West Coast fast food chain Jack in the Box Inc. will sell Qdoba Restaurant Corporation to funds managed by affiliates of private equity firm Apollo Global Management, LLC.
Under the terms of the agreement, the Apollo funds will purchase Qdoba for approximately $305 million in cash.
Qdoba has four locations in northern Delaware and one in Dover. It competes in the crowded “fresh Mex” market that in Delaware includes chains like Chipotle, Moe’s and California Tortilla. Competition also comes from family-owned taco trucks that offer low-priced fare and do not pay franchise fees.
The fresh Mex segment has struggled with higher operating costs and a saturated market. Downtown Newark has a Qdoba, Chipotle and California Tortilla.
The company expects to use the net cash proceeds after tax and transaction costs to retire outstanding debt.
Lenny Comma, CEO of Jack in the Box Inc. the sale of Qdoba is the best alternative for enhancing shareholder value and is consistent with the Company’s desire to transition to a less capital-intensive business model.
“At the time the Company acquired Qdoba in 2003, it had 85 locations in 16 states, with $65 million in system-wide sales. Over the past 14 years, net units have grown at a compound annual growth rate of 16 percent. Today, Qdoba is the second largest fast-casual Mexican food brand in the U.S., with more than 700 locations in 47 states, the District of Columbia and Canada, and system-wide sales of more than $820 million in fiscal 2017,” Comma stated.
