Here’s What Could Have Led To Jack In The Box Selling Qdoba

Photo: Bobak Ha’Eri | Wikimedia Commons

This morning, news broke that fast-casual Mexican brand Qdoba had been sold by Jack In The Box. The restaurant chain was sold to Apollo Management Group, who also owns Chuck E. Cheese’s, in a $305 million deal expected to close in April 2018.

USA Today attributes a number of factors that led to Qdoba’s less-than-ideal fiscal year. Company-owned same-store sales dropped 4 percent in the fourth quarter of 2017, with overall same-store sales dropping 2 percent. There was also a 50 percent hike in avocado prices that definitely didn’t help.

Qdoba was purchased by Jack In The Box in 2003 when they only had 85 locations. In the 14 years since, the brand grew drastically under Jack’s ownership with more than 700 restaurants in the United States.

This, however, was during the era where fast-casual eateries like Chipotle were flourishing.

With a concept so similar to Chipotle, it was understandable that Qdoba had trouble finding a way to differentiate itself from the Steve Ells-founded brand. Between the two, Chipotle was much more recognizable.

It also didn’t help that Chipotle began serving queso dip this year, one of the few things that set Qdoba apart from the fast-casual chain. Ultimately, there wasn’t too much that made Qdoba stand out from other fast casual spots.

Earlier this year, Jack In The Box announced that they would prioritize value, soon announcing the release of a 2018 value menu. During that announcement, the burger chain kept pretty hush about the future of Qdoba.

Jack In The Box Chief Executive Lenny Comma did mention earlier this May that having two different business models has impacted the value of the company as a whole. He also said in a second quarter earnings release that one of the things that would cause Jack to reconsider their plans for Qdoba was valuation. Paired with higher wages affecting restaurant margins, the sale to Apollo began to make much more sense.

So what’s Jack planning after the sale goes through?

According to the release, Jack in the Box will use the proceeds of the deal to retire outstanding debt.

Hopefully, under Apollo, Qdoba will have a second chance to rebrand themselves into something fans will flock towards. An al pastor spit, for example, would blow our minds.