The long-expected deal, expected to close in April, will enable the San Diego-based Jack to focus on its core burger chain, which is primarily franchised. More than half of Qdoba’s nearly 700 locations are company operated.
Jack in the Box said it would use cash from the sale to retire debt.
The company paid $45 million for Qdoba in 2003, when the chain had 85 locations and $65 million in system sales. At the time, it was one of a number of big burger companies that sought to diversify in part by investing in fast-casual burrito chains—Wendy’s bought Baja Fresh and McDonald’s invested in Chipotle. Jack was the last to keep ownership of its chain.
“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,” Jack in the Box CEO Lenny Comma said in a statement.
Qdoba is the second-largest fast-casual Mexican chain in the U.S. It had $805 million in system sales in 2016. Yet its unit volumes, at just less than $1.2 million in 2016, according to Technomic data, are far less than the $1.8 million at rival Chipotle.
And this year the chain’s same-store sales have stumbled, including a 2.1% decline in the chain’s most recent quarter.
It will get an opportunity to grow as a private company under the ownership of Apollo, a frequent buyer of restaurant brands that currently owns Chuck E. Cheese's operator CEC Entertainment.
“We are firmly committed to Qdoba’s continued growth as a leading fast-casual restaurant operator,” Lance Milken, Apollo senior partner, said in a statement.
Jack in the Box earlier this year started working with financial advisors, including Morgan Stanley, to decide the best route for Qdoba. The company considered refranchising the brand but, Comma said, “determined that the sale of Qdoba is the best alternative for enhancing shareholder value.”
This is the 35th sale of a restaurant brand of more than 10 locations in 2017. Numerous chains, including Panera Bread, Popeyes, Cheddar’s and Buffalo Wild Wings, have changed hands as buyers line up for potential deals.