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Company-Owned Restaurants Dominate Qdoba’s Unit Growth

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Qdoba’s unit growth

When Qdoba Mexican Eats, then called Qdoba Mexican Grill, was acquired by Jack in the Box in 2003, the brand had 85 restaurants across 16 states. Since then, the company’s unit count has grown steadily, reaching 661 by the end of September 2015.

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Analyzing unit growth over five years

In 2011, Qdoba, a brand under the umbrella of Jack in the Box (JACK), operated 548 restaurants, of which 245 were company-owned restaurants and 339 were franchisee-operated restaurants. By 2015, the overall restaurant count grew by 22.2%. In the same period, company-owned restaurants grew by 31.4% and the unit count of franchisee-operated restaurants came down by one unit.

In 2013, after conducting comprehensive performance analysis of the restaurants and taking into consideration the key operating performance indicators and returns on investments, the company decided to close 62 underperforming restaurants. This has affected Qdoba’s unit growth.

Peer comparison: Unit growth

Between September 2014 and September 2015, Chipotle Mexican Grill (CMG), which owns and operates all of its restaurants, recorded an overall unit growth of 12%. During the same period, Panera Bread (PNRA) recorded an overall unit growth of 5.5%, with company-owned units increasing by 3.1% and franchisee-owned units increasing by 7.7%. Qdoba has expanded at a faster rate than its competitors in the last five years by opening new company-owned restaurants.

The Consumer Discretionary Select Sector SPDR ETF (XLY), which invests about 10% of its portfolio in restaurant stocks, has 4.8% of its portfolio invested in McDonald’s (MCD) and 3.8% invested in Starbucks (SBUX).

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