Hollis Johnson/Business Insider
Qdoba burrito
- Jack in the Box is selling Chipotle to a private equity firm for $305 million.
- Qdoba has struggled recently, but has build a cult following thanks to some of its key attributes.
- When compared to rival Chipotle, it's especially clear why Qdoba could be in the perfect position to dominate the fast-casual industry post-acquisition.
Jack in the Box is selling Qdoba - a struggling Chipotle rival with a cult following.
Hollis Johnson/Business Insider
On Tuesday, Jack in the Box announced it had entered into an agreement to sell Qdoba to Apollo Global Management for $305 million.
Qdoba's systemwide sales exceeded $820 million in 2017. The chain has been dealing with a significant sales slump, with same-store sales dropping 1.4% in the last fiscal year and falling 2.1% in the fourth quarter.
Despite recent struggles, Qdoba has some strong attributes - especially in comparison to competitor Chipotle.
Qdoba and Chipotle have some key similarities. Both were founded in Denver, Colorado in the early '90s. They have similar menus, selling burritos, burrito bowls, and tacos made in a fast-casual assembly line. And, both have struggled recently, as the fast-casual sectors has gone from trendy to filled to the brim with competitors.
However, as detailed by Business Insider's Hollis Johnson, Qdoba has a leg up on Chipotle - at least when it comes to how customers perceive the chain.
Hollis Johnson/Business Insider
Qdoba has already managed to pull off a move that Chipotle bungled this year: adding queso to the menu. Both guacamole and queso are free at Qdoba, a clear bonus over Chipotle.
Chipotle's "strange and grainy bechamel wannabe that's passed off as queso just cannot hold a candle to Qdoba's," Johnson writes.
Johnson continues: "It's that perfectly plasticky, fascinatingly fake and yet all too real and cheesy colloid that one expects of queso. We all know that special texture that should logically disgust any palate, yet instead manages to delight and enrapture with every goopy, hot bite."
Hollis Johnson/Business Insider
Qdoba additionally has a more extensive menu that allows it to avoid falling into Chipotle's "menu fatigue" trap.
Some analysts argue that Chipotle's overly-simplistic menu could be a bigger issue in the long-run than its E. coli scandal. Qdoba dodges that bullet by additionally offering quesadillas, nachos, soups, and taco salad.
Finally, there's the question of public perception.
Chipotle still has not managed to shake the stigma of the 2015 E. coli outbreak, struggling to regain lost customers. Simply avoiding such a scandal puts Qdoba ahead of its fast-casual rival.
Qdoba will likely undergo some major changes under Apollo's management. Some revamps are necessary, especially as customers lose interest in the fast-casual industry.
However, Qdoba has already won over a solid base of customers. The chain hasn't yet managed to cash in on Chipotle's sales slump, according to Nation's Restaurant News. If, under Apollo's management, Qdoba can convince former Chipotle fans - or simply fans of good queso - to visit it over its fast-casual rival, it could decimate Chipotle in the future.
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