Turnaround Update

Company: Noodles & Company, Boulder, Colo.
Founded: 1995
Founder: Aaron Kennedy
Business: Restaurant chain specializing in noodle dishes

Back in 1996, a negative review of one of Aaron Kennedy's restaurants nearly sunk his business. Noodles & Company had opened its first location a year before in Denver, Colo. But facing a lousy review of a Madison, Wis. location and $50,000 in losses from its flagship Denver location, the restaurant chain's future didn't look too bright, as Inc. magazine writer Kate O'Sullivan reported in her Sept. 2001 profile of the company.

"We were in the basement for sure," recalls Kennedy, founder and co-CEO of Noodles & Company, a restaurant chain specializing in noodle dishes headquartered in Boulder, Colo. But after a few shrewd management moves and some attention to long-term planning, Kennedy got his business back on track.

Kennedy's first shrewd move was in 1996, as O'Sullivan points out in "Using Your Noodle". At that time, Kennedy had kicked off a "Redefine Noodles & Company" campaign, which ultimately led to successful changes in décor, pricing, and food quality. Soon thereafter, Kennedy made more changes to ensure Noodles & Company's long-term success.

"I recognized fairly early on that if we were to grow the company we'd have to add new talent to the organization," says Kennedy. Even though Noodles & Company's revenues were skyrocketing (by the end of 2001 revenues had reached $28 million, they had 36 stores, and Inc. magazine had ranked the company number 45 on its annual list of America's fastest growing companies), Kennedy needed someone to help run and grow the company.

It was in 2001 that "I created a list of what the company needed from the president, and I identified what I was well suited to do," Kennedy says. Kennedy realized he was best suited to developing the brand (prior to Noodles he was a brand manager for such large companies as Pepsi Cola and Oscar Mayer Foods), evolving the menu, nurturing the company's culture, and offering broad strategic guidance. But when it came to building teams, developing procedures and policies, and charting real estate strategies, he would need to rely on someone else.