Revenue Recognition

12 Months Ended

Jan. 02, 2024

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Gift Cards

As of January 2, 2024 and January 3, 2023, the current portion of the gift card liability, $2.2 million and $2.4 million, respectively, is included in accrued expenses and other current liabilities, and the long-term portion, $1.0 million and $0.7 million, respectively, is included in other long-term liabilities in the Consolidated Balance Sheets.

Revenue recognized in the Consolidated Statements of Operations for the redemption of gift cards was $2.8 million, $3.4 million and $3.2 million in 2023, 2022 and 2021, respectively. The Company recognized gift card breakage in restaurant revenue of approximately $0.3 million, $0.5 million and $0.3 million in 2023, 2022 and 2021, respectively.

Franchise Fees

Initial fees received from franchisees are recognized as revenue over the term of each respective franchise agreement, which is typically 20 years. The Company recognized revenue of $0.2 million, $0.1 million and $0.1 million in 2023, 2022 and 2021, respectively related to initial fees from franchisees that were included in the contract liability balance at the beginning of the year. The Company expects to recognize approximately $0.1 million each fiscal year through fiscal 2028 and approximately $0.8 million thereafter related to performance obligations that are unsatisfied as of January 2, 2024.

Loyalty Program

The Company operates the Noodles Rewards program, which is primarily a spend-based loyalty program. With each purchase, Noodles Rewards members earn loyalty points that can be redeemed for rewards, including free products. Using an estimate of the value of reward redemptions, we defer revenue associated with points earned, net of estimated points that will not be redeemed. Points generally expire after six months. Revenue is recognized in a future period when the reward points are redeemed. Deferred revenue related to the rewards was $0.9 million and $0.3 million as of January 2, 2024 and January 3, 2023, respectively, and was included in accrued expenses and other current liabilities in the Consolidated Balance Sheets.