Operations

Qdoba refinancing debt, growing to 1,500 units

Photo: Qdoba

November 29, 2023

A year after being purchased by Los Angeles-based private equity firm Butterfly, Qdobahas closed its inaugural $305 million whole business securitization while achieving an asset-light business model via refranchising over 120 of its 750 restaurants — shifting its franchise mix to nearly 80%.

The chain also achieved 6% positive systemwide same-store sales growth in fiscal year 2023, ending Oct. 1, according to a company press release. Earlier this year, Butterfly appointed Applebee's veteran John Cywinski as CEO and former Sonic Drive-In Head of Technology Prashant Budhale as CTO.

"We've experienced immense transformation over the past year and are proud to announce this transaction as we look to further Qdoba's status as the #2 Mexican fast-casual brand in the U.S.," Cywinski said in the release. "This deal positions Qdoba for accelerated investment and growth in what I believe to be the most attractive category in the restaurant industry."

Proceeds from the transaction will be used primarily to refinance Qdoba's existing senior debt facilities and provide liquidity to invest in general corporate initiatives, such as remodeling over 80 corporate restaurants and adding digital menu boards to 150 restaurants.

The chain also plans to double its unit count to at least 1,500 restaurants.

"Under Butterfly's ownership, Qdoba has continued to accelerate and emerge as the leading Mexican franchisor uniquely suited for this transaction," Francesco D'Arcangelo, principal at Butterfly, said in the release. "This is more than a financial milestone; it's a testament to our conviction in Qdoba's capacity to propel the fast-casual Mexican sector, and we are thrilled to be a part of its remarkable growth and evolution."

Barclays Capital Inc. acted as sole structuring advisor and sole bookrunner, Kirkland & Ellis LLP served as special counsel to Qdoba, and Milbank LLP served as special counsel to Barclays.