Butterfly Acquires QDOBA, Forms Leading Fast Casual Platform Through Merger with Modern Restaurant Concepts

Interior of Qdoba restaurant

QDOBA, the No. 1 franchisor in the Mexican fast casual sector in North America, joins Modern Market Eatery and Lemonade to form one of the largest fast casual restaurant platforms in North America with nearly 800 units

Butterfly today announced entry into a definitive agreement with funds managed by affiliates of Apollo (the “Apollo Funds”) to acquire QDOBA, the No. 2 player and No. 1 franchisor in the Mexican fast casual restaurant sector in North America, via a merger transaction with Modern Restaurant Concepts (“MRC”), an industry-leading “better-for-you” fast casual restaurant platform consisting of two brands: Modern Market Eatery (“Modern Market”) and Lemonade.

“We’ve only scratched the surface of QDOBA’s potential to date and Butterfly’s food focus will strengthen our ability to grow and deliver great food to our loyal customers.”

Based in San Diego, California, QDOBA is the No. 1 Mexican fast casual franchisor in North America and has helped lead the broad growth of the Mexican restaurant sector. It operates nearly 750 units across North America, about 450 of which are franchised. Known for its signature queso and hand-made guacamole, QDOBA has been voted best fast casual restaurant for four years in a row by USA TODAY’s 10Best.

Upon closing of the merger transaction, the Modern Restaurant Concepts platform will comprise approximately 800 units touching nearly every U.S. state and the combined restaurants will employ nearly 18,000 systemwide. Each of the QDOBA, Modern Market and Lemonade brands will continue to accelerate system growth through company-operated, franchised, and licensed openings. MRC leadership believes that there exists growth potential for more than 3,000 total units across brands.

Concurrent with the announcement of the merger transaction, MRC today is also announcing that Modern Market has recently signed a multi-unit franchise development agreement with a leading national franchisee. The franchise development agreement is Modern Market’s first and will bring over 40 new Modern Markets to 7 states. Earlier this year QDOBA announced its largest multi-unit franchise development agreement in company history, and in aggregate has developed a committed pipeline of approximately 300 franchised units to be opened in the next five years.

As part of the transaction, King Street Capital Management, a leading global alternative asset manager, is investing alongside Butterfly.

“With this transaction, we could not be more excited to bring together three incredible restaurant brands in QDOBA, Modern Market and Lemonade to form one of the leading next-generation restaurant platforms” said Adam Waglay, Co-Founder and Co-CEO of Butterfly. “Together, these brands are incredibly positioned for the future with craveable food, flexible and affordable menu choices and a powerful off-premise offering.”

Ed Testerman, partner at King Street added: “We are pleased to once again partner with Adam and his team at Butterfly Equity to further expand the scale and capabilities of the Modern Restaurant Concepts platform.”

“We are incredibly excited to partner with Butterfly in the next phase of QDOBA’s journey alongside Modern Market and Lemonade,” said Keith Guilbault, current QDOBA CEO, who will continue to lead QDOBA as Co-CEO of MRC. “We’ve only scratched the surface of QDOBA’s potential to date and Butterfly’s food focus will strengthen our ability to grow and deliver great food to our loyal customers.”

“QDOBA is an iconic brand whose reach will help us bring Modern Market and Lemonade to new consumers and franchisees around the country, particularly as we begin our own franchising journey,” said Rob McColgan, current MRC CEO, who will continue to lead the Modern Market and Lemonade brands as Co-CEO of MRC. “We’re thrilled to welcome the QDOBA team to the Modern Restaurant Concepts family and believe that together we can build something truly differentiated in the restaurant space.”

“We are proud to have supported QDOBA’s business transformation under our fund’s ownership, solidifying its position as the number one Mexican fast-casual franchisor in North America,” said Apollo Partner, Itai Wallach. “We are confident QDOBA will continue on its growth trajectory as part of the Modern Restaurant Concepts platform and that the talented team will be a valuable asset to the combined platform in its exciting next phase.”

Terms of the transaction were not disclosed. The transaction is expected to close in Q3 2022. Butterfly was advised by Kirkland & Ellis LLP on legal matters in connection with the transaction. QDOBA and Apollo Funds were advised by Deutsche Bank, Credit Suisse, and Morgan, Lewis & Bockius LLP.

About Modern Restaurant Concepts

Modern Restaurant Concepts is one of the largest fast casual restaurant platforms in North America with nearly 800 units across three brands, QDOBA, Modern Market Eatery and Lemonade. The system operates corporate-owned and franchised units across nearly every U.S. state as well as Canada and Puerto Rico.

Modern Market Eatery is a food forward, sustainable fast casual restaurant concept that operates in Colorado, Texas, Arizona and Indiana. Delivering the freshness and flavors of the market in a modern dining format and environment, Modern Market Eatery’s menu of protein-centric bowls, garden fresh salads, toasted sandwiches and brick oven pizzas redefine what it means to eat well at a reasonable price. For additional information about Modern Market Eatery, please visit www.modernmarket.com.

Lemonade is a California-based modern fast casual concept serving colorful, seasonal and healthy lunch and dinner options as diverse as California itself. Raising the standard of quality and freshness in the industry, Lemonade entices time-crunched but food-savvy individuals with the simple allure of beautifully prepared salads, hearty braised meats, satisfying sandwiches, decadent desserts, and thirst-quenching, handcrafted lemonades. For additional information about Lemonade, please visit www.lemonadela.com.

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