CEO John Cywinski said franchisees from both the QSR and casual-dining segments see Qdoba as their way into the booming fast-casual space.
Source: Restaurant Business
John Cywinski loves being Number Two.
As CEO of Qdoba, he leads the second-largest Mexican fast-casual concept. With about 785 units, Qdoba is well behind category leader Chipotle’s nearly 3,700 units.
But Chipotle doesn’t franchise (at least, not in the U.S.), and Qdoba does. And with the fast-casual segment booming, it offers multi-unit franchisees an opportunity to diversify their portfolios with a Mexican fast-casual brand that, Cywinski contends, has plenty of whitespace ahead.
For Qdoba, 2024 was a good year, despite the macro challenges. Cywinski said the San Diego-based chain saw same-store sales increase 7.7% systemwide in fiscal 2024 (the chain’s year ends in September), with 4% to 5% of that from traffic.
This year, so far, same-store sales are closer to 10%, also mostly driven by traffic, he added. The chain’s average unit volume is just shy of $1.7 million.
The chain expects to net about 56 new restaurants in 2025. Next year, the plan is to net 75, and then he expects net new unit growth will reach 100. By 2027, Cywinski expects Qdoba will pass 1,000 units, roughly 80% of which will be franchised.
Qdoba has 167 company-owned locations, and another eight to 10 will open this year, including four in Phoenix (a return to that market which once had 11 Qdobas that later closed). Last year the company completed a rollout of digital menu boards to all company units, and he expects to see franchisees follow suit.
Cywinski said the chain has some 500 units in development, and several large agreements have been announced in recent months.
Among them is a 20-unit deal with APR Island Management/Cafua Management, the largest Dunkin’ franchisee in the U.S., which is opening Qdobas in New Hampshire and Rhode Island. The group already has an agreement to build five in Pennsylvania.
“After more than 40 years in the quick-service industry, we chose to invest in the fast-casual market, and Qdoba stood out for its fresh, customizable meals and loyal customer base,” said Mark Cafua, an owner with Cafua Management, in a statement.
Applebee’s franchisee Thrive Restaurant Group has also committed to 30 units in North and South Carolina.
In Houston, Q Eats LLC has signed an agreement for 15 restaurants. Jay and Ahmad Jabbar are planning to open five Qdobas in New Orleans. Spork Restaurant Holdings has committed to opening 12 in and around Kansas City. Holy Moley Guacamole LLC has signed on for 15 in Lake and DuPage counties in Illinois. Boost Enterprises is bringing eight to Savannah, Georgia.
Existing franchisees are expanding their investments to add six units in Cleveland and Toledo, Ohio, another three in Cincinnati, three in Baltimore, four in Connecticut and one in Colorado. And the multi-unit operator ELPX Restaurant Group LLC is planning to open Qdobas in U.S. military installations globally, starting this year.
Qdoba was acquired by Butterfly Equity in 2022, along with the Modern Market Eatery and Lemonade brands. Butterfly later sold both Lemonade and Modern Market.
Before Qdoba was acquired, it was owned by Apollo, where the fast-casual chain was “orphaned,” as Cywinski likes to say, laying stagnant through the pandemic years. Butterfly, however, has been a “great partner,” Cywinski said.
Now, Qdoba needs to build its brand awareness. Cywinski said only about 40% of Americans have heard of the brand, which is concentrated in the Midwest. A larger national marketing push is on deck for next year.
“Right now, franchisees contribute 2.75% of their sales nationally to our marketing fund, and 1.25% locally. It’s my view that those two percentages should be consolidated into a national contribution, and perhaps even elevated beyond the 4% that represents,” he said. “I think 2026 is when we will have alignment with our franchisees.”
Cywinski argues that Mexican fast casual is the most attractive and unique category right now. In both QSR and casual dining, he said he could name 20 mature brands slugging it out for market share with negative traffic.
Pizza is a commodity category, he said. Chicken is pretty well entrenched with 10 national players.
“And then I look at Mexican fast casual and there are only two primary national brands,” he said. “We don’t have to deal. We don’t have to discount. We have organic growth. We don’t have to steal one dollar of market share from Chipotle. We can peacefully co-exist.”
