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We have written extensively on Noble Roman’s and encourage readers to use the SEARCH function on our Home Page to access previous articles.


Noble Roman’s (NROM) remains a small-cap situation with a great deal of untapped potential. The Company’s emergence from Covid in a strong competitive situation should provide them with a new opportunity to build out this fifty- year-old Midwest brand. Nine company operated Craft Pizza and Pubs are profitable, setting the stage for further expansion, especially if a new smaller CPP works as expected. In the non-traditional venue, the Targeted Addressable Market amounts to tens of thousands of outlets, and NROM should be able to build on their base. With a microcap valuation (22M share at $.20-.25 per share), the potential upside of this situation continues to be substantial. While the current long term debt absorbs an undesirably large portion of the current operating cash flow, that should be less the case as margins improve from here. As more consistent operating results are reported for the first time in many years, we believe the long term debt can be restructured on materially better terms, allowing for greater free cash flow to fuel consistent and profitable growth.


The second quarter for Noble Roman’s was fairly typical of most restaurant chains as inflation drove labor and other operating costs high enough to delay the return to normal operating margins. In addition to the nine company operated Noble Roman’s Craft Pizza and Pubs (CPPs), the non-traditional segment that generates just over $1M per quarter in royalties and licensing fees (with substantial long term potential) continues to show modest but steady improvement and has recently demonstrated a noticeable pickup in signings and openings.


Revenues were $3.8M vs. $3.6M, with a net loss of $50k vs a net profit of $85k in ’21. Company owned CPPs generated $2.5M vs $2.3M, and franchising revenues was $1.1M vs. $1.2M. As the Company summarized it, “ramifications of the COVID pandemic continue to negatively impact labor, supply chain and cost structures…..the impact of these factors has dissipated measurably with regard to CPPs….the franchising venue has been impacted more significantly and in a more lasting way but the venue is now growing again, while at a slower pace due to the economic environment and labor shortages.

The Noble Roman’s Craft Pizza and Pub (CPP) Venue

Compared to 2021, Cost of Goods was unchanged at 20.9% and Labor up only 20 bp at 28.6%. Facility Cost was up 120 bp to 16.2%, Packaging was up 90 bp while Delivery Fees were down 250 bp to 1.6%. All other Operating Expenses were up 90 bp to 15.5% (with utilities costing 30% more) and the store level EBITDA margin was down 90 bp to 13.6%, up sequentially from 9.9% in Q1. A notable sequential improvement was in Labor which declined 310 bp from 31.7% in Q1.

The Franchising Venue

Royalties and Fees were $1.064M vs. $1.199M, still down from ’21 but continuing to improve sequentially from $1.034M in Q1’22 and $1.014M in Q4’21. The margin contribution from this venue was 54.6% of Revenues, down from 59.8%, with Salaries and Wages up 300 bp to 20.4%, Trade Show Expense down 280 bp, Insurance up 180 bp, Travel & Auto was up 200 bp and Other Operating Expense up 110 bp. Part of the swing in payroll and other expenses was a function of allocating PPP money in ’21 to those categories.

Operating Income

Operating Income was $282k vs. $424k in ’21, after D&A of $113k vs. $142k and G&A of $539k vs. $424k. Interest Expense was $11k higher at $348k, resulting in a pretax loss of $66k vs a profit of $85k.

The Outlook

Management provided tangible indications of improving fundamentals relative to both important venues. The formal earnings release indicated that the “Covid factors have measurably dissipated” with regard to the CPP venue and the franchising division is “now growing again”, and the Conference Call filled in more details

Regarding the CPPs, not only were Q2 Revenues up as expected, with the season, but July Revenues improved further, the CPP EBITDA margin improved to 16.0% in July, and the most recent week in August was up 20.8% for the comp stores open over two years. It is also noteworthy that these sales gains are a result of traffic improvement, since prices have not been raised since early in the year and the average ticket has actually been running down modestly. In terms of unit development, the search for an attractive location in which to place the first “smaller footprint” CPP continues.

On the non-traditional front: nineteen locations have been opened in the year to date, with eighteen sold, and the pace seems to be continuing. It was mentioned that a recent Indiana C store added $11k/wk of pizza sales when it introduced Noble Roman’s product. While it is clear that some of the weakest non-traditional outlets, which pre-Covid numbered over 600, will likely not return because the operators could not financially survive the Covid, newer outlets are opening successfully and the marketplace seems more receptive than in a long time.

President and CEO, Scott Mobley, provided further operating details on the Conference Call. The labor situation at the CPPs, while always challenging, has largely stabilized, so turnover is coming down and productivity per hour is increasing. Retention of managers, who generally are leaving the industry, is a more important longer term issue than finding hourly workers. Negotiations continue with all sorts of vendors to keep operating costs under control. New agreements with commodity suppliers may save about 50bp of operating margin, in addition to another potential 50bp from a recent decline in the price of cheese. While beef and pork prices could move higher, costs are generally under control. A new salad bar has been introduced in the CPPs and almost 2,000 salads were sold in a recent week, showing some promise, especially for the lunch daypart.

CONCLUSION: Provided at the beginning of this article