- Butterfly Equity will acquire Qdoba from Apollo Global Management for an undisclosed sum, Butterfly announced Tuesday. Butterfly will merge Qdoba with Modern Restaurant Concepts. The transaction is expected to close during the third quarter.
- Modern Restaurant Concepts, which consists of fast casual brands Lemonade and Modern Market Eatery, will reach approximately 800 units as a result of the deal. Qdoba’s nearly 750 units will account for the vast majority of the company’s unit count.
- Apollo Global Management was rumored to be considering a sale of Qdoba in 2019, less than two years after acquiring the Mexican fast casual chain from Jack in the Box. Butterfly’s acquisition suggests some companies are still willing to acquire new brands to build out their platforms, despite market uncertainty.
Qdoba’s franchise model could help build on MRC’s expansion goals. Modern Market recently signed a multi-unit franchise deal, the first for the brand, adding 40 units across seven states, according to the press release. Qdoba has extensive franchising experience — 450 of its roughly 750 locations are franchised, and it has about 300 franchise restaurants in its development pipeline to open over the next five years. MRC management believes the three brands have the potential for over 3,000 combined units.
“QDOBA is an iconic brand whose reach will help us bring Modern Market and Lemonade to new consumers and franchisees around the country, particularly as we begin our own franchising journey,” Rob McColgan, CEO of MRC, said.
In addition to its experience with franchising, Qdoba has built up its digital assets this year. In February, the chain renovated its loyalty program into a two-tiered offering, in which customers who visit the chain more than 12 times in one year gain access to more extensive loyalty benefits. In June, Qdoba debuted a queso-focused virtual brand, Pure Gold by Qdoba, which is available through third-party apps in a small number of markets.
Despite falling real gross domestic product, high inflation and flat personal consumption — which have triggered fears of a recession in the last few months — restaurant acquisitions have continued. In July, Ampex Brands, Au Bon Pain’s parent company, bought Bellagreen. In the same month, Denny’s also finalized the $82.5 million acquisition of Keke’s Breakfast Cafe and Gala Capital Partners purchased Dunn Brothers Coffee.
This flurry of acquisitions shows companies are looking to build out platforms consisting of multiple, complimentary brands. Fat Brands, for example, acquired eight brands in 2021, and is now looking to grow its systemwide unit count by 900 units over the next five years.