Jack in the Box sells Qdoba
Jack in the Box is selling Qdoba for $305 million to the investment firm, Apollo Global Management, according to a company press release.
Jack in the Box acquired Qdoba in 2003, when it had only 85 locations in 15 states and $65 million in sales. Jack in the Box grew Qdoba into a major national brand with more than 700 restaurants in 47 states and 2017 fiscal-year sales of more than $820 million.
The brand, however, has stumbled in recent quarters, and rumorsof a sale have been circulating over the past year. Sales at Qdoba stores open at least a year fell 1.4 percent in the 2017 fiscal year, including a 3 percent drop for company-owned locations. The news was even worse in Q4 with company-owned same-store sales down 4 percent and overall same-store sales down 2.1 percent.
"For the past several months, we have worked closely with our financial advisors and evaluated various strategic alternatives with respect to Qdoba, including a sale or spin-off, as well as opportunities to refranchise company restaurants,” Lenny Comma, chairman and chief executive officer of Jack in the Box Inc., said in the release. "Following the completion of this robust process, our Board of Directors has determined that 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.
"Keith Guilbault, Qdoba Brand President, has assembled a talented and experienced management team, and we wish them, the franchisees and all of the brand employees continued success."
Apollo Senior Partner Lance Milken said the company is excited about the sale.
"We are firmly committed to Qdoba's continued growth as a leading fast-casual restaurant operator," he said.
The transaction is expected to close by April 2018. The company expects to use the net cash proceeds after tax and transaction costs to retire outstanding debt under its term loan, as required by the terms of its credit facility.
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.
Topics: Franchising & Growth