SEC Doesn't Like Noodles' 'Guests'


Is a restaurant customer truly a "guest" of that establishment?

To many restaurants, the customer is a guest, a person invited to spend some time within its walls, eating and drinking and hopefully spending lots of money.

But, to the Securities and Exchange Commission, the term needs to go away. In the run-up before Noodles & Company's June initial public offering, the SEC took issue with the Colorado chain's use of the term "guest" to describe its customers. (The Wall Street Journal first reported the dispute.)

The SEC first asked Noodles to quit using the term "guest" to refer to customers in April. In response, attorneys for Noodles  responded that the Merriam-Webster definition of "guest" includes "a person who pays for the services of an establishment (as a hotel or restaurant)."

Indeed, several restaurant chains use the term "guest" over "customer," because that apparently sounds better than "diner," "patron" or, at least according to this thesaurus here, "sucker." Companies that use the term "guest" in SEC filings include Kona Grill, Ignite Restaurant Group, Ruth's Chris Steak House and Bravo Brio Restaurant Group.

Some restaurant vendors never use the term "customer." "POS systems all over the world call customer counts 'guest counts,'" said John Gordon, a San Diego-based restaurant consultant.

But the SEC was having none of it.

"We note that the term 'guest' does not appear to clearly represent the reality of the business transaction that takes place when a person purchases goods and services and is required to provide monetary value in return for such goods or services," the SEC wrote in a letter to Noodles CEO Kevin Reddy in late May. It asked the company to revise its use of the term guests to describe its customers.

Noodles relented, and the term "guest" disappeared from the chain's public filing lexicon.

We're not the biggest fans of the word "guest" to describe a customer, either—it's typical PR puffery, if you ask us. Then again, we could think of a few things more worthy of the SEC's time than word usage.

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