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There were no meaningful fundamental developments at Noble Roman’s annual meeting that took place last Friday, 7/15/22. However, CEO Scott Mobley’s presentation provided an update regarding progress over the last two years, and reviewed ongoing challenges and opportunities. The full slide presentation can be found on the Noble Roman’s website, and we provide some of the highlights below. Our previous articles regarding Noble Roman’s can be accessed through the SEARCH function on the Home Page of this website.


Second quarter results, to be reported in early August, will obviously be instructive. It seems that, based on the presentation at last week’s Annual Meeting, the worst of the COVID and supply chain effects is in the rear-view mirror. Our expectation, therefore,  is that sales in Q2 are likely to be noticeably higher than Q1, both on a seasonal basis and also less affected by COVID variants. Operating margins at the Craft Pizza and Pubs (CPPs) should also be sequentially improved, better labor efficiency and higher sales, and commodity prices no worse than in Q1.

Non-traditional franchising results in Q2 should improve sequentially, at least modestly, with seasonally higher sales, new units signed and/or opened, and the continued recovery from COVID. Most importantly, the “total addressable market” is huge, many tens of thousands of prospects, the franchise offering has been improved, signings and openings are taking place, and a newly hired experienced sales associate could be an important addition. This division, over the long term, could be materially larger than it is today.

The new smaller CPP prototype, if successful, could provide new momentum for this division. The company has demonstrated an ability to open new locations in as little as 90 days from signing of a lease, and lease negotiations are currently taking place, so we should have feedback in this regard within perhaps six months.


Recall that there are currently nine company operated “CPPs”, plus three franchised locations, all within an hour or so of Indianapolis. The CPP is distinctive from fast casual pizza competitors in that its menu is broader (with sandwiches, pasta, salads, desserts), three different size pies are served, there are several styles of crusts, beer and wine is offered, the dining room has more service, and the décor is modern with TV entertainment. The latest developments include: a salad bar added during June and July, which in the last week of June increased sales before 4pm by 16.8%. Potentially very important: a new 2,400 square foot prototype has been designed, allowing for 20 tables seating 89, retaining the pizza valet service entrance and the visible dough making area, with two large ovens replacing three smaller units, continued offering of domestic and imported craft beers but without the bar area. The new CPP version will save about $270k of initial hard costs (versus the previous $650-$700k), with presumably lower ongoing occupancy expense. Negotiations are in progress for the first company operated location, which could facilitate franchising by being much less costly to build and more profitable to operate.


Recall that there are over 600 non-traditional locations selling Noble Roman’s pizza and other products, generating over $4M in annual royalties with operating profit well over 50%. This business, mostly convenience stores and gas stations, was seriously impacted over the last two years by Covid, has been steadily recovering most recently. In addition to pizza, baked sandwiches, pasta, burgers/cheeseburger pizzas, breakfast and take-N-Bake products have been available. Honey Crisp Chicken was introduced as an “Add-On Concept” but was de-emphasized during the Covid due to supply shortages. The Total Addressable Market (TAM) In the convenience store/gas station grouping is about 150,000 units. Foodservice sales within convenience stores (industry wide) have been growing steadily right through the Covid, accounting for 22.5% of inside sales and 33.5% of gross profit, so non-traditional potential franchisees are increasingly interested in improving their food offerings. While many non-traditional franchisees are small business entities, and were obviously affected by the stay-at-home economy in 2020 and 2021, it is noteworthy that, since the onset of COVID (from 3/20 to 7/22), NROM has signed 85 franchise agreements and 61 new units have opened. In calendar 2022 through 7/15 there have been 21 signings and 17 openings. The typical non-traditional installation costs about $24,500 for equipment and signage and a $7,500 initial franchise fee. A newly instituted franchise agreement calls for a minimum weekly royalty, and expands the economic viability of lower volume locations. Lastly, a new sales associate, with operational and sales experience in the non-traditional sphere has been hired as of July 5, 2022.


Scott Mobley reiterated how difficult the two years ending 3/22 have been, indicating that staffing and supply chain issues have noticeably eased in the last few months. Inflation, however, remains a key issue, and good real estate is in short supply due to minimal new strip center development over the last two years. The average salary for general & assistant managers is up 18.2% since October, 2019, to $51,444, but adjustments at four company locations, reducing salaried managers from three to two, has been a partial offset. Average hourly wage in the same period has increased by 8% to $11.70/hr. As a measure of the improvement in labor productivity, Sales Per Non-Management Labor Hour (SPNMLH) has increased from $52.89 in January, 2020 to an impressive $75.59, up 43%,  in July, 2022.


The CRB Commodity Index, after rising almost 50% from January through June, 2022, has retreated about 15% from its high in the last several weeks. Wheat, Beef, Chicken, and Tomato Paste, after substantial increases, are still at or near their recent highs. Cheddar Cheese Block price, after rising throughout ’21 to $2.00, rose further to a peak around $2.35 by April-May, has now retreated to about $2.15. Offsetting some of the higher cost of goods and in an effort to cut down on waste, operational simplifications have been put in place. Some slower moving menu items have been removed from the menu and the variety of cheese cup sizes has been reduced. To reduce power usage, only 2 of 3 ovens are used during lunch and slower weekdays. Negotiations have taken place with linen, pest control and produce suppliers, as well as their credit card processor. Relief relative to the operating costs of goods and services is “on the way”, the magnitude of which is “TBD”.


The presentation made reference to ongoing uncertainties such as the general economy, the price of gasoline which inhibits local travel, the general rate of inflation, resurgence of COVID variants, and customer resistance to necessary menu price increases.


Over the last year, from June to June, the average ticket is up 8.7%, the percent of sales that is Dine-In is 56.4% vs. 49.4%, 3rd party delivery sales is 13.8% vs. 17.7%, and YTD catering is $98,996 vs. $71,735. Consumers are clearly more comfortable dining out, and entertaining groups at home, rather than picking up or getting delivery.

CONCLUSION: Provided above



Previous reports we have written that more completely describe Noble Roman’s, its operations and its prospects, can be accessed via the SEARCH function on our Home Page.


Noble Roman’s (NROM) has been predictably affected by ramifications of Covid-19 and its variants, as well as supply chain, labor and inflationary challenges. However, the Noble Roman’s Craft Pizza & Pub venue moves forward with nine company operated stores, operating profitably even in their seasonally weakest quarter and still influenced by the Covid. The non-traditional venue, even as it recovers, is generating over $1M per quarter in royalties and can be expected to grow from here.

The development of a new smaller prototype of the “Pub” has the potential to provide an additional growth venue for this fifty year old  midwest brand. Noble Roman’s was generating approximately $3M EBITDA annually prior to the Covid. While a good portion of that EBITDA was consumed at that time by  legal expenses related to long gone franchising activities, that burden has seemingly run its course. At the same time, over the last two years the “Pubs” have more than doubled in size (from five to nine company locations) and could grow very fast if the new smaller prototype is successful. Additionally, the non-traditional venue seems poised to grow again.

Scott Mobley’s summation is pertinent: “…the period from mid-November ’21 through late February ’22 required a constant emergency footing…daily pricing issues, ingredient shortages, personnel shortages, . Covid-19 isolations, distribution disruptions, shortages of equipment parts and service…The necessity of managing daily emergencies has subsided dramatically, and the operating environment during March and April, although still challenging, is very good by comparison.”

Overall, it seems likely that operating results, along with last vestiges of Omicron, have bottomed and the long term potential for earnings and cash flow growth should assert itself. With a total enterprise value of only about $15M, the possibility of record levels of EBITDA (which could exceed $5M in just few years), would provide a handsome return to investors at the current level.


Indianapolis based Noble Roman’s reported their March ’22 quarter, showing higher revenues versus ’21, due to two new “Craft Pizza Pubs”, with earnings and EBITDA subdued by the lingering effects (revenues and staffing) of Omicron and supply difficulties.

Total revenues in Q1’22 were $3.465M vs. $3.282M. Operating Income was $159k, down sharply from $1.161M (when $941k was received from the PPP program). There was a net loss of $137k, after interest of $342k and a $46k tax benefit, versus a profit of $827k in ’21 (as a result of the PPP). Adding back $112k of D&A, the first quarter of ’22 was virtually breakeven from an EBITDA standpoint (a loss of $25k).


The Craft Pizza & Pub Division generated $2.283M of revenues, up from $2.108M, with nine locations operating versus seven in ’21. Cost of sales was similar at 20.8%. Salaries and wages was 31.7% of sales, higher than “normal”, due to staffing challenges, and especially higher than the 10.9% shown in ’21, when PPP was largely applied against this category. In a similar fashion, Facility Cost was 17.2% of sales versus only 5.4% shown in ’21. The total of Packaging, Delivery and “Other” Expenses was well controlled, 20.6% of sales versus 21.2% in ’21. The store level EBITDA margin contribution was 9.9% in ’22 versus a non-comparable 41.7% in ’21.

Based on commentary from both Paul and Scott Mobley, within the earnings release and on the conference call, there is reason to believe that store level margin from this division will improve noticeably in quarters to come. Per Paul Mobley: “the effect of labor shortages, supply chain disruptions, inflationary pressures and the Omicron effect have dissipated significantly starting in March (when labor expense ran 29.0% (versus 31.7% in Q1).  Scott Mobley elaborated that “through aggressive recruiting, company owned Pub restaurants all have a full complement of management staff. We are much better staffed now than many and we have no severe staffing deficits in any company operated units….we are having to pay up for that labor, however, the good news is that our hourly labor productivity has increased more dramatically than the wage increase…..the average wage for hourly employees has increased by 5% in round numbers…..however…..sales per non-management labor hour  has increased by approximately 35%. This and the menu price increase translate into a lower wage expense as a percentage of sales, a trend that began showing itself in March and has continued through April and now into May. Scott Mobley also pointed out that average salaries of managers is up about 7.5% since pre-Covid, partially offsetting the productivity gains of hourly staff.

Reinforcing the indication that sales have firmed in April and May, Scott Mobley described on the conference call that: “Organic sales of stores open well over a year or more, ‘organic’ defined as ‘total less catering and special events’, during the last six weeks are up 11% vs. last year…average check is up 5% so traffic and average check combined, is up about 6%.”.

Also supporting the likelihood of an improving store level margin was Scott Mobley’s breakdown of sales by venue during the last six weeks: Inside dining has been 49% vs 52% a year ago, carryout has been 34% vs. 33%, 3rd party delivery 17% vs 15%. Importantly, a recent new arrangement for third party delivery will incorporate a lower charge by the agent as well as a surcharge over the in-store price, which should make the 17% of sales from 3rd party delivery materially more profitable than it has been.

Based on the above indications, margins at the Craft Pizza and Pubs appear likely to move materially higher than was shown in Q1. The normal seasonal increase in sales, combined with the described improvement in labor costs, as well as 3rd party delivery profitability, seem likely to move margins at the Craft Pizza Pubs at least several percentage points higher than the 10% area of the first quarter.


This portion of Noble Roman’s activities was virtually flat in the first quarter, at $1.03M vs. $1.05M in Q1’21. The EBITDA margin contribution of this segment was $573k vs. $715k in Q1’21. The flat year to year sales, in spite of new openings, is a result of closures likely affected by the ongoing Covid variants. The decline in profitability was also largely due to PPP funds in ’21 largely applied against Salaries and Wages, which was up $95k in ’22. Scott Mobley pointed out that the challenges of Omicron took certain NROM employees away from their normal efforts to support and build non-traditional results, but they have now returned to their traditional job descriptions. In the meantime, fourteen non-traditional locations have been signed in ’22 with fifteen opened and more to come. The non-traditional venue, with over six hundred locations operating before the Covid pandemic, has something less than that number operating today, but there continues to be substantial opportunity for growth. There are many thousands of convenience stores, gas stations, and entertainment centers that are prospects for Noble Roman’s products.


While NROM management continues to search for CRAFT PIZZA & PUB locations, they announced within the first quarter report the development of a new smaller prototype, which is contemplated to be 1,800 to 2,400 square feet in size. It would be suitable for smaller markets and potentially far more interesting to franchisees. It would have a more limited menu, therefore simpler to operate, and an initial investment far lower than the current 3,400 square foot version. As they search for the first site, management obviously feels that the opportunity is substantial and the risk is tolerable.


The current ratio was 2.5 to 1.0 on March 31, 2022, including cash of $808k, compared to 2.3 to 1.0 on 12/31/22.  Current liquidity, along with cash flow generation from operations, should allow for development of at least two Noble Roman’s Craft Pizza Pubs. There is $8M of long term debt plus $597k of convertible debt. One of the corporate objectives is to refinance the $8M, at a lower interest rate and longer term, before principal repayments (at $33,333/month) begin on February 28, 2023., allowing for more rapid expansion of company operated Pub locations.

CONCLUSION: Provided at the beginning of this article

Roger Lipton



Noble Roman’s continues to build on the productive reincarnation of their fifty year old midwest brand. Overall company revenues in Q3 were $3.4M vs. $2.9M in ’20. The net income line was virtually breakeven, as in ’20 (a loss of $79k vs. a profit of $83k). The EBITDA was comfortably positive at $488k vs. $589k in ’20., the largest difference being Salaries and Wages at the Noble Roman’s Craft Pizza & Pubs (NRCPPs)  (29.2% of sales, vs 26.3% in ’20), partially offset by lower cost of sales (21.0% vs 22.5%). The bottom line EBITDA margin at the NRCPPs was 10.6% of sales vs. 13.0% in ’20.

The franchising division (non-traditional & grocery sales) showed Total Revenues of $1,177k, down just slightly from $1,252k, most of the decline due to the grocery segment, which was down $31k. Expenses were well contained and the margin contribution was $685k vs. $770k (58.2% of sales vs. 61.5%). There are still temporary closures within the non-traditional system, not all of which will reopen, but sales should recover as the Covid winds down and there is considerable untapped potential for more non-traditional outlets.

CEO, Scott Mobley, made reference to the ongoing franchising of non-traditional outlets, though potential franchisees are predictably inhibited by Covid-caution. Relative to all outlets, but NRCPPs specifically, Mobley talked about “the inflationary pressures from labor and ingredients, as well as additional costs from managing the supply chain…those restaurants open greater than one year had an AUV of $1.2M and store level EBITDA above 15%. Newer locations opened in 2020 are averaging $1.4M with store level EBITDA from 17-20%. …we anticipate continued gains in both revenue and EBITDA….a menu price increase implemented on November 10,2021 should alleviate the inflationary and supply chain management cost pressures that adversely impacted margins in the third quarter.”

Corporate expenses were well controlled. D&A was higher due to the newer stores, but G&A was up just $46k to $506k with preparation for the newest NRCPPs. The current ratio on the Balance Sheet was much improved, at 4.6 to 1, compared to 2.6 to 1 as of 12/31/20, as a result of the PPP funding in February 2021 and the cash flow from operations.

Management expressed satisfaction, within the earnings release and on the conference call, in the progress made in spite of an unprecedented number of operating challenges. They pointed to the four new successful NRCPP locations opened since March ’20, with a fifth (the ninth overall) to open on December 6 and a tenth well along in lease negotiations. At the same time, the balance sheet is strong enough (with $1.8M in cash and positive cash flow) to support a continued expansion of company locations while awaiting post-Covid interest from potential franchisees for both the NRCPPs and non-traditional locations. Management declined to predict how many NRCPP locations will open in ’22 but lease negotiations are continuing and it seems reasonable that at least three more company stores could open by the end of ’22. CEO, Scott Mobley, on the conference call recounted the impressive efforts made by administrative personnel as well as store crew and field supervisors in coping with the unprecedented operating challenges.


The Covid hangs on, continuing to affect consumer dining habits as well as the availability of labor, and supply channel disruptions create an entirely different set of challenges. However, a long entrenched regional brand, with management committed to protect their personal legacy as well, should have a good chance of emerging stronger than ever and moving the Company to new heights.

Roger Lipton

P.S. We have written extensively about Noble Roman’s, its history and its prospects, which readers can find by using the SEARCH function on our Home Page.







Shown below are articles that Roger has written describing the progress made by Noble Roman’s over the last several years.






Readers can use the SEARCH function on our Home Page for previous articles on NROM





We have written previously about Noble Roman’s and suggest our readers access those articles by way of the SEARCH function on our HOME PAGE.


While NROM has moved up in price over the last few months, there continues to be potential upside. The second quarter provided about $600k of quarterly EBITDA once again, and seems to provide a base on which to build further. As outlined below, potential add-ons “in hand” could take the annual EBITDA to comfortably over $4M annually going into calendar ’22 and be at or above $5M early in ’23. The regional focus with their expanding NRCPP chain seems to minimize operational risk and the total Enterprise Value (currently about $25M) is obviously modest for a well established brand with growth potential.


Noble Roman’s reported their 2nd quarter results, ending 6/30/21. Since PPP loans were received in the 2nd quarter of ’20 and the first quarter of ’21, distorting QTQ comparisons, we will first discuss the six month report, which provides a more accurate picture of the YTY recovery from the pandemic.


For the six months: Restaurant Revenues, from their Craft Pizza and Pubs, were $4.4M, up from $2.5M, as a result of three new Pubs opened during calendar ’20, as well as the ongoing post-pandemic sales rebound. Operating Income was $1.586M almost exactly flat with $1.608M, with both six month periods affected by PPP loans which offset extra expenses. Depreciation was $306k in ’21, up from $164k, as a result of the three new locations, so EBITDA for H1’21 was about $1.8M, a little higher than in ’20. Still, we do not view the $1.8M in H1’21 to be a current EBITDA run rate because of the ongoing operating adjustments, especially in Q1’21. The following discussion of Q2’21 is more indicative of the income and cash flow going forward because of the diminishing, though still material, effects of the pandemic.


Revenues in the Craft Pizza and Pubs was $2.265M vs. $1.407M, as a result of the three successful new Pubs opened during ’20. The store level EBITDA was 14.5% of sales (expected, as stated by management, to improve), not comparable to the 42.8% in ’20 which was driven by the PPP loan/grant. Royalties and Fees from Franchising was $1.046M, up from $905k in ’20 and up sequentially from $890k in Q1’21. Royalties and fees from the grocery segment (becoming relatively immaterial) was down $45k to $317k. The Margin Contribution from the total Royalties Segment (Non-traditional, NRCPP, and Grocery) was $717k, down from $821k, a 59.8% Margin Contribution vs. 75.4% in ’20. This decline in margin on an increase in YTY revenues is due to the receipt in ’20 of the PPP loan, part of which was allocated to expenses of this segment. Q2’21 showed Operating Income of $424k. D&A of $142k and a few small non-cash expenses, which brought the quarterly EBITDA to approximately $600k. We will use this past quarter and first half EBITDA (about $600k/qtr., $2.4M annually) to build upon in terms of potential EBITDA over the next year or two. It is worth noting that NROM has about $15M of tax loss carryforward so that EBITDA, less interest, will approximate the after tax cash flow from operations. The balance sheet includes $2.1M of cash, about $8M of total long term debt, with a current ratio of 4.7 to 1.


Paul Mobley, CFO, expressed his satisfaction that facility cost in  Q2 was lowered to 10.4% from 15.5% last year, due to the higher sales of the first four NRCPPs, the well above average sales at the three new locations, and the new leases. At the end of the call, he interjected that July sales for the seven NRCCPs were up 4.6% over June. Additionally, “August is a transition period where weekends are getting larger, weekdays a little smaller….but it looks like August will be a pretty decent month as well.”

Scott Mobley, President and CEO, described how supply chain (i.e.chicken and packaging) and labor issues were second quarter hurdles but operations were maintained without major disruptions. He noted that when Indiana opted out of the unemployment bonus payments, there was an immediate resurgence of job applications, but the applications dried up when the court reversed the opt out policy. Logically, the labor situation  (for all) will hopefully improve when the Federal programs expire in September. He described the two new announced NRCPP locations with enthusiasm and  noted that signups for non-traditional units are increasing, 19 so far in ’21.

The current sales mix is 47% dine-in, 18% third party delivery (which is not promoted) and 35% takeout (the pizza valet program). In the most recent weeks, carry-out has firmed up as the Covid variant has been in the news. There are no new mask mandates but some customers are obviously concerned.

Scott Mobley talked about a new flatbread pizza that has worked well in test, will be rolled out shortly, and can be done without new operational complexity. He also expressed an expectation that third party delivery charges can be reduced by way of a new local agent.


We build, below, upon the current run rate of EBITDA, to develop expectations over the next year or so.

Three new NRCPPs to come on stream in Q4’21. Two leases are signed, the first to open in late September, the 2nd in October, the 3rd in late Q4. If the three stores average $1.4M of revenues annually, as the last three have done, and generate a store level EBITDA margin of 18-20%, that would contribute $252k-$280k each annually, or $756k-$820k ($788 at the midpoint) for the three locations.

It seems reasonable to assume an additional sales recovery of 5-10% from the existing seven NRCPPs, or $65k/store, bringing the current $1.3M run rate to about $1.4M. The Company has said that the most recent 14.5% store level EBITDA can be improved, especially with the recent 5% menu price rise. If we assume two points of margin improvement on $1.4M, that would be $28k per store, or $196k annually on the existing seven locations.

The non-traditional franchised segment, primarily C-stores and gas stations, numbered close to 650 locations two years ago. Including the royalties and fees from NRCPPs, that segment contributed $1.3-$1.4M of royalties on a quarterly basis, with a margin contribution well above 60%. This segment has been improving sequentially, from a low of $846k in Q4’20 to $890k in Q1’21 to $1046k in Q2’21. If we assume this segment will continue its recovery back to about $1.3M quarterly, that would be about $300k quarterly, with an incremental margin of at least 75%, $225k quarterly, or $900k annualized.

Potentially offsetting the above potential add-ons could be a continued deterioration in the royalties from grocery stores, which could be perhaps $200k of revenues and $150k of EBITDA.

Adding together the above contributions, we get $1.734M of additional EBITDA within the next year or eighteen months. On top of the current annual run rate of $2.4M, that would total $4.134M. This can be considered “in hand” potential over the next twelve months, essentially going into calendar ’22. It can be expected, looking out more than twelve months, that there will be additional NRCPP openings, a new high of non-traditional locations, and additions to the current three franchised NRCPPs.

It does not seem to be a “reach” to think that annual EBITDA could be at a run rate of $5M or more by the beginning calendar ’23. The biggest single variable, which could help or hurt, would be the rate of sales at the fleet of NRCPPs. Mitigating the risk is the fact that the entire fleet of NRCPPs (10 company operated and 3 franchised), are within an hour’s drive of Indianapolis, with the attendant operational focus.

CONCLUSION: Provided above

Roger Lipton



Noble Roman’s (NROM) announced today a lease signing for their ninth company operated Noble Roman’s Craft Pizza and Pub location, to open in Franklin, Indiana, just south of Indianapolis.

While NROM is relatively small, among publicly held restaurant chains, this forty year old brand has been re-invented over the last five years, in particular with the creation of its flagship Noble Roman’s Craft Pizza and Pub (NRCPP). Our previous write-ups, describing the Company, its history and its prospects, can be accessed using the SEARCH function on our Home Page.  As we have previously suggested, the public valuation of NROM should follow, as the Company produces  steady fundamental progress

Recall that Noble Roman’s (NROM), with the first NRCPP location, in Westfield, IN now over four years old, opened three highly successful units during 2020, bringing the current total to seven. The Franklin unit will be the second of three expected during the balance of 2021. There are three franchised locations also operating, so NROM will enter 2022 with thirteen units in their expanding NRCPP system, all within a ninety minute drive from  Indianapolis.

The latest location will be about 3,600 square feet, representing the somewhat smaller  (10-20%) version of the first NRCPPs, and this size location (costing about $750k) and including their innovative curbside “pizza valet” carry-out service,  has shown a capability of generating  annualized volumes  over $1.5M with a store level EBITDA margin at 20% or more. It is worth noting that the Pizza Valet service, introduced over a year before Covid-19, served the Company well during 2020 and should alleviate the traffic risk from any sort of resurgence concern.

The recovery from the pandemic affected 2020, including their 650 franchised non-traditional locations, and new unit growth of the NRCPP system should allow for expanding cash flow and earnings. The stock has moved up materially (from about $0.50 to $0.80-0.90) but the Enterprise Value, still under $30M, continues to be modest relative to the prospective earnings and cash flow.

Roger Lipton




Noble Roman’s (NROM) has dealt with the pandemic related challenges better than most, maintaining corporate liquidity, improving their balance sheet materially, and controlling operating expenses well. The prospect for increasingly profitable growth has been enhanced by the opening, in the heart of the pandemic, of three additional Noble Roman’s Craft Pizza and Pub locations. The seven current NRCPPs can now be expected to annualize at an indicated average of about $1.4M, with store level margins in the high teens generating a cash on cash return of 35% or more. Moreover, If the three latest openings, annualizing at about $1.6M, are any indication, future results could be materially better than that. At the same time, the 650 non-traditional locations, mostly in C-stores and entertainment facilities, generate annually over $4 million of royalties and can be expected to grow as well. The Company has reported an EBITDA of approximately $3M in recent years, but that has been reduced by high interest cost and legal expenses, both of which should be much lower in the future. Over the next twenty four months, it is not hard to project a corporate EBITDA run rate between $4M and $5M, from a combination of company NRCPPs, steady progress in the non-traditional segment, and franchised NRCPPs. As the Company results reflect the expected steady progress, with fewer non-operating adjustments, it seems likely that NROM will be revalued upward.

Relative to the expected stock performance, it should be noted that a substantial holder (Robert Stiller, founder of Green Mountain Coffee), who purchased over 3 million shares of stock something like 10 years ago, has been a seller recently of several hundred thousand shares (about 79,000 shares this month). While he has not directly spoken to the Company, his most recent filing indicates his ownership at 2.8M shares, about 12% of the outstanding shares. We expect that, if the fundamentals of Noble Roman’s develop as expected, the Stiller holdings, worth about $1.1M at the current price will be absorbed by new buyers. His apparent willingness to sell shares at this level could provide an opportunity to a value oriented small cap stock investor.


Noble Roman’s (NROM) reported their March, 2020 quarter last week. Results, as indicated with the ’20 yearend report and subsequent commentary, showed store level operations at the seven company operated Noble Roman’s Craft Pizza & Pub (NRCPP) locations largely recovered from the pandemic, and the 650 franchised non-traditional units steadily recovering (though mores slowly) as well.

We have written about Noble Roman’s previously, and readers can use the SEARCH function on our Home Page to access previous articles. Recall that all company operated NRCPPs are in the Indianapolis metro area. The first four were in Westfield (now open for four years), followed by Whitestown, Carmel and Fishers. The three newest NRCPP locations are in Brownsburg, McCordsville & Greenwood, opened during calendar 2020, in combination materially improving the previous average unit volumes.   The non-traditional locations were not affected as much by the pandemic as the NRCPPs, percentagewise (perhaps 50% at worst versus 75% for the NRCPPs. However, discussed further below, this segment, while steadily recovering, was still down about 30% YTY in the March quarter. Recall also that NROM received $941k of PPP funds in the March quarter, which was obviously a material contribution to the Operating Profit of $1.2M.

Total Revenues in the 3/31/21 quarter were $3.3M, up from $2.7M YTY. The Operating Profit was $1.2M vs. $589k. The Operating Income was improved as a result of the four original NRCPPs almost recovering their pre-pandemic AUVs, the three new NRCPPs doing even better, and the reimbursement of $941k in PPP qualifying expenses, partially offset by the lower fees from non-traditional franchisees ($890k vs. $1,278k). It should be noted that the non-traditional royalties were up sequentially from the $840k in Q4’20.

The total $941k of PPP funds were allocated as follows: $371k toward NRCPP labor, $211k toward NRCPP occupancy and other expenses, $140k toward non-traditional expenses, $29k toward company operated non-traditional, and $190k toward corporate expenses.

The NRCPPs generated $2,108k of Revenues vs. $1,092 last year, and $880k of store level EBITDA vs. $121k.  Adjusting for $371k of PPP funds applied toward labor and about $210k toward occupancy expenses, indicated store level EBITDA would have been $299k or 14.2% of sales. This compares against 11.1% store level EBITDA in Q1’20. The Company points out that both quarters are not “normalized” since expenses were incurred, not necessarily reimbursed, to cope with the pandemic. In any case, the higher volumes from the most recently opened locations should point to improving average store level EBITDA in quarters to come.

The franchising venue, consisting mostly of non-traditional stores, secondarily-grocery store fees, lastly- revenue from the three franchised NRCPPs (in Lafayette, Kokomo and Evansville, IN) reported $1054k of royalties and fees vs. $1,467k. The grocery segment was down $25k to $164k. The non-traditional portion was $890k vs. $1278k. The margin contribution was $714k vs. $977k, after crediting $140k of the PPP funds, so the pre-PPP margin was $574k.

There is one company operated non-traditional location, in a hospital, that generated $116k of revenues and $27k of EBITDA margin, after applying $29k of PPP funds.

Net income in Q1’21 vs. a year ago, both quarters obviously affected by the pandemic, with a profit of $827k vs. a loss in ’20 of $255k. This year was still negatively affected by the pandemic, offset by the PPP receipt. Last year was affected much less by the pandemic but included a non-cash write-off of unamortized loan cost of $658k. Importantly, even without the PPP receipt, and in spite of the continuing operational distortions related to the pandemic, Operating Income was a positive $220k and $165k of D&A provided positive EBITDA of $385k.

In terms of future expectations, as described below from the conference call, operating margins at both the NRCPPs and non-traditional franchising can be expected to improve, from normal seasonality, pandemic effects unwinding, and the inclusion of three very successful newly opened NRCPPs.


Paul Mobley, Executive Chairman and CFO, reviewed the financials, and Scott Mobley discussed operational considerations. Aside from the financial details described above, Paul Mobley pointed out that the $941k PPP receipt in Q1 is expected to be forgiven, just as the $715k received in ’20. He indicated that normalized Operating Income was about $700k in the quarter, since there were pandemic related operational adjustments, partially offset by the $941k PPP receipt. He indicated that the uncertainties related to the pandemic have created hesitancy among potential new franchisees of both the NRCPPs and the non-traditional venue. In spite of that, the first NRCPP franchisee (in Lafayette and Kokomo) is looking for a third location and 12 new non-traditional franchisees have signed up so far this year. Mr. Mobley pointed out that the balance sheet current ratio is a healthy 3.8 to 1 compared to 2.6 to 1 at 12/31/20. The $1.9M of cash plus expected cash flow allows for the Company to plan three new NRCPPs in ’21, each costing about $750k, while still maintaining adequate liquidity.

During the Q&A, Paul Mobley described how the first quarter, while encouraging, had additional pandemic-related expenses that were not fully covered by the PPP receipt, so sales and operating margins in the quarters to come should be more normalized and “significantly improved”.

Scott Mobley described how the break down between dine-in and off premise sales is now about 50-50, versus 35% dine-in just 4-6 weeks ago, varying between locations. He also indicated that lunch ran about 22.5%, dinner 77.5% Pre-Covid. Lunch fell off to about 15%  early in the pandemic, and has recovered only to about 17.5% so is expected to build further as customers return to the workplace. Online ordering was only 8.5% Pre-Covid, grew to 35% and now is running about 20% of sales. Importantly, delivery, which the Company does not promote, ran under 10% of sales pre-Covid, jumped to 22.5% of sales and is now running about 18%. The Company has recently been “working with a third party alternative” which will reduce NROM’s cost by about 50%, thereby saving something over two points of store operating expense from what it ran in Q1’21  (4.5% of sales, up from 3.2% in ‘20). Scott described with pride how, in spite of the unprecedented labor shortage, the Company has met the challenge with recruiting, training and motivation. The Company has kept the labor expense under control. Adding back the $371k credit of PPP funds to the $229k of reported salaries and wages would indicate a labor expense of $600k or 28.4% of sales, versus 29.1% a year ago.

Also during the Q&A, Scott Mobley described how the Company  has engineered the NRCPPs to provide speed (2.5 minutes for the traditional crust, about 6 minutes for Sicilian) along with a high quality end product. The stock equipment from the manufacturer was fine tuned to mesh with the long successful dough recipe that was also modified accordingly. He also described some aspects of the raw ingredient quality: 100% real meats with no fillers, tomatoes processed in the field and never frozen, as well as the never frozen dough. In terms of the varied menu, including pasta, sandwiches and salads, each ingredient can play multiple roles on the menu, which provides velocity for the distributor, higher volume and pricing control with the manufacturer and simplifies handling procedures for employees.

CONCLUSION: Provided at the beginning of this article




Indiana based Noble Roman’s (NROM) has been publicly held for decades, participating in our (then) annual Small-Mid Cap Restaurant Conference back in the 1980s. Readers can confirm within social media commentary the warm recollections that mid-west residents have from their youth, not only in relationship to the pizza but the legendary breadsticks served with a spicy cheese sauce. The Company has been reinvented in the last five years, creating and establishing the ten unit (7C+3F) Noble Roman’s Craft Pizza & Pubs as an attractive growth vehicle. In addition, NROM can build upon their nationwide system of over 600 non-traditional locations. The three 3,600 sq.ft. Pub locations, opened in the middle of the pandemic, are annualizing at well over $1.5M, with an indicated store level EBITDA above 20%, that would generate a cash on cash return of approximately 50%. The total of seven existing company locations are annualizing at $1.4-$1.5M, with an EBITDA margin in the range of 17-20% that generates a cash on cash return of 34% to 43%. The Company was solidly profitable in ’20, in spite of the pandemic, and should be more so as existing Pubs normalize post-pandemic and new units are added. We project the possibility that within eighteen months, there could be 10-12 company Pubs operating, further modest growth in the non-traditional segment, and a corporate EBITDA in the area of $5M, even without significant Pub franchising. The balance sheet has a manageable long term debt component of $6M, net of the $2M in cash. Since the value of the common stock is under $10M, an Enterprise Value of under $16M is obviously very modest relative to the brand value and the EBITDA potential. Obviously a micro-cap valuation at this point, NROM has the opportunity to grow substantially,  attract a larger investment following and be revalued substantially upward.


When a branded chain has been around, and publicly held, for four decades, there is almost always some “baggage” and Noble Roman’s is no exception. Skipping over ancient history, within a few years before and after the financial crisis of ’08-‘09, Noble Roman’s signed up something like 700 non-traditional licensed locations (c-stores, gas stations, hospitals, bowling alleys, etc.). Unfortunately, in ’14 and ’15  (out of Noble Romans’ control) a number of c-store chains re-franchised many locations and the new franchisees proved to be poor operators and/or financially unreliable. Determined to protect the brand, Noble Roman’s management did their best to enforce the franchise contracts, including collection of the royalties (and subsequent legal expenses) receivable. This effort has gone on through the last six years and culminated at the ’20 year end with a full reserve of the last of the long term royalties and legal expenses receivable. It is worth noting that none of the royalties and legal expenses due are from current franchisees. Management has emphatically stated that the royalties now shown as receivable, $879k at 12/31, from the franchise segment that generated $5.0M of revenues in ’19 and $4.1M in pandemic driven ’20, are all current.

The last five to six years have been characterized by steady operating earnings, but corporate cash flow has been reduced by legal expenses and high interest rates on debt. Bottom line GAAP results have in turn been hit by increased reserves against receivables.  If the Company meets its operating objectives, all of these negative factors: burdensome interest rates, high legal expenses, and receivable adjustments would not apply in the future.

For perspective, we recently compared the “state of the Company” at 12/20 versus 12/14, six years ago, covering the period in which the substantial improvements as described above have taken place. Revenues in ’14 were $7.9M, almost all of it royalties, and Net Income Available to Common Shareholders was $1.59M. There was $3.3M of long term debt, offset by $200k of cash. Net (current) Accounts Receivable were $1.7M. In relationship to the “Other Asset” account, just recently reduced to almost zero, it was $5.0M in ‘14, up from $3.1M in ’13, and those receivables were a heavy burden in the succeeding six years.

Six years later: the fourth quarter of ’20, while still affected materially by the pandemic, can be considered to be approaching normality. Revenues ran at an annualized rate of $13.2M. In the full calendar year, there were a number of material non-cash adjustments (to be discussed later) but Net Cash From Operating Activities $1.7M, and, with a tax loss carry forward, that is almost the same as the $1.59M available to common shareholders in ’14. It is true that the first PPP loan of $715k contributed to the calendar ’20 result, those funds replaced lost sales and related costs so the normalized result without PPP would likely not have been much different. The balance sheet is further indebted today than in ‘14, with $8M of long term debt at 12/31/20, offset currently by $2.0M of cash but there is no principal due for several years. Most importantly, Other Assets, including Long Term Receivables, has been reduced to almost zero, so reserve adjustments should not recur, as was the case from ’14 through ’20. Critical to the public shareholder base, the average number of shares fully diluted is up only about 11%, to 23.5M over the last six years.  The absence of major shareholder dilution is likely due in no small part to the fact that Paul and Scott Mobley personally own about 23% of the shares outstanding so have every reason to minimize dilution. They have also voluntarily reduced their salaries during the last several years, committing to annual increases of no more than 5% in the future.

In summary, results the last six years have been affected by a variety of operational and financial adjustments, always difficult in a publicly held environment, but the net cost has been relatively modest , the public shareholders were well protected and the Company now emerges in its best position over many years.


The fourth quarter, while still materially affected by the pandemic, is more indicative of the current “state of the Company” then full year results because the pandemic affected the twelve months much more than the fourth quarter, which was approaching normalization. Fourth quarter results were also not benefited by incorporation of the PPP loan proceeds, as was the case earlier in ’20.

In the fourth quarter, Total Revenues were $3.3M, up from $2.6M, primarily as a result of three new very successful Noble Roman’s Pizza and Pub locations that opened during calendar ’20. Operating Profit before interest, valuation adjustment and taxes was $295k vs. $234k. After interest of $337k (about 45% of which was non-cash amortization of previous loan cost and non-cash PIK interest expense) adjusted (for cash interest) pretax income (before the Increased Reserve for Long Term Receivables) was about $110k. Adding back depreciation of $120k provides an EBITDA of about $230k, still positive in the midst of a pandemic.

By segment in Q4:

The Pubs produced $2.126M vs. $1.136M of Revenues, as a result of three successful openings. Cost of sales was 22.4% vs 22.3%. Salaries and Wages was 27.4%, an improvement of 260 bp. Facility Costs improved 260 bp to 13.6%, as a result of higher sales and lower rents at the three new locations. Packaging Costs were constant at 2.8%. All Other Operating Expenses were 60 bp better at 17.7%. The EBITDA margin contribution was up by 570 bp to 16.0%. Same Store Sales for the four original Pubs was not disclosed and we assume that those volumes, which improved through ’20, were still running modestly behind Q4’19. Overall, the Pubs improved substantially in all important respects, especially impacted by the three new locations.

The Franchising segment produced Royalties and Fees of $1.220M, down slightly from $1.267M. The grocery portion was down $114k to $187K and the Non-Traditional/Pub portion was up about $67k to $1.033k. Backing out our estimate of $75k of royalties/fees from Pubs, it appears that Non-Traditional fee generation was down very modestly, a result of new store fees (signings and openings) offsetting stores (e.g. bowling alleys, hospitals) temporarily closed and lower volume permanent closings. Overall, this segment has steadily recovered throughout the pandemic, is virtually back to the level of a year ago, opened 20 locations in ’20 while permanently closing the same number of presumably lower volume locations. There remains the possibility of steady growth from this segment.

The third segment, financially immaterial, is the one company operated non-traditional location, located in a Covid-limited-access portion of a hospital. This location had revenues of $105k in Q4, down from $174k, and showed a loss of $3.4k vs a profit of $11.7k.

Calendar ’20 Results

Operations were materially affected by the pandemic but the Company remained profitable throughout the year. The major accomplishments included the opening of three very successful company Pubs (for a total of seven), the third (and highest volume) franchised opening (in Kokomo, IN), a refinancing of the long term debt, the receipt of a (now forgiven) $715k PPP loan, the signing and opening of 25 and 20, respectively, new non-traditional locations, the operational adjustments that produced a still profitable year in spite of the pandemic. Also of material importance was the decision to fully reserve $4.9M for the collection of long term receivables from franchisees that have left the non-traditional system, therefore reducing future book keeping adjustments as well as legal expenses in the pursuit of those receivables.

The Pub division generated revenues of $6.2M vs $4.8M, as a result of the new locations. The margin contribution was $1.3M (20.5% of revenues) vs. $580k (12.0%). The PPP loan (since forgiven) of $715, was reflected in these numbers, largely in a reduction of Salaries and Wages (to 21.8% of revenues) an improvement from 30.0%.

The Franchising Venue generated revenues of $4.1M, down from $5.0M, with a margin contribution of $3.1M (64.1% of revenues) vs $4.1M (66.1%).

The year as a whole showed Operating Income of $2.3M. Adding back D&A of $382k, Corporate EBITDA was about $2.7M. Interest expense was $1.9M but $658k of that was non-cash writeoff of unamortized previous loan discount and $221k was non-cash PIK expense. Subtracting cash interest of about $1.0M from $2.7M of EBITDA provides cash generation of $1.7M. Subtracting the $.715M from the PPP loan, since forgiven, indicates that the Company remained cash flow positive, on its own, in spite of Covid-19, a fairly uncommon feat in the world of publicly held restaurant chains.


CFO and Executive Chairman, Paul Mobley, provided the financial update. In addition to the numerical summary, he strongly reiterated that, in the wake of reserving completely for Long Term Receivables, the $879k of net Receivables at yearend are current and collectible. Legal expenses will presumably be  minimal, employed when collectability is likely, and amounts when collected will be reflected in income. The Non-Traditional segment continues to have growth potential. The Company sold 25 new locations and opened 20, with 20 older locations closing. Already in Q1’21, there have been seven signed up and seven openings. Significantly, an additional $940k has been received under the CARES act, expected to be forgiven.

Scott Mobley, President and CEO, provided an operational update. He described some of the challenges of adjusting to pandemic requirements, including expanded and more effective use of the pizza valet curbside pickup service, adjusting service from fast casual to full service to deal with social distancing concerns, and handling sharply higher online ordering. Supply chain and staffing challenges were unprecedented, dealt with as needed, including the temporary use of supervisory personnel to fill in for store crew, and this flexibility and dedication is a corporate strength. Commodity prices, cheese in particular, fluctuated more than normal. Third party delivery continues to not be a priority, running at a relatively modest 15% of sales, since NROM is not anxious to lose control of “the last mile”. The Pizza Valet curbside pickup service, introduced over a year before the pandemic, has been improved further, enjoyed by both customers (who better control the off-premise experience) and crew (who earn tips). To whatever extent third parties are used, the expectation is that competition among them will serve to reduce the loss of  profit margin  from their use.

In response to questions, management reiterated the intention to open several new company operated Pubs in the current year. Paul Mobley indicated his optimism that there still could be some collection of  the now fully reserved Long Term Receivables. Legal assistance will be employed only when success is highly likely and recovery will be reflected in income when received.


The current balance sheet (including the $940k received in ’21 from the CARES ACT, and expected to be forgiven, reflects about $2M of cash and $8M of long term debt. The Company has indicated their intention to open three new company Pubs in ’21. While no guidance has been given beyond ’21, there seems a likelihood of at least three more locations in ’22.

Without consideration of more franchised Pub locations or non-traditional growth, we think it likely that eighteen months from now there will be five more company operated Pubs, bringing the total to twelve. If twelve pubs average $1.4M and generate a store level EBITDA of a reasonable 17%, that would generate $16.8M of revenues and $2.9 store level EBITDA. Adding $4.0M of Margin Contribution from the Non-Traditional system, as generated in ’19, provides $6.9M of EBITDA from those two divisions. The grocery division might fade further but modest growth in franchising could offset that.  G&A has been running about $1.7M for the last three years, and if we assume it becomes a run rate of $1.9M eighteen months from now, that would provide a corporate EBITDA run rate of $5.0M.

CONCLUSION: Provided at the beginning of this article

Roger Lipton




Noble Roman’s (NROM) reported their third quarter results, which were once again profitable in spite of the pandemic. More important than the exact operating results is that (1) Same store sales for the original four Noble Roman’s Craft Pizza and Pubs (NRCPPs) have steadily recovered and were negative by only 2% in October. (2) The two most recently opened NRCPPs look like they will generate sales and store level margins almost 50% higher than the first four locations.  Brownsburg and Greenwood, IN have changed the NROM equation. Average store level EBITDA margins among the current six locations  can now be expected to approximate 18%, generating a 40% cash on cash return on investment, among the best in the restaurant space.  (3) The balance sheet is the strongest in many years (4) The corporate cash flow has been positive all year, in spite of the pandemic, and can be utilized in the next several years for growth rather than debt service.

The corporate EBITDA which has been in the area of $3M in recent years, with much of it necessarily servicing debt, could expand over the next eighteen months to something on the order of $5M, most of which can fund growth. Though the NRCPP concept is still small among publicly traded restaurant companies, with only six (soon to be seven) company units and three franchised locations, the Brand has legs, in the Midwest at the very least, which leaves a very long runway for growth from this modest base in Indianapolis. The 650 unit non-traditional franchised locations, while currently inhibited by the pandemic,  provide another long term growth opportunity.  The Enterprise Value currently is in the range of $16-$17M, obviously a very modest valuation considering the cash flow considerations as described below.


Noble Roman’s, Inc. (NROM) reported their third quarter, ending 9/30, results on Tuesday. The quarter was profitable, as same store sales for their flagship Noble Roman’s Craft Pizza Pubs chain improved steadily through the quarter. The non-traditional fleet of over 600 franchised C-stores, convenience stores, etc., is recovering more slowly but the franchising division was solidly profitable as well. Overall corporate results for the quarter showed Operating Income of $411k. After deducting $328k of interest, $105k of which was non-cash, pretax income was $83k. GAAP EBITDA for the quarter, adding back $98k of D&A to operating income, was $509k.

The now six unit Company operated Noble Roman’s Craft Pizza & Pub (plus 3 franchised locations, including Kokomo which opened yesterday) showed a modest negative comp for Q3 of 6%, sharply improved from a negative 28.1% in Q2. October, importantly was down only 2%. Store level EBITDA of the 5 NRCPPs in Q3, improved to 13.2%, up from 11.8% in 2019, with the addition of Brownsburg that opened 3/25. The Company noted that, after adding back 1% cost of sales from pandemic related commodity shortages, about 2% from additional pandemic related operating expenses, and 1% from non-cash lease expense. the Adjusted store level EBITDA was about 17%. It was pointed out that Brownsburg is projected  to do about $1.7M of annual volume and contribute $383k (22.5%) EBITDA at the store level, generating a 59% cash on cash return on the approximate cash cost of $650k. Management pointed out on the conference call that the 3 points of pandemic related expenses applies to these numbers as well, so the post-pandemic margin could be even higher.

The non-traditional franchising venue is recovering more slowly, with revenues of $1,252k vs, $1,681k, down 25.6%. The margin contribution from this segment was 62.5%, down from 69.7%. The uncertainty regarding the duration of the pandemic make it unclear how quickly the results from this division will recover.


The sixth company operated NRCPP location opened to record weekly sales in Greenwood on 10/12. Management indicated, on the conference call, the possibility that sales and margins could exceed those of Brownsburg. Though Greenwood is only open one month, so it is early to draw conclusions, Greenwood sales after one month are exceeding those of Brownsburg at the same point. The third franchised location, in Kokomo, IN opened two days ago. The seventh company location opens just after Thanksgiving in McCordsville, IN. The Company refrained from making projections relative to future openings, but reflected on the comfortable balance sheet ($1.6M in cash) and the consistently positive cash flow, concluding that they are continuously screening location prospects and an eighth location could open in Q1’21.


The most important consideration in terms of investment prospects for any  restaurant chain is the return on investment at the unit level, which depends on the “operating profit”, or “store level EBITDA” compared to the investment per unit. That outlook, while more than adequate prior to the recent openings, has been enhanced substantially by Brownsburg and Greenwood. The four original NRCPPs, the first of which opened in January 2017, produced an average of $1.2M of sales in calendar 2019, with an average operating profit of 12%. A case can be made that there were some non-recurring factors, amounting to at least two points, that affected those results, including the operating learning curve from introducing a brand new concept, shockingly high Common Area Charges at two locations, third party delivery charges, and some degree of cannibalization of sales from the highest volume original Westfield location. A 14% Adjusted Return generates $168k of average annual operating profit, or a very acceptable 26% cash on cash return on the $650k of average investment per store. However, the fifth and sixth location look like they will do something like $1.7M of sales, with a normalized operating margin above 26%. That would bring the average annual volume to $1.37M with an average store level EBITDA margin of $261k, which is 18% of sales generating a 40% cash on cash return. This  is obviously a huge improvement in the outlook in the wake of the two most recent openings. Future openings can, of course add or detract from the 18% on $1.37M but it seems like a reasonable bet that McCordsville and others will at least match the new average.


Scott and Paul Mobley, CEO and CFO respectively, commented further that labor is a continuing challenge, especially with the masking requirement but the Company has managed to adequately cope. Relative to the non-traditional venue, 20 new locations have opened this year, in spite of pandemic related hesitancy of potential franchisees, matching the 20 lower volume locations that have closed. The dine-in portion of sales at the two newest NRCPP locations is about 40%, and it varies more widely at the first four locations. Partitioning and other physical adjustments have allowed for almost 100% of pre-pandemic seating, but customer attitudes still affect the sales mix. Third party delivery, which hurt margins in 2019 and early 2020 and which the Company has never promoted, has trailed off to minimal levels. The proprietary Pizza Valet curbside pickup service has been embraced by both customers and staff (who like the tips). In terms of the number of potential NRCPPs in the vicinity of Indianapolis, Scott Mobley referred to the twenty Buffalo Wild Wings as just a starting point, so the geographical pipeline close to home is substantial.


The balance sheet showed $1.645M of cash at 9/30, up from $1.577 at 6/30, with Greenwood (now open) and McCordsville (to open by December 1st) almost fully funded. Corporate EBITDA was over $500k in the third quarter, obviously still affected by the Pandemic, obviously with no contribution from the new Greenwood location. Nine month reported EBITDA was $2.3M, which included the forgivable $715k PPP loan, but that loan replaced lost sales and profits so the normalized EBITDA would likely still be in the same range. It seems reasonable that 2021, in a more normalized environment, with Brownsburg (opened in March’20), Greenwood (opened in October ’20) and McCordsville (about to open) could generate something at or above $4M of corporate EBITDA. As opposed to last several years, when debt service absorbed a large part of corporate cash flow, aside for the possibility of principal payments out of excess cash flow, as defined, there are no principal payments due on the $8M of current long term debt until 2023. Management has not committed to a further schedule of company NRCPP openings, primarily because of pandemic related uncertainties, but they have demonstrated an ability to open stores within 90 days of a lease signing, are continuously evaluating locations, and it would be surprising if two or three new company operated locations don’t happen in 2021. It is not hard to picture therefore a $5M run rate of corporate EBITDA within 18 months from today.

CONCLUSION: provided above

Roger Lipton



Everyone likes a success story, and we could all use one, with uncertainty on so many levels these days.

Noble Roman’s (NROM) continues to make substantial progress, even with the ongoing challenges of the pandemic. We have written in the past of their improved balance sheet and the expansion of their Craft Pizza and Pub concept (NRCPP), now several years old since inception. We suggest that interested readers use the SEARCH function on our home page for our previous reports on NROM.

Recall that the Noble Roman’s brand has been well regarded by consumers over more than four decades, especially close to home in Indiana and surrounding states. Social media commentary ever since the Westfield, IN NRCPP opened several years ago has been consistently complimentary, often referring with nostalgia to an experience in their youth at Noble Roman’s.

Putting the latest developments into context, the Westfield opening, the first NRCPP was the best of the first four company openings, generating an initial annual sales volume over $1.5M, with store EBITDA margins in the twenties. This obviously generates a very high cash on cash return, for a 4,200 square foot facility that costs about $650k to put in place. The next several NRCPP units have been successful and generated an acceptable return for company operated locations, but the average volume (in 2019) for the four locations came in at $1.2M, with an overall store level EBITDA of 12%. There were several mitigating factors (unexpectedly large CAM charges at two locations, non-cash lease expense, and heavy delivery charges) so the “adjusted” store level EBITDA was more like 17-18%, but this was clearly less than Westfield had originally generated. The resultant average 31-33% cash on cash return is more than adequate for company locations, but materially less so for franchisees that pay a 5% royalty, have advertising expenses and local G&A. Still, the Noble Roman’s brand is well enough known that two franchisees successfully opened stores within the last year or so, and the first (with a location in Lafayette, IN) is about to open a second location, in Kokomo, IN.

With that as background, NROM had the courage to open their fifth company operated NRCPP location, on March 25th of this year, virtually the worst week of the pandemic. The Pizza Valet curbside pickup service, introduced in January, 2019, served the effort well, and the Brownsburg store “shocked the world” by doing over $50,000 the first week, still doing comfortably over $30k at last report. The sixth company location, in Greenwood, IN, opened a week ago and the Company announced yesterday a record opening week, at almost $60k. A breakdown of in-store vs. off-premise sales was not provided, but the Pizza Valet service which has been enhanced over the last six months, was no doubt instrumental. It is worth noting that the Company has introduced a “smaller box”, 3,700 square feet, 500 square feet smaller than the 1.0 version, which is designed to generate at least as much volume with quality and service improvements.

The result is that six company locations can now be said to be annualizing at $1.4-1.5M, generating  store level EBITDA close to 20%, perhaps even higher if delivery charges and CAM charges become less of a burden. The $280k-$300k (generating 43-46% cash on cash return) estimated annualized store level EBITDA is obviously a far more attractive cash on cash return than the 31-33% estimated above, could and should be important to attracting more franchisees.

It is equally important that the Company, while reporting their Q2 results on the mid-August conference call, indicated that YTY comps for the 4 original company stores had improved steadily from March to July, from down 25-30% at the beginning of the pandemic to a single digit decline in July, much better than most of their restaurant peer group. Dining rooms are open 100% in Indiana, but social distancing still limits the practical capacity to about 50% in-store, so the Pizza Valet service, enhanced by the Company and embraced by customers, will no doubt be a continued strength going forward.


The Company’s progress this year, coping with the pandemic and moving the NRCPP expansion vehicle forward, should provide a new level of confidence and investor enthusiasm for NROM stock. This is an admittedly small Company and NROM often trades thinly, as stocks often do when Company value is such that sellers are hard to find. Still, the news should continue to be encouraging relative to the sales and margins at Company NRCPP locations, with the seventh Company location to open in Q4 and the third franchise location as well. In spite of the uncertainty relative to the restaurant industry in general, NROM seems capable of distinguishing itself from the crowd. Considering the much improved balance sheet, the demonstrated long term appeal of the brand and the long runway for growth, as higher earnings and cash flow are demonstrated the real world value of the Noble Roman’s company should be increasingly reflected in its stock price.

Roger Lipton