Qdoba wants to double unit count to 1,500 in a decade

Dive Brief:

Qdoba plans to double its unit count in the next decade, with a target of 1,500 restaurants, the company said in a press release Wednesday. The chain aims for a 10% unit growth rate beginning in 2025.
To support its growth, Qdoba is selectively refranchising some corporate stores.
This ambitious growth plan comes a year after Butterfly Equity announced it would buy Qdoba and fold it into Modern Restaurant Concepts, which at the time was beginning to explore franchising at its other brands.

Dive Insight:

Qdoba is leaning on franchising to achieve its expansion goals, both through refranchising and new deals with restaurant operators.

“We are in the process of aggressively accelerating new restaurant development in partnership with existing and new franchisees. Once our pipeline is fully established, we expect to sustain a 10% annual growth rate through new restaurant development,” John Cywinski, CEO of Modern Restaurant Concepts, said in a statement. Cywinski joined Modern Restaurant Concepts as CEO in January after a tenure at Applebee’s, Dine Brands’ largely franchised chain.

As part of its refranchising strategy, Qdoba sold 77 of its company-owned restaurants to North Fork Fresh Max, which became its largest franchisee at 97 units as a result of the deal. The operator has signed a seven-year, 73-unit expansion deal with the brand.

Refranchising boosts the unit count of franchisees, potentially making it easier for the franchisees to raise capital to finance growth, since franchising puts much of the cost of expansion on operators rather than on franchisors. But company-owned expansion hasn’t proved a problem for Qdoba’s main competitor in the fast casual Mexican category: Chipotle. The burrito giant is aiming for a long-term unit count of 7,000 in North America, and has not engaged in franchising.

Qdoba is on pace for 5.3% unit growth this year, or about 40 new units, according the press release, and the company will increase its development pace to 60 units in 2024 and 80 in 2025. Cywinski said the fast casual Mexican chain was well positioned to grow over the next decade. Qdoba has posted 10 consecutive quarter of comparable sales growth and an AUV of about $1.6 million, though that lags Chipotle’s AUV, which was $2.8 million earlier this year, according to QSR Magazine.