Dive Brief:

• Qdoba is offering $100,000 cash to franchisees “after opening for any commitments to open new restaurants by September 2026,” the company announced Monday. 
• The cash incentive is available to current franchisees who add new units to their development plans and to new franchisees who sign up to develop multiple units. 
• Since Qdoba was bought by Butterfly Equity in 2022 the chain has tried to use franchising to become a major competitor with Chipotle, whose company-owned model leaves operators looking to jump into Mexican fast casual searching for firms other than the segment’s biggest player.

Dive Insight:

The brand is targeting 1,500 units, a doubling of its unit count, over the next seven years, according to previous company statements. According to the release announcing the cash incentive, Qdoba has signed 10 new multi-unit deals this year, for a total of 70 units, bringing its development pipeline to 400 commitments. The cash incentive could push franchisees to speed up development of stores.

Jeremy Vitaro, Qdoba’s chief development officer and head of international, said the cash bonus was intended “to reward franchisees who are motivated to grow alongside the brand in the most attractive category.”

CEO John Cywinski, at the ICR conference earlier this year, identified big state markets like California, Texas and Florida as ripe for expansion by Qdoba, which had only about 60 units in those states as of January.

As part of its pitch to prospective franchisees, Qdoba highlighted the flexibility of its store format, which includes end-caps, in-line and freestanding units. Qdoba is looking to develop in highly visible locations with about 1,800-2,200 square feet, according to the press release. The company’s average unit volumes have grown, reaching $1.6 million in 2023, though they still lag considerably behind Chipotle, which cracked the $3 million mark last year.

The COVID-19 pandemic resulted in a glut of second generation restaurant space, while franchisors across the industry are shifting to favor multi-unit operators who are well-capitalized enough to expand quickly. Many brands have used incentive programs to jumpstart franchised growth. Tijuana Flats, for instance, halved its franchise fee in 2023 for new franchisees. Papa Johns offered franchisees who open a unit in 2024 a discount on ad contributions that could provide about $330,000 in value per store, while Wendy’s cut its royalty rate and slashed fees for prospective franchisees last year.