At 750 restaurants, QDOBA’s long-term objective is to double in size. The fast casual wants to do so primarily through franchising and well-equipped operators. But the chain is self-aware enough to know how expensive the market has become.
Build-out costs across the country have soared and so have interest rates. The chain has tried to mitigate these challenges by downsizing the restaurant to 1,800 to 2,000 square feet compared to 2,400 to 2,500 square feet. The idea is restaurateurs pay less in overhead and initial costs, but make the same amount of sales, leading to a bigger ROI. That’s one piece of QDOBA’s attraction.
The other component is a short-term play—a $100,000 cash incentive for operators wanting to grow within the system. This is for candidates opening a committed restaurant by September 2026. That means new franchisees signing on for multi-unit development and existing operators adding more locations to their footprint.
“We’ve got what we think is a fantastic model and a really big opportunity to grow,” says chief development officer Jeremy Vitaro, who joined QDOBA in March. “And so we wanted to do something to accelerate that growth. And we thought about what we could do and we felt like a cash intensive like this—which is a little bit different from what I’ve done in the past with some other brands—would be really attractive in this moment. … I think we’ll just continue to grow from here. There’s just a lot of really good things happening at the brand, and I came in at a great time.”
READ MORE: QDOBA Will No Longer be an ‘Afterthought’ on the National Stage
The growth push coincides with years of financial consistency. QDOBA has seen 14 straight quarters of positive same-store sales and 18 of the past 21 years. Two of those three negative quarters were during the Great Recession in 2008 and the other was during COVID in 2020. Between 2004 and 2023, the chain averaged 4.1 percent comps growth. In 2023 alone, same-store sales rose 6.1 percent, and that’s on top of a 12.1 percent increase in 2022 and a 10.7 percent rise in 2021. In fiscal 2023, the brand earned $1.1 billion in sales and a restaurant-level EBITDA margin of 18 percent. Corporate AUV was $1.6 million, a 30 percent increase from 2019. About 70 percent of that growth came from price and 30 percent came from transactions.
In terms of sales performance, Vitaro points out the growing significance of takeout and delivery, the strength of QDOBA’s app and rewards program, and the brand’s robust catering business, which serves office environments, hospitals, and private events. This diverse range of services enhances consumer loyalty and adds incremental value to the business, he adds. “Our growth isn’t coming from price hikes but from more consumers visiting our restaurants. This year, we’ve outpaced the casual and [quick-service] categories, which reinforces my confidence in QDOBA’s potential,” Vitaro says.
Franchisees are responding accordingly. QDOBA has signed 10 deals in 2024 thus far, representing more than 70 future restaurants in markets nationwide. There are nearly 400 commitments in the pipeline as of now. The plan is to open around 50 units this year, which will be the company’s highest number of openings since 2012.
Then it will grow to 75 and 100 stores per year in the long run. The brand is already the largest Mexican fast casual franchise in the U.S. Nearly 80 percent of the footprint is currently franchised, but leadership wants to increase that to 90 percent plus. The largest operator has 100 stores in the Midwest. The second-biggest has nearly 60 units in Wisconsin. There are a couple more franchisees with around 30 locations apiece. Then there’s a long tail of operators that own one, two, or three restaurants.
“[The pipeline] has increased significantly partially because of the incentive and the business performance,” Vitaro says. “We’ll continue to grow that obviously. What really matters is opening successful new restaurants.”
The number of restaurant commitments within franchise agreements varies depending on the market and the developer, but on average, they fall within the mid to high single digits. QDOBA operates nationally in 45 states, but many areas are still lightly penetrated. The wide distribution allows the brand to leverage a national supply chain and demonstrates its ability to perform well in diverse market types, Vitaro says. Key growth opportunities include trade areas in Texas, Las Vegas, Salt Lake City, Chicago, Pittsburgh, and Florida.
Endcap locations ranging from 1,800 to 2,200 square feet are the sweet spot for QDOBA. However, the fast casual has seen success with inline, drive-thru, and freestanding stores. Around 35 QDOBA locations have drive-thru or pickup windows. These include both full drive-thrus with detached menu boards and simple digital pickup windows.
“It’s a little different again from some of the other concepts that I’ve come from and so I think that’s a good thing because we can be flexible,” Vitaro says. “And there’s a real hospitality element to this brand where consumers love to come in and customize and go down the line, see the food being freshly prepared. The meats are grilled on a flame right in front of them and they can pick and choose how they want their bowl or the burrito made. I think drive-thrus will have a place or pickup windows will have a place. But the bulk of the business, at least right now, still remains linked to the customization and the freshness and the food quality of it being prepared.”
For potential franchisees, Vitaro stresses the importance of a strong restaurant operations background and territorial knowledge. “A proven ability to hire and build great restaurants, along with a high level of hospitality and execution, is critical for our brand. Operators must know their geographies well, have relationships with local contractors and vendors, and be able to hire and operate successfully within their territories,” he says.
QDOBA is also committed to relaunching company-owned development in select markets. Additionally, the chain plans to remodel half of its corporate restaurants by the end of the fiscal year, upgrading 80 out of 160 locations to current standards.
“I’m excited about where we are and both the opportunity and the performance that we’re seeing toward that,” Vitaro says.
