QDOBA Finds a New Digital Growth Lever

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In the nearly two-and-a-half years since the pandemic began, countless brands have converted typical hero items—burgers, pizzas, and tacos—into virtual brands to better meet customer convenience. 

QDOBA wanted its share of these digital incremental gains, but in a somewhat atypical fashion. The fast casual launched a new concept that leverages one of its most popular side items—3-Cheese Queso. 

The brand, named Pure Gold by QDOBA, features 24-Karat Quesadillas (a golden cheese-crusted flour tortilla packed with a protein, shredded cheese, pico de gallo, and 3-Cheese Queso); Gold Rush Tacos (3-Cheese Queso layered between tortillas and filled with protein and toppings); and Loaded Queso, which is essentially a bowl filled with 3-Cheese Queso, protein, and toppings, served with chips. 

Pure Gold is available exclusively through third-party delivery apps in select markets, such as Denver, Michigan, and Indianapolis. Expansion will depend on how well the concept does in initial areas. The brand adds incremental revenue for franchisees without adding complexity in the back of house, chief development officer Jim Sullivan says. QDOBA is using paid social media campaigns and its app to advertise the launch. 

“This allows us to have an extension of our core brand and our core branded products,” Sullivan says. “We can offer guests that are looking for flavorful Mexican food through an alternative channel. We’re able to use third-party [platforms] to give people unique, quality flavors that are branded as Pure Gold by QDOBA. We want to have a bigger presence in the digital space.”

“… The base business for us is great,” he adds. “But we have the capacity to drive more revenue.”

The fast casual is equipped to handle influxes of off-premises orders because of recently installed digital make lines and additional display systems. For customers, mobile app upgrades are user friendly and a “seamless experience, Sullivan says. The same is true for guests ordering Pure Gold through third-party delivery companies. 

“A customer can pull up DoorDash, order a Pure Gold product, and it comes into our restaurant. It’s seamless, the order is made, it’s packaged, picked up, delivered, and paid for,” he says. “It makes it seamless for the guests and it doesn’t add incremental complexity to the restaurant. We’re able to utilize existing labor and the existing footprint.”

QDOBA is physically prepared for off-premises growth with a slimmer, 2,000-2,200-square-foot prototype. The chain offers a suite of store designs— including freestanding drive-thru and endcap drive thru—that feature interior and exterior digital menuboards. The company shrank its footprint without limiting revenue capacity, Sullivan says. 

The nearly 750-unit chain, which franchises about 60 percent of its stores, believes there’s room for 2,000 locations in the U.S. In terms of unit count, QDOBA is already the largest Mexican fast casual franchisor in the country. Earlier this year, the chain announced a 30-unit deal—the biggest in company history—to open locations in South Florida over the next 10 years. Not to long afterward, it revealed a 10-unit deal to grow in Cleveland. The goal is to debut 60 restaurants this year, and then start opening at a clip of 100-120 units per year. Other target markets include Arizona, Georgia, Ohio, Nevada, New Jersey, New York, Texas, and Pennsylvania.

The quick-service concept earned $835 million in systemwide sales in 2021, and earned an AUV of $1 million, according to the QSR 50. It ended the year with 406 franchises and 333 company-owned units. 

In addition to brick-and-mortar expansion, QDOBA announced a partnership with ghost kitchen solution Reef Kitchens for 25 locations across the U.S. The first two will open in early August and September in Austin, Texas. The chain will use these delivery-only spots to build awareness and set up future streetside expansion if customer acceptance is high enough. Because of the ghost kitchens’ size, they won’t feature QDOBA’s full menu—or Pure Gold—but core items will be present. 

“Success for us will mean being able to go into markets where we currently lack presence and build brand awareness,” Sullivan says. “Then we can build out the market and tap into market efficiencies with Pure Gold. Success will be adding incremental revenue to a current footprint without over complicating operations.”

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