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Why Qdoba Mexican Eats’ Same-Store Sales Growth Fell in Fiscal 2Q17

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Fiscal 2Q17 performance

Qdoba Mexican Eats, operating under the umbrella of Jack in the Box (JACK), posted systemwide SSSG (or same-store sales growth) of -3.2%. Its company-owned restaurants posted SSSG of -5.9%, while franchised restaurants posted SSSG of -0.3%.

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Decline in Qdoba’s SSSG

Looking at company-owned restaurants’ performance, the decline in traffic negatively impacted SSSG by 8.2%. However, the increase in ticket size and catering growth contributed 1.8% and 0.5%, respectively, toward its SSSG, offsetting some of the declines.

The increase in ticket size included a 0.3% contribution from the rise in menu prices. The company had offered aggressive discounting in fiscal 2Q16, which led to negative SSSG in fiscal 2Q17.

The company’s management expects the brand’s SSSG to improve in fiscal 3Q17 due to the introduction of Primetime Nachos, as well as the return of Smoked Brisket and Queso Diablo. The company also plans to expand its delivery service from the current 25 company-owned and 120 franchised restaurants to more restaurants to drive its sales.

For 3Q17, the company’s management set its SSSG guidance to be in the range of down 1% to up 1%. For fiscal 2017, the company expects its SSSG to fall 1% to 2%.

Peer comparisons

During fiscal 2Q17, Qdoba’s peers Chipotle Mexican Grill (CMG) and Panera Bread (PNRA) posted SSSG readings of 17.8% and 2.6%, respectively.

Next, we’ll look at the unit growth of both brands.

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