Dive Brief:
- Qdoba’s private equity owner, Butterfly Equity, announced Tuesday that it has secured a $527 million continuation fund to support the growth of the franchised Mexican fast casual chain.
- The deal was led by Apollo S3 — a subsidiary of Apollo Global Management, which owned Qdoba until Butterfly’s acquisition of the brand in 2022 — and is supported by new and existing investors.
- The fund “provides an attractive liquidity option for QDOBA’s existing investors, strengthens the Company’s capital structure and provides a clear runway to achieve its next phase of growth,” according to the announcement of the transaction.
Dive Insight:
Since acquiring Qdoba in 2022, Butterfly has made major changes to the brand: Qdoba sold more than 110 restaurants to franchisees in 2023, and another 11 in 2024, according to its franchise disclosure document. These sales shifted it from being significantly company-owned to overwhelmingly franchised.
Qdoba is looking to franchising to bolster its growth, with more than 500 units in various stages of development. The investment is intended to speed up the 800-unit chain’s expansion, per the press release.
“We have been impressed by the progress that Butterfly has made in positioning QDOBA for sustained growth and believe the depth and breadth of the Apollo platform enables us to execute bespoke transactions like this,” said Steve Lessar, Apollo partner and co-head of S3.
Qdoba’s unit economics are also growing. According to the chain’s FDD, same-restaurant sales across 377 mature franchised restaurants rose 9.3% in fiscal 2022, 5.8% in FY 2023 and 8.0% in FY 2024.
“Given this trajectory, we expect to double QDOBA’s system sales over the next five years,” Qdoba CEO John Cywinski, who has led the chain since 2023, said in the press release.
This sales growth is in keeping with the overall strength of the fast casual segment, though 2025 has not been kind to Qdoba’s largest competitor, Chipotle, which saw same-store sales fall 4% in Q2.
Despite the sales trouble at major brands, the restaurant sector is still drawing investment and M&A interest from major investors and private equity firms. Just this week, Philz Coffee sold to Freeman Spogli, for a reported $145 million.
