Qdoba plans new brand campaign to drive sales

Qdoba's same-store sales for the fourth quarter increased 0.8 percent at company-owned stores, and 0.4 percent systemwide. This performance was slightly below expectations, and CEO/chairman Linda A. Lang said several brand activation initiatives are in development, including a new campaign to drive traffic and sales.

"The new campaign will focus on articulating Qdoba's innovative menu and unique brand positioning," Lang said during Tuesday's earnings call. "We are taking the same holistic approach to improving sales and traffic at Qdoba as we did at (sister brand) Jack in the Box, so we're looking at everything from the communication and brand strategy to operational execution and even our catering business."

Jack in the Box's initiatives have paid off with its strongest sales year since 2007.

For Qdoba, the company tapped a new advertising agency in mid-August called Goodness Works. The Denver-based agency has since been working on a new campaign that will showcase the brand's variety and innovative menu that differentiates Qdoba from its competitors, Lang said.

The company is also currently searching for a national catering director.


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"That's a strong point of difference, and we can leverage catering more fully," Lang said.

Qdoba has also recently invested in its menu R&D, with the recent launch of a whole wheat tortilla being one example.

The company opened a total of 95 restaurants systemwide during the year, including 37 Jack in the Box and 58 Qdoba restaurants. Twenty-four Qdoba units opened in Q4.

The company also recently hired Jeff Wood as vice president and chief development officer to intensify the focus on Qdoba's growth.

Qdoba now represents 37 percent of company-owned restaurants, as compared to 6 percent five years ago.

Obamacare

Finally, Jack in the Box executives were asked about the company's plan for the implementation of Obamacare within the next two years.

Chief Financial Officer Jerry Rebel responded, in part: "There are still a lot of unknowns. Based on what we know, we're looking at the impact on margin to be in the neighborhood of 50 to 100 basis points. The midpoint of that is about $10,000 per restaurant ... That's lower than what we have been hearing many (restaurant brands) talk about. We think we have a pretty good bead on this (because) at Jack in the Box and Qdoba, our managers and assistants are already offered health care by the company. Most of our part-time employees already average less than the 30 hour-per-week threshold. So we don't believe there's going to be a big impact on having part-time employees actually be classified as full-time equivalents.

"Also, we currently offer some level of health care plan, mini-med plan, for the full-time crew employees and also offer a health care plan to the Jack in the Box team leaders. Acceptance rates are less than 20 percent, and we're not anticipating that we would have a meaningful appreciation in terms of the acceptance rate going forward ... The high levels of turnover (in the industry) will also lessen the impact."

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