Dive Brief:

• Qdoba is launching its first virtual brand, Pure Gold by Qdoba, which is only available on third-party apps, the company said Tuesday. It is available in select U.S. markets, including Denver, Michigan and Indianapolis, with potential for expansion.
• The cheese-centric brand will include menu items like Loaded Gold Quesos, 24-Karat Quesadillas and Gold Rush Tacos, though the gold refers to the color of the cheese, rather than any metallic content. 
• Qdoba joins a growing list of chains, including Chick-fil-A, Wingstop and Dickey’s, to pilot virtual brands to reach more customers and/or test new menu items.

Dive Insight:

Over the last few years, Qdoba has been shifting its strategy to expand its off-premise channel. Two months before the pandemic hit, Qdoba launched a digital platform, which included third-party delivery integration with its POS. During the early days of the pandemic, it added a second production line and kitchen display system to handle digital orders. 

Later in 2020, Qdoba introduced a variety of restaurant formats, including units with mobile-order drive-thrus, walk-up windows, mobile-order pickup lockers, dedicated curbside pick-up areas and ghost kitchens. In March, it piloted ghost kitchens with Reef in Seattle, Atlanta, and Austin, Texas. As part of its agreement with Reef, it plans to develop 25 locations. The fast-casual chain also rolled out a revamped two-tiered loyalty program in February allowing customers to more easily accrue and redeem points. 

Qdoba will have to heavily market this virtual brand since third-party apps are crowded with new and existing brands. Up to 41% of independents have added a virtual brand, only adding to the growth of this category. Casual brands, including Brinker, Applebee’s, IHOP, TGI Fridays and Denny’s, have been expanding their now established virtual brands. Qdoba’s queso-oriented menu could be a point of differentiation as many virtual brands have focused on menus with chicken wings, sandwiches or burgers.

Adding a virtual brand to its off-premise lineup could allow Qdoba to better test new markets as it plans to expand from over 740 units to 2,000. Having data on customer reactions to the brand could help spur additional interest from franchisees. In February, Qdoba signed its largest franchisee agreement ever to develop 30 units in Florida over the next 10 years. The company is currently prioritizing franchise growth in markets such as Arizona, Georgia, Ohio, Nevada, New Jersey, New York, Texas and Pennsylvania, the company said in the press release.