Qdoba Mexican Eats Franchise: Average Sales ($1.49M) vs. Cost ($489K-$1.17M)

In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:

Section I – Estimated initial investment (franchise costs) for a Qdoba Mexican Eats franchise, based on Item 7 of the company’s 2023 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Qdoba Mexican Eats franchise, based on Items 5 and 6 of the company’s 2023 FDD

Section III – Number of franchised and company-owned Qdoba Mexican Eats outlets at the start of the year and the end of the year for 2020, 2021, and 2022, based on Item 20 of the company’s 2023 FDD

Section IV – News updates on the Qdoba Mexican Eats franchise opportunity

Section V – Presentation and analysis of Qdoba Mexican Eats’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2023 FDD, including information on the:

• 2022 average, median, lowest, and highest net sales (by quartile and overall) for the 277 franchisee-operated Qdoba Mexican Eats restaurants that were open for at least 1 year as of the end of the trailing 12 months ended October 2, 2022 (TTM) and that were not closed greater than 7 operating days in the TTM

• 2022 average restaurant sales, promotions, net restaurant sales, cost of sales, salaries and benefits, other operating expenses, occupancy costs, royalty fee, advertising fee, total cost of revenues, and EBITDA for the 238 company-operated Qdoba Mexican Eats restaurants that were open for at least 1 year as of the end of the TTM and that were not closed greater than 7 operating days in the TTM

• 2022 average, median, lowest, and highest net sales (by quartile and overall) for the 80 non-traditional Qdoba Mexican Eats licensed restaurants that were open for at least 1 year as of the end of the TTM

Section VI – Key ratios, comparables, computations, and analyses for the Qdoba Mexican Eats franchise opportunity (exclusive content for Platinum subscribers)

Section I – Qdoba Mexican Eats Franchise Costs

• Qdoba Mexican Eats franchise costs, based on Item 7 of the company’s 2023 FDD:

• Franchise Fee:  $30,000
• Development Costs (plans, legal fees, permits):  $10,000 to $50,000
• Leasehold Improvements:  $180,000 to $400,000
• Furnishings, Fixtures, and Equipment:  $185,000 to $380,000
• Signage:  $5,000 to $50,000
• IT and Other Systems:  $33,700 to $55,000
• Opening Inventory:  $5,000 to $10,000
• Travel and Living Expenses While Training:  varies
• Miscellaneous Pre-Opening Expenses:  $5,000 to $15,000
• Grand Opening Advertising (at traditional sites):  $5,000 to $25,000
• Insurance:  $5,000 to $10,000 (excluding several types of coverage)
• Liquor License:  varies depending on location
• Real Property Lease/Purchase Costs:  varies depending on location
• Business Licenses, Health Permits, and Similar Permits:  $500 to $3,000 (varies depending on location)
• Additional Funds for 3 Months:  $25,000 to $150,000
• Total Estimated Qdoba Mexican Eats Franchise Costs (excluding real property and liquor license costs):  $489,200 to $1,178,000

Section II – Qdoba Mexican Eats’ Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Qdoba Mexican Eats’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2023 FDD:

• Franchise Fee:  $30,000 for traditional units; $15,000 for non-traditional units
• Royalty:  5% of Gross Sales
• Marketing Fee:  currently, 1.75% of Gross Sales
• Local Advertising:  currently, 1.25% of Gross Sales

Section III – Number of Franchised and Company-Owned Qdoba Mexican Eats Outlets

Franchised

2020

• Outlets at the Start of the Year:  380
• Outlets at the End of the Year:  397
• Net Change:  +17

2021

• Outlets at the Start of the Year:  397
• Outlets at the End of the Year:  406
• Net Change:  +9

2022

• Outlets at the Start of the Year:  406
• Outlets at the End of the Year:  447
• Net Change:  +41

Company-Owned

2020

• Outlets at the Start of the Year:  350
• Outlets at the End of the Year:  344
• Net Change:  -6

2021

• Outlets at the Start of the Year:  344
• Outlets at the End of the Year:  333
• Net Change:  -11

2022

• Outlets at the Start of the Year:  333
• Outlets at the End of the Year:  286
• Net Change:  -47

Section IV – News Updates on the Qdoba Mexican Eats Franchise

• Butterfly to Acquire Qdoba and Form Leading Fast Casual Restaurant Platform Through Merger with Modern Restaurant Concepts

• Qdoba Poised for Growth in 2023

• Qdoba Ends 2022 Fiscal Year Poised for New Phase of Growth

• Qdoba Mexican Eats Signs Largest Franchise Deal in Brand History

• Qdoba Launches First Virtual Brand

• Qdoba Mexican Eats Did Not Rank on Entrepreneur’s 2023 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Qdoba Mexican Eats Franchise (Item 19, 2023 FDD)

Part 1 – Franchised Qdoba Restaurants – Historical Average, Median, Lowest, and Highest Net Restaurant Sales

• The following figures represent the average, median, lowest, and highest restaurant sales for certain franchisee-operated Qdoba restaurants for the trailing 12 months ended October 2, 2022 (“TTM”).

• The information is based on unaudited information for 277 franchisee-operated restaurants that were open for at least 1 year as of the end of the TTM and that were not closed greater than 7 operating days in the TTM.

• Qdoba excluded information for 72 franchisee-operated Qdoba restaurants because they were not open and franchisee-operated for at least 1 year or were closed greater than 7 operating days in the TTM (38 excluded for not being open or franchisee-operated for 1 year and 34 excluded for being closed greater than 7 operating days), as well as for non-traditional licensed Qdoba restaurants (98 units), which are included in a separate table below.

Top Quartile

• Average Net Sales:  $2,213,544
• Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales:  25/70 (35.7%)
• Median Net Sales:  $2,016,728
• Lowest Net Sales:  $1,785,492
• Highest Net Sales:  $4,459,150

2nd Quartile

• Average Net Sales:  $1,625,545
• Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales:  34/69 (49.3%)
• Median Net Sales:  $1,620,866
• Lowest Net Sales:  $1,474,209
• Highest Net Sales:  $1,784,052

3rd Quartile

• Average Net Sales:  $1,270,833
• Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales:  34/69 (49.3%)
• Median Net Sales:  $1,268,400
• Lowest Net Sales:  $1,104,667
• Highest Net Sales:  $1,468,838

Bottom Quartile

• Average Net Sales:  $870,721
• Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales:  40/69 (58.0%)
• Median Net Sales:  $897,310
• Lowest Net Sales:  $501,644
• Highest Net Sales:  $1,091,708

Total

• Average Net Sales:  $1,497,754
• Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales:  134/277 (48.4%)
• Median Net Sales:  $1,474,209
• Lowest Net Sales:  $501,644
• Highest Net Sales:  $4,459,150

Part 2 – Company-Operated Qdoba Restaurants – Historical Sales, Certain Costs, and EBITDA

• The following figures represent the sales and operating figures of certain traditional, company-operated Qdoba restaurants for the TTM.

• The information is based on the unaudited operating results of 238 company-operated restaurants that were open for at least 1 year as of the end of the TTM and that were not closed greater than 7 operating days in the TTM.

• Qdoba excluded information for 42 company-operated Qdoba restaurants because they were not open for at least 1 year or were closed greater than 7 operating days in the TTM, as well as for non-traditional company-operated Qdoba restaurants (6 units).

• These figures for company-operated Qdoba restaurants have not been audited.

• Restaurant Sales figures represent all sales including, but not limited to, food, beverage, catering, delivery fees, and convenience fees, but do not include sales or service taxes.

• Promotions consist of the dollar amount of coupons, other promotional discounts, and manager-complimentary items.

• The Restaurant Cost of Sales section excludes depreciation and amortization expense.

• Cost of Sales includes cost of food, paper, and other packaging costs, net of any applicable vendor rebates. The Cost of Sales may vary considerably based on the geographical areas in which you operate and those serviced by Qdoba’s approved suppliers and distributors.

• Salaries and Benefits include wages paid to management (but does not include any wages or overhead above the store management level) and employees of the restaurant, including shift supervisors; management bonuses; payroll taxes; the cost of group insurance; workers’ compensation; vacation; and other employee benefits.

• Other Operating Expenses include repairs and maintenance, smallwares, cleaning supplies, office supplies, POS maintenance, pest control, delivery charges, credit card processing fees, bank charges, telephone and internet expenses, trash services, equipment rental, property and liability insurance, security expenses, license and business taxes, cost of utilities, and other miscellaneous expenses.

• Occupancy Costs include base rent, percentage rent, common area maintenance, real estate taxes, personal property taxes, landlord-billed insurance, and other miscellaneous lease expenses.

• The Royalty Fee is defined in Item 6 of the disclosure document. The Advertising Fee includes both the Marketing Fees and Local Advertising Fee, as defined in Item 6 of the disclosure document.

• This amount does not include certain fees and expenses you pay which include, but are not limited to, development fees, franchise fees, and administrative costs.

Average

Revenues

• Restaurant Sales:  $1,518,189 (103.8%)
• Less:  Promotions:  $55,045 (3.8%)
• Net Restaurant Sales:  $1,463,144 (100.0%)

Restaurant Cost of Sales

• Cost of Sales:  $444,581 (30.4%)
• Salaries and Benefits:  $423,162 (28.9%)
• Other Operating Expenses:  $225,880 (15.4%)
• Occupancy Costs:  $129,296 (8.8%)
• Royalty Fee:  $73,157 (5.0%)
• Advertising Fee:  $43,894 (3.0%)
• Total Cost of Revenues:  $1,339,970 (91.6%)

Proforma Franchise EBITDA:  $123,175 (8.4%)

Add Back Royalty Fee:  $73,157 (5.0%)

Add Back Advertising Fee:  $43,894 (3.0%)

Company EBITDA:  $240,226 (16.4%)

Part 3 – Non-Traditional Licensed Qdoba Restaurants – Historical Average and Median Net Restaurant Sales

• The following figures represent the average and median net restaurant sales for certain non-traditional company-operated and licensed Qdoba restaurants.

• This information is based upon royalty reporting that Qdoba has received from its licensees.

• Qdoba has not audited the information received from its franchisees, but believes it is accurate.

• The data covers all non-traditional licensed restaurants for the TTM that have been open 1 or more years.

• Qdoba excluded information for 5 non-traditional licensed Qdoba restaurants that closed permanently during the fiscal year.

Top Quartile

• Average Net Sales:  $2,279,488
• Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales:  7/20 (35.0%)
• Median Net Sales:  $1,733,210
• Lowest Net Sales:  $1,118,730
• Highest Net Sales:  $5,023,387

2nd Quartile

• Average Net Sales:  $942,664
• Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales:  11/20 (55.0%)
• Median Net Sales:  $949,489
• Lowest Net Sales:  $809,918
• Highest Net Sales:  $1,110,181

3rd Quartile

• Average Net Sales:  $699,470
• Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales:  11/20 (55.0%)
• Median Net Sales:  $709,448
• Lowest Net Sales:  $578,018
• Highest Net Sales:  $802,993

Bottom Quartile

• Average Net Sales:  $331,021
• Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales:  10/20 (50.0%)
• Median Net Sales:  $319,801
• Lowest Net Sales:  $122,273
• Highest Net Sales:  $544,630

Total

• Average Net Sales:  $1,063,161
• Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales:  23/80 (28.8%)
• Median Net Sales:  $806,456
• Lowest Net Sales:  $122,273
• Highest Net Sales:  $5,023,387

Section VI – Qdoba Mexican Eats Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️