014

2013

The tables below summarize the option activity under the Plan:

Outstanding—December 30, 2014................................................................................................
Granted .....................................................................................................................................
Forfeited ...................................................................................................................................
Exercised ..................................................................................................................................
Outstanding—December 29, 2015................................................................................................

Shares
3,245,264

Weighted-
Average
Exercise Price
12.17

921,825
$
(307,318) $
(792,363) $
$
3,067,408

14.55

18.76

8.86

13.08

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

10. Stock-Based Compensation (continued)

Outstanding as of December 29, 2015...................................
Vested and expected to vest...................................................
Exercisable as of December 29, 2015....................................

Shares
3,067,408

2,978,704

1,940,770

Weighted-
Average
Exercise Price
13.08

12.96

10.93

Weighted-
Average
Remaining
Years of
Contractual
Life

7.00

6.93

5.72

Aggregate
Intrinsic Value(1)
(in thousands)
2,587

2,587

2,586

_____________
(1)

Aggregate intrinsic value represents the amount by which fair value of the Company's stock exceeds the exercise price of the option as of
December 29, 2015.

As of December 29, 2015, there was $5.0 million of unrecognized compensation cost related to nonvested share-based

compensation arrangements granted under the Stock Incentive Plan, which is expected to be recognized over 2.95 years.

11. (Loss) Earnings Per Share

EPS is calculated by dividing (loss) income available to common shareholders by the weighted-average number of shares of
common stock outstanding during each period. Diluted (loss) earnings per share ("diluted EPS") is calculated using (loss) income
available to common shareholders divided by diluted weighted-average shares of common stock outstanding during each period.
Potentially dilutive securities include shares of common stock underlying stock options and restricted common stock. Diluted EPS
considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential
common shares would have an anti-dilutive effect.

The following table sets forth the computations of basic and dilutive (loss) earnings per share:

Net (loss) income (in thousands).......................................................................
Shares:

2015

2014

2013

(13,765) $

11,428

6,665

Basic weighted average shares outstanding ....................................................
Dilutive stock options and warrants................................................................
Diluted weighted average number of shares outstanding ...............................

28,938,901

29,717,304

26,406,904

—

1,283,795

1,281,725

28,938,901

31,001,099

27,688,629

(Loss) earnings per share:

Basic (loss) earnings per share........................................................................
Diluted (loss) earnings per share.....................................................................

(0.48) $
(0.48) $

0.38

0.37

0.25

0.24

Potential common shares are excluded from the computation of diluted (loss) earnings per share when the effect would be anti-
dilutive. All potential common shares are anti-dilutive in periods of net loss. The Company excluded 3,184,949; 247,427 and 17,000
outstanding options from the diluted (loss) earnings per share calculation for 2015, 2014 and 2013, respectively, as the options were
anti-dilutive.

12. Employee Benefit Plans

Defined Contribution Plan

In October 2003, the Company adopted a defined contribution plan, The Noodles & Company 401(k) Plan (the "401(k) Plan").
Company employees with six months of service, aged 21 or older, are eligible to participate in the 401(k) Plan. Under the provisions
of the plan, the Company may, at its discretion, make contributions to the 401(k) Plan. Participants are 100% vested in their own
contributions. The Company made no contributions during 2015, 2014 and 2013.

Deferred Compensation Plan

The Company's deferred compensation plan, under which compensation deferrals began in 2013, is a non-qualified deferred

compensation plan which allows highly compensated employees to defer a portion of their base salary and variable compensation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

12. Employee Benefit Plans (continued)

each plan year. To offset its obligation, the Company purchases Company-owned whole-life insurance contracts on certain team
members. As of December 29, 2015, $1.5 million was included in other assets, net, which represents the cash surrender value of the
associated life insurance policy, and $1.6 million was included in other long-term liabilities, which represents the carrying value of
the liability for deferred compensation.

Employee Stock Purchase Plan

In 2013, the Company adopted an Employee Stock Purchase Plan under which eligible team members may voluntarily contribute
up to 15% of their salaries, subject to limitations, to purchase common stock at a price equal to 85% of the fair market value of a
share of the Company's common stock on the first day of each offering period or 85% of the fair market value of a share of the
Company's common stock on the last day of each offering period, whichever amount is less. In general, all of the Company's officers
and team members who have been employed by the Company for at least thirty days prior to the offering period and who are regularly
scheduled to work more than 20 hours per week and for more than five months in any calendar year, are eligible to participate in
this plan which operates in-line with the Company's fiscal quarters. A total of 750,000 shares of common stock are available for
issuance under this plan. The Company has issued a total of 54,224 shares under this plan, of which 18,464 shares were issued during
2015. A total of 695,776 shares remain available for future issuance. For 2015, in accordance with the guidance for accounting for
stock compensation, the Company estimated the fair value of the stock purchase plan using the Black-Scholes multiple-option pricing
model. The average assumptions used in the model included a 0.080% risk-free interest rate; .25 month expected life; expected
volatility of 17.7%; and a zero percent dividend yield. The weighted average fair value per share at grant date was $2.17. In 2015,
the Company recognized $45,803 of compensation expense related to this plan.

13. Leases

The Company leases restaurant facilities, office space and certain equipment under operating leases that expire on various dates
through September 2035. Lease terms for traditional shopping centers generally include a base term of 10 years, with options to
extend these leases for additional periods of five to 15 years. Typically, the lease includes rent escalations, which are expensed on a
straight-line basis over the expected lease term. The difference between rent expense and cash paid for rent is recognized as deferred
rent. Rent expense for 2015, 2014 and 2013 was approximately $41.8 million, $35.7 million and $29.5 million, respectively.

Future minimum lease payments required under existing leases as of December 29, 2015 are as follows (in thousands):

2016............................................................................................................................................................................ $
2017............................................................................................................................................................................
2018............................................................................................................................................................................
2019............................................................................................................................................................................
2020............................................................................................................................................................................
Thereafter ...................................................................................................................................................................

49,555

47,678

44,088

42,149

42,233

286,316

512,019

14. Supplemental Disclosures to Consolidated Statements of Cash Flows

The following table presents the supplemental disclosures to the consolidated statements of cash flows (in thousands) for fiscal

years 2015, 2014 and 2013:

Interest paid (net of amounts capitalized) .........................................................
Income taxes paid (net of refunds) ....................................................................
Purchases of property and equipment accrued in accounts payable..................

839

354

1,414

— $

811

2,506

137

996

2015

2014

2013

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

15. Commitments and Contingencies

As previously disclosed in prior reports filed with the SEC, the Company is named as a defendant in an action filed in the
Superior Court of Delaware in New Castle County (the “Court”), entitled The State of Delaware, William French v. Card Compliant,
LLC, et. al. The case was filed under seal in June 2013 and was unsealed on March 26, 2014. The complaint in this case alleges that
a number of large retailers and restaurant companies, including the Company, knowingly refused to fulfill obligations under Delaware's
Abandoned Property Law by failing to report and deliver "unclaimed gift card funds" to the State of Delaware, and knowingly made,
used or caused to be made or used, false statements and records to conceal, avoid or decrease an obligation to pay or transmit money
to Delaware in violation of the Delaware False Claims and Reporting Act. The complaint seeks an order that the Company cease
and desist from violating the Delaware Abandoned Property Law, monetary damages (including treble damages under the False
Claims and Reporting Act), penalties, and attorneys' fees and costs. On November 23, 2015, the Court ruled on a motion to dismiss
the complaint that the defendants—including the Company—had filed. While the Court granted the motion to dismiss with respect
to a claim alleging that the defendants intended to defraud the government or willfully concealed property owed to the government
and for which a certificate or receipt was provided, it did not dismiss the other claims alleging that the defendants knowingly made
false statements to avoid transmitting money to the government. The trial date with respect to this matter is set for January 8, 2018.
The Company has recorded a loss contingency accrual based on a reasonable estimate of the probable losses that might arise from
this matter; this loss contingency accrual did not have a material effect on our results of operation. The Company intends to continue
to vigorously defend this action.

On February 10, 2016, Tammie Carter, a former employee of the Company, filed a purported collective and class action lawsuit
against the Company alleging violations of the Fair Labor Standards Act and the Colorado Wage Order (the “Labor Laws”) in the
United States District Court for the District of Colorado. The plaintiff filed the case on her behalf and on behalf of all assistant general
managers employed by the Company during the past three years whom the Company classified as exempt employees, and she alleges
that the Company violated the Labor Laws by not paying overtime compensation to its assistant general managers. The plaintiff is
seeking, on behalf of herself and members of the putative class, unpaid overtime compensation, damages (including liquidated and/
or punitive damages), a declaratory judgment, an injunction, and attorneys’ fees and costs. This case is at an early stage, and the
Company is therefore unable to make a reasonable estimate of the probable loss or range of losses, if any, that might arise from this
matter. The Company intends to vigorously defend this action.

In the normal course of business, the Company is subject to other proceedings, lawsuits and claims. Such matters are subject to
many uncertainties, and outcomes are not predictable with assurance. Consequently, the Company is unable to ascertain the ultimate
aggregate amount of monetary liability or financial impact with respect to these matters as of December 29, 2015. These matters
could affect the operating results of any one financial reporting period when resolved in future periods. The Company believes that
an unfavorable outcome with respect to these matters is remote or a potential range of loss is not material to its consolidated financial
statements. Significant increases in the number of these claims, or one or more successful claims that result in greater liabilities than
they currently anticipate, could materially and adversely affect our business, financial condition, results of operations or cash flows.

The Company entered into an employment agreement with its Chief Executive Officer in connection with the IPO superseding
the previous employment agreement with this executive. The agreement has an initial term of three years and automatically renews
annually unless canceled by either party within 90 days of the end of the initial term or anniversaries thereof. Under the Employment
Agreement, if the executive’s employment is terminated by the Company without "cause" or by the executive with "good reason," (as
such terms are defined in the applicable employment agreement) the executive is entitled to receive compensation equal to 18 months
of the executive’s then-current base salary, payable in equal installments over 18 months, a pro rata bonus for the year of termination
and reimbursement of "COBRA" premiums for up to 18 months for the executive and his dependents. The severance payments are
conditioned upon the executive entering into a mutual release of claims with the Company.

16. Related-Party Transactions

During 2013, the Company paid $375,000 to the Equity Sponsors for management service fees and Class C Dividends pursuant
to a management services agreement and an agreement to pay dividends on its Class C common stock. In connection with the IPO,
the management services agreement expired and one share of Class C common stock was redeemed. Management service fees and
Class C dividends paid in each fiscal year vary due to the timing of payments. No such payments were made during fiscal years 2014
and 2015.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOODLES & COMPANY

16. Related-Party Transactions (continued)

In connection with the IPO during the second quarter of 2013, the Company paid $1.7 million of transaction bonuses and related

payroll taxes to employees of the Company, and $0.8 million in transaction payments to the Equity Sponsors.

In connection with the follow-on offering in the fourth quarter of 2013, the Company purchased 108,267 shares of common
stock from certain of its officers at the net offering price per share in such follow-on offering. The Company did not receive any of
the proceeds from the offering.

Stockholders Agreement. In connection with the IPO, the Company entered into a new stockholders agreement with the Equity
Sponsors (the "2013 Stockholders Agreement"). The 2013 Stockholders Agreement contains restrictions on sale, issuance or transfer
of shares for each Equity Sponsor without the consent of the the other Equity Sponsor except in a tag along sale under the Registration
Rights Agreement or the earlier of the second anniversary of the offering and time at which such Sponsor holds less than 25% of the
Company's outstanding stock and Class B stock. The 2013 Stockholders Agreement also grants the Equity Sponsors the right to
nominate representatives to the Company's board of directors and committees of the board. L Catterton and Argentia each have the
right to designate two members to the Company's board of directors and the Equity Sponsors will agree to vote to elect such director
designees. If at any time an Equity Sponsor owns more than 10% and less than 20% of outstanding Class A and Class B common
stock, such Equity Sponsor has the right to designate one nominee for election to the Company's board of directors. If an Equity
Sponsor’s ownership level falls below 10% of outstanding Class A and Class B common stock, such Equity Sponsor will no longer
have a right to designate a nominee. In addition, for so long as L Catterton and Argentia hold at least 35% of the voting power of
outstanding common stock, certain actions may not be taken without the approval of L Catterton and Argentia.

17. Selected Quarterly Financial Data (unaudited)

The following table presents selected unaudited quarterly financial data for the periods indicated. Each fiscal quarter contained

13 weeks (in thousands, except per share data):

December 29,

September 29,

June 30,

March 31,

2015

Revenue .................................................................. $
Operating (loss) income .........................................
Net (loss) income ...................................................
Basic (loss) earnings per share ............................... $
Diluted (loss) earnings per share ............................ $

117,128
(6,464)
(4,254)
(0.15) $
(0.15) $

117,328
(15,302)
(9,821)
(0.35) $
(0.35) $

2014

115,233

105,761

5,016

3,062

0.10

(4,318)

(2,752)

(0.09)

Revenue .................................................................. $
Operating income ...................................................
Net income .............................................................
Basic earnings per share ......................................... $
Diluted earnings per share...................................... $

December 30,

September 30,

July 1,

April 1,

108,546

106,216

99,459

89,519

5,474

3,535

0.12

0.11

5,045

2,943

0.10

5,941

3,527

0.12

0.11

2,456

1,424

0.05

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Noodles & Company

We have audited the accompanying consolidated balance sheets of Noodles & Company (the Company) as of December 29,
2015 and December 30, 2014, and the related consolidated statements of income, comprehensive income, equity, and cash flows for
each of the three years in the period ended December 29, 2015. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Noodles & Company at December 29, 2015 and December 30, 2014, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 29, 2015, in conformity with U.S. generally accepted accounting
principles.

/s/ Ernst & Young LLP

Denver, Colorado
March 1, 2016

ITEM 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

ITEM 9A.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management carried out an evaluation, under the supervision and with the participation of our chief executive officer and
chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule
13a-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our chief executive officer
and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered
by this annual report.

Management’s Annual Report on Internal Control Over Financial Reporting

The management of Noodles & Company is responsible for establishing and maintaining adequate internal control over financial
reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles
generally accepted in the United States of America. Our internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with accounting principles generally accepted in the United State of America, and that our receipts and expenditures
are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect
on our financial statements.

Under the supervision and with the participation of our management, including our chief executive officer and chief financial
officer, we carried out an evaluation of the effectiveness of our internal control over financial reporting as of December 29, 2015
based on the criteria in "Internal Control - Integrated Framework (the 2013 framework)" issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO"). Based on this evaluation, our management concluded that our internal control
over financial reporting was effective as of December 29, 2015.

This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm,
because as an "emerging growth company" under the JOBS Act our independent registered public accounting firm is not required
to issue such an attestation report.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter

that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.

Other Information

None.

ITEM 10.

Directors, Executive Officers and Corporate Governance

PART III

Information regarding our executive officers is set forth in Item 1. of Part 1 of this Report under the caption "Executive Officers

of the Registrant."

We have adopted a Code of Business Conduct and Ethics that applies to our directors and a Code of Business Conduct and Ethics
that applies to our officers and employees (collectively, the "Codes"), including our principal executive, financial and accounting
officers, or persons performing similar functions. These Codes are published on our corporate governance website located at
investor.noodles.com/corporate-governance.cfm. We intend to disclose future amendments to certain provisions of our Codes, or
waivers of provisions of the Codes granted to executive officers and directors, on the website within four business days following
the date of such amendment or waiver.

The remaining information required by this item is incorporated herein by reference to the sections entitled "Proposal No. 1 -
Election of Directors," "Section 16(a) Beneficial Ownership Reporting Compliance," "Board Committees—Policy Regarding
Stockholder Nominations" and "Board Committees—Audit Committee" in our definitive Proxy Statement for the Annual Meeting
of Shareholders to be held on May 5, 2016 (the "Proxy Statement").

ITEM 11.

Executive Compensation

The information required by this item is incorporated by reference to the sections entitled "Executive Compensation," "Director
Compensation" and "Board Committees—Compensation Committee Interlocks and Insider Participation" in the Proxy Statement.

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated by reference to the section entitled "Security Ownership of Certain Beneficial

Owners and Management" in the Proxy Statement.

Equity Compensation Plan Information

The following table summarizes information as of December 29, 2015, about shares of common stock that may be issued

under our equity compensation plans.

Plan Category
Equity compensation plans approved by
security holders(1) .............................................
Equity compensation plans not approved by
security holders ................................................
Total..................................................................

______________________________

Number of securities to
be issued upon exercise
of outstanding options
and warrants
(a)

Weighted-average exercise
price of outstanding options
and warrants
(b)

Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))
(c)

3,125,108

—

3,125,108

13.08

—

13.08

3,055,860

—

3,055,860

(1)

Includes in column (a) 3,067,408 shares of Class A common stock issuable upon exercise of options outstanding under the Company’s Stock Incentive
Plan and 57,700 shares of Class B common stock issuable upon exercise of a warrant granted to a consultant. Includes in column (c) 2,360,084 shares
of Class A common stock available for issuance upon exercise of future grants under the Company’s Stock Incentive Plan and 695,776 shares of Class
A common stock available for future issuance under the Company’s Employee Stock Purchase Plan. Material features of the Company's Stock
Incentive Plan and Employee Stock Purchase Plan are set forth in Note 10-Stock-Based Compensation and Note 12-Employee Benefit Plans.

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated by reference to the sections entitled "Transactions with Related Persons"

and "Directors and Corporate Governance—Board Independence" in the Proxy Statement.

ITEM 14.

Principal Accounting Fees and Services

The information required by this item is incorporated by reference to the section entitled "Proposal No. 2 - Ratification of

Appointment of Independent Registered Public Accounting Firm" in the Proxy Statement.

ITEM 15.

Exhibits, Financial Statement Schedules

PART IV

1. Our Consolidated Financial Statements and Notes thereto are included in Item 8, "Financial Statements and

supplementary Data," of this Annual Report on Form 10-K.

2. All financial schedules have been omitted either because they are not applicable or because the required information is

provided in our Consolidated Financial Statements and Notes thereto, included in Item 8 of this Annual Report on Form
10-K.

3. The Index to Exhibits, which appears immediately following the signature page and is incorporated herein by reference,

is filed as part of this 10-K.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 1, 2016.

SIGNATURES

NOODLES & COMPANY

By: /s/ Dave Boennighausen

Dave Boennighausen
Chief Financial Officer

POWER OF ATTORNEY

Know all persons by these presents, that each person whose signature appears below constitutes and appoints Dave Boennighausen
or Paul Strasen, or any of them, as such person’s true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for such person and in such person’s name, place and stead, in any and all capacities, to sign any and all amendments
to this Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as such
person might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or any of them or their
or such person’s substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf

of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ KEVIN REDDY
Kevin Reddy

/s/ DAVE BOENNIGHAUSEN
Dave Boennighausen

/s/ KATHY LOCKHART
Kathy Lockhart

Chairman and Chief Executive Officer
(principal executive officer)

March 1, 2016

Chief Financial Officer and Director
(principal financial officer)

March 1, 2016

Vice President and Controller
(principal accounting officer)

March 1, 2016

/s/ SCOTT DAHNKE

Scott A. Dahnke

/s/ JEFFREY JONES

Jeffrey Jones

/s/ JAMES RAND

James Rand

/s/ ANDREW TAUB

Andrew Taub

Director

March 1, 2016

Director

March 1, 2016

Director

March 1, 2016

Director

March 1, 2016

/s/ JOHANNA MURPHY

Johanna Murphy

Director

March 1, 2016

Exhibit
Number
3.1

3.2

4.1

10.1

10.2

10.3

10.4

10.5

10.6

10.7

Exhibit Description

Amended and Restated
Certificate of Incorporation

Second Amended and Restated
Bylaws

Specimen Stock Certificate

Noodles & Company Amended
and Restated 2010 Stock
Incentive Plan

Noodles & Company 2013
Employee Stock Purchase Plan

Registration Rights Agreement,
dated December 27, 2010, by and
among Noodles & Company and
certain of its stockholders

Amendment No. 1 to
Registration Rights Agreement,
dated as of July 8, 2014, among
Noodles & Company and certain
of its stockholders

Amended and Restated Credit
Agreement, dated as of
November 22, 2013, among
Noodles & Company, the other
Loan Parties thereto, Bank of
America, N.A., as Administrative
Agent, L/C Issuer and Swing
Line Lender and the other
lenders party thereto

Amendment No.1 to the
Amended and Restated Credit
Agreement, dated as of June 4,
2015, among Noodles &
Company, the other Loan Parties
party thereto, the lenders thereto
and Bank of America, N.A., as
Administrative Agent, L/C Issuer
and Swingline Lender

Amendment No.2 to the
Amended and Restated Credit
Agreement, dated as of
November 24, 2015, by and
among Noodles & Company,
each of the Guarantors signatory
thereto, Bank of America, N.A.,
as administrative agent and the
lenders signatory thereto

EXHIBITS

Description of Exhibit Incorporated Herein by Reference

Form
S-1

File No.
333-192402

8-K

001-35987

S-1/A

333-188783

S-1/A

333-188783

S-1/A

333-188783

S-1/A

333-188783

Filing
Date
November
19, 2013

August 24,
2015

June 17,
2013

Exhibit
Number
3.1

Filed
Herewith

3.1

4.1

10.1

10.2

10.3

10-Q

001-35987

November
6, 2014

10.1

8-K

001-35987

November
26, 2013

10.1

8-K

001-35987

June 5,
2015

10.10

8-K

001-35987

November
24, 2015

10.10

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

Security Agreement, dated
February 28, 2011, by and
between Noodles & Company
and Bank of America, N.A., as
administrative agent

Pledge Agreement, dated
February 28, 2011, by and
between Noodles & Company
and Bank of America, N.A., as
administrative agent

Form of Indemnification
Agreement by and between
Noodles & Company and each of
its directors and executive
officers

Form of Area Development
Agreement

Form of Franchise Agreement

Severance Agreement with Dave
Boennighausen, dated December
19, 2012

Employment Agreement, dated
June 7, 2013, by and between
Noodles & Company and Kevin
Reddy

Employment Agreement, dated
June 7, 2013, by and between
Noodles & Company and Keith
Kinsey

Noodles & Company
Compensation Plan For Non-
Employee Directors

The Executive Nonqualified
"Excess" Plan Adoption
Agreement, adopted by Noodles
& Company on May 16, 2013

Amended and Restated
Stockholders Agreement, dated
as of July 2, 2013, among
Noodles & Company, L
Catterton-Noodles, LLC and
Argentia Private Investments Inc.

Letter agreement dated March 9,
2015 between Noodles &
Company and Dan Fogarty

Severance Agreement with Paul
Strasen, dated January 24, 2011

S-1

333-188783

May 23,
2013

10.13

S-1

333-188783

May 23,
2013

10.14

S-1/A

333-188783

June 17,
2013

10.15

10-K

001-35987

February
24, 2015

10.9

10-K

001-35987

10-K

001-35987

S-1/A

333-188783

February
24, 2015

March 7,
2014

June 17,
2013

10.10

10.1

10.20

S-1/A

333-188783

June 17,
2013

10.21

S-1

333-192402

S-1/A

333-188783

November
19, 2013

June 17,
2013

10.16

10.22

S-1

333-192402

November
19, 2013

10.18

10-Q

001-35987

May 7,
2015

10.10

21.1

23.1

24.1

31.1

31.2

32.1

101.CAL

101.DEF

101.LAB

101.PRE

List of Subsidiaries of Noodles &
Company

Consent of Ernst & Young LLP

Power of Attorney (included on
signature page of this report)

Certification of Principal
Executive Officer pursuant to
Section 302 of the Sarbanes-
Oxley Act of 2002

Certification of Principal
Financial Officer pursuant to
Section 302 of the Sarbanes-
Oxley Act of 2002

Certification of Chief Executive
Officer and Chief Financial
Officer Section 302 of the
Sarbanes-Oxley Act of 2002

XBRL Taxonomy Extension
Calculation Linkbase Document

XBRL Taxonomy Extension
Definition Linkbase Document

XBRL Taxonomy Extension
Label Linkbase Document

XBRL Taxonomy Extension
Presentation Linkbase Document

(This page has been left blank intentionally.)

BOARD of DIRECTORS
Kevin Reddy

Chairman & Chief Executive Officer

Scott Dahnke

Global Co-CEO
L Catterton

Dave Boennighausen
Chief Financial Officer

François Dufresne
Senior Director
Public Sector Pension Investment Board

Jeffrey Jones

Former Chief Financial Officer
Vail Resorts, Inc.
Johanna Murphy

Chief Marketing Officer
rag & bone
James Rand

Former Senior Vice President of
Worldwide Development
McDonald’s Corporation

Andrew Taub

Managing Partner
L Catterton

MANAGEMENT
Kevin Reddy

Chairman & Chief Executive Officer

Dave Boennighausen
Chief Financial Officer

Mark Mears

Executive Vice President, Chief Marketing Officer

Phil Petrilli

Executive Vice President of Operations

Paul Strasen

EVP, General Counsel & Corporate Secretary

Kathy Lockhart

Vice President – Controller

Forward Looking Statements

Any forward-looking statements about Noodles &
Company’s outlook and prospects contained in this
Annual Report are subject to risks and uncertainties, as
described in materials filed with the U.S. Securities and
Exchange Commission from time to time, including the
“Risk Factors” section of our Annual Report on Form
10-K for the year ended December 29, 2015.

Stock Exchange Listing

Common Stock listed and traded on:
The NASDAQ Global Select Market
NASDAQ Symbol – NDLS

Transfer Agent & Registrar for Common Stock

Wells Fargo Bank, N.A.
Shareowner Services
1110 Centre Point Curve, Suite 101
Mendota Heights, MN 55120-4100
www.shareowneronline.com

(Toll-free: 800-468-9716)
(Foreign Shareholders: 651-450-4064)

Auditors

Ernst & Young
370 17th Street, Suite 3300
Denver, CO 80202

Investor Relations

Additional information, including an investor package
may be obtained from:

Noodles & Company
520 Zang Street, Suite D
Broomfield, CO 80021
Attn: Investor Relations
or by email at investorrelations@noodles.com

3/14/16 2:53 PM

We mean it. We want you to love the REAL Food, REAL Cooking and REAL Flavors that are happening in our kitchen.

And if you don’t, we’ll make you something you do love, free. That’s what we mean by Made. Different.

REAL Food. REAL Cooking. REAL Flavors.

45483cov.indd 1

Made. Different.