Why Jack In the Box Is Selling Off Chipotle Competitor Qdoba

December 19, 2017, 4:13 PM UTC
Alichia Barnes Enjoys A Chicken Burrito For Lunch At Qdoba
BOSTON - SEPTEMBER 13: Alichia Barnes enjoys a chicken burrito for lunch at Qdoba near Northeastern University. (Photo by Wendy Maeda/The Boston Globe via Getty Images)
Boston Globe Boston Globe via Getty Images

Jack in the Box stock rose 2.4% in early Tuesday trading on news the company will sell fast casual Mexican chain Qdoba, a Chipotle competitor, to private equity firm Apollo Global Management for about $305 million in cash. The sales comes in the wake of falling same-store revenues for Qdoba, which has more than 700 locations in 47 states.

Jack in the Box chief Lenny Comma explained the rationale behind the sale in a statement. “[This] is consistent with the company’s desire to transition to a less capital-intensive business model,” said Comma.

That may be a reference to Jack in the Box’s preference for a franchise model. For instance, as the Wall Street Journal points out, just 47% of Qdoba stores are franchised compared with 88% of Jack in the Box stores. The company-owned locations (and many fast food operations generally) have faced same-store sales declines amid falling demand.

Jack in the Box originally purchased Qdoba in 2003 for $45 million.