Sorry, Noodles, but You're No Chipotle

Noodles & Co. (NASDAQ: NDLS  ) more than doubled after going public on Friday, and the shares rose another 5% on Monday.

As a fast-growing casual dining concept, investors are naturally going to compare the new carb-laden kid on the block to Chipotle Mexican Grill (NYSE: CMG  ) , but the comparisons may be premature.

Yes, both companies specialize in the fast-casual niche that's growing at the expense of traditional casual dining. Customers crave quality eats that are prepared quickly. Prepaying at the counter comes in handy, since there isn't a need to flag down a server for a check at the end of a meal.

There are other similarities between Chipotle and Noodles, and it's not just that both stocks doubled the day they began trading.

Chipotle's claim to cult status popularity is that its comps remained positive even during the darkest recessionary stretches. Noodles is there, too, having posted positive same-store sales in 28 of the past 29 quarters.

However, let's talk about valuations.

Chipotle was a lot larger than Noodles when McDonald's chose to spin off the fast-growing burrito roller.

Chipotle had 489 restaurants by the end of 2005. Revenue had climbed 33% to $627.7 million that year, and comps had posted eight consecutive years of double-digit comps.

Noodles is doing well, but not that well.

Revenue climbed 17% to $300.4 million last year, and Noodles closed out the year with 276 locations. Systemwide comps have grown 3.7%, 4.8%, and 5.4% in its three most recent fiscal years.

In short, Noodles is half the size -- and growing at half the rate -- of Chipotle at the time of its IPO. The average Chipotle restaurant was making more than the average Noodles unit is making now.

Chipotle's IPO pop boosted its market cap to $1.4 billion. Noodles -- with the inevitable over-allotment of shares pushing its total share count to 29.4 million -- is now worth more than $1.1 billion.

To be fair, Chipotle went public at a time when casual dining was still unproven. Even if it takes another three to four years for Noodles to get to where Chipotle was at the time of its IPO, it will probably command a market cap greater than $1.4 billion at the time if the fundamentals continue to hold up.

Noodles has a surprisingly unique concept, specializing in all types of noodles -- from Asian noodle bowls to Italian pasta dishes to Americana mac and cheese staples -- that help limit the veto vote that may shoot down family or group outings to fast-casual establishments with narrower menus. However, with the easy money already made and the concept still lacking the cult status distinction that Chipotle has achieved, Noodles is clearly no Chipotle.

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