Jack in the Box (NASDAQ: JACK) has announced plans to sell Qdoba to an investment firm after struggling with the fast food competition, labor expenses, and higher commodity. Apollo Global Management will pay about $305 million for the Qdoba chain.
Back in 2003, Jack in the Box bought Qdoba when it had only 85 locations in 15 states with $65 million in sales. After the deal, Qdoba became a major national brand with more than 700 restaurants in 47 states. The 2017 fiscal year sales totaled to more than $820 million. However, recent quarters showed that sales at stores open for at least a year tumbled 1.4% which included a 3% drop for company owned locations. The fourth quarter followed with company owned same store sales dropped 4% while overall same store sales were down 2.1%. Qdoba’s fourth quarter performance was also majorly impacted by the 50% rise in avocado prices while wage increases also hurt earnings.
“We are extremely excited to be acquiring Qdoba and look forward to working with the management team, employees and franchisees to continue building the Qdoba brand,” Apollo Senior Partner Lance Milken said in a statement. “We are firmly committed to Qdoba’s continued growth as a leader fast-casual restaurant operator.”
The deal is expected to complete by April.