Qdoba Doesn't Want to Be the Next Chipotle

Source: Qdoba.

One of Chipotle Mexican Grill's feistiest rivals is going in a different direction. Qdoba Mexican Grill became Qdoba Mexican Eats on Tuesday, and it's not the only thing that's being updated at the Jack in the Box owned chain.

According to Nation's Restaurant News, the chain also updated its logo on social media and began decking out its employees in new uniforms on Tuesday.

Chains refreshing their uniforms, logos, and even monikers may seem like desperate moves, but that's not Qdoba at all. It's actually doing brisk business these days, and by one telltale measure it's actually faring even better than Chipotle.

Jack in the Box doesn't report quarterly results until next month, so comparisons for the third quarter will have to wait. However, Qdoba's year-over-year comps growth of 7.7% during the previous quarter was enough to surpass Chipotle and its4.3% showing.

That isn't a fluke. Jack in the Box's popular burrito chain saw comps soar 8.3% and 14% during the two previous quarters. Dropping the Chipotle-esque "Grill" off of its store name isn't a sign of surrender. It's a sign that it just doesn't need to play that game anymore.

Things haven't always been silky smooth for Qdoba. Jack in the Box had to close 62 underperforming stores two years ago, but that's also when it brought in former Mrs. Fields chief Jim Casey to shake things up.

The first step seemed to be to take a page out of the Chipotle playbook, simplifying its pricing last year with flat pricing based on the meat protein that's selected. It did differentiate itself from its larger rival. Guacamole was offered at no additional cost. The same goes for Qdoba's signature queso sauce which isn't in the Chipotle play sheet. Simplicity has paid off with a spike in store-level sales, but now Qdoba wants to set itself apart.

"When we delved into the consumer research, what we heard was the consumer viewed Qdoba as a me-too brand, and a me-too brand to Chipotle," Casey said in a Fast Company interview earlier this month. "No brand wants to be in that place. The more we learned, it occurred to me that the brand need to take a pivot to own a white space in the industry."

Trying to fix something that isn't broken may seem like a bad strategy, but Jack in the Box's chain apparently wants to be a leader of a new category instead of riding Chipotle's coattails. It's not the safe call but it's the one that will reward investors if it pans out.

The article Qdoba Doesn't Want to Be the Next Chipotle originally appeared on Fool.com.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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