Qdoba Business
Plan
Prepare For: Potential Equity Investors, Banks
Prepared By: Ryan Janckila
Introducing: Qdoba
Qdoba Mexican Grill
Table of Contents
Executive Summary.........................................................................................................................iii
1.0 Introduction .............................................................................................................................. 1
1.1 Easy Eats................................................................................................................................ 1
1.2 Mission Statement ................................................................................................................ 1
1.2.1 Goals .............................................................................................................................. 2
1.3 Industry Overview ..................................................................................................................... 3
1.3.1 Industry Background .......................................................................................................... 3
1.3.2 Opportunities ..................................................................................................................... 4
1.3.3 Threats ............................................................................................................................... 5
1.4 Financing ............................................................................................................................... 6
2.0 Operations Plan......................................................................................................................... 7
2.1 Location ................................................................................................................................. 7
2.2 Floor Plan .............................................................................................................................. 9
2.3 Quality Control .................................................................................................................... 10
2.4 Day to Day operations ........................................................................................................ 10
2.5 Organization Structure ........................................................................................................ 10
2.6 Capital Budget ..................................................................................................................... 12
2.7 Working Capital................................................................................................................... 12
3.0 Human Resources Plan ........................................................................................................... 13
3.1 Job Descriptions .................................................................................................................. 13
3.2 Staffing Requirements ........................................................................................................ 15
3.3 Employee Training .............................................................................................................. 15
4.0 Marketing Plan ........................................................................................................................ 17
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4.1 Market Analysis ................................................................................................................... 17
4.2 The Marketing Mix .............................................................................................................. 19
4.2.1 Product ......................................................................................................................... 19
4.2.2 Pricing........................................................................................................................... 19
4.2.3 Place ............................................................................................................................. 20
4.3.4 Promotion .................................................................................................................... 22
5.0 Financial Plan .......................................................................................................................... 24
5.1 Financing Structure ............................................................................................................. 24
5.2 Dividend Policy .................................................................................................................... 24
5.3 Net Income and Cash Flow ................................................................................................. 25
5.4 Net Present Value, IRR ........................................................................................................ 25
5.5 Risk and Sensitivity Analysis ................................................................................................ 25
Conclusion ................................................................................................................................. 26
6.0 Summary ................................................................................................................................. 27
7.0 References ................................................................................................................................ A
8.0 Appendices ................................................................................................................................ B
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Introducing: Qdoba
Qdoba Mexican Grill
Executive Summary
Qdoba Mexican Grill is an American franchise model that we hope to bring to Saskatoon. Given
the expansion of Saskatoon’s economy and its population there is ample room for services and
restaurants in the Saskatoon Region. Qdoba will be branded in the fast casual industry which
currently has few competitors in the Saskatoon Market and provides a niche market in Mexican
cuisine that we wish to exploit. This business plan is a summary of our research, strategies, and
pricing models that show the profitability in this endeavor and highlights the paths for action
that we need to take in order to make Qdoba a profitable business venture in the Saskatoon
market. Some of the highlights or our analysis includes:
1. Achieving Profitability in Year One. With a modest base case scenario we have
determined that we can become immediately profitable and work to become more
profitable over the next 5 years.
2. NPV of 129,410. Based on our base case we also project to realize a NPV of 129,410
over the first five years of business. We expect a much larger return on our investment
but the modesty of our projections allow us to see the relative small amount of risk on
our investment. Our worst case scenario still sees average positive profits.
3. $0. Given our choice to lease our property we understand that the terms of our loan will
be short. This also means that our loan will be paid off after 5 years which will lead to
much larger cash flows and dividends to Equity investors in year 6.
Given the positive outlook that our research has provided we feel that our business plan is
economically feasible and we plan to start our business process early in 2015. We hope to
attract $300,000 in Bank Financing but would be open to more Equity investments if the right
opportunities and partners present themselves.
We Look forward to serving you at our future locations.
Ryan Janckila, Brad Simonson
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Introducing: Qdoba
Qdoba Mexican Grill
1.0 Introduction
Qdoba Restaurant Corporation (Qdoba) is a fast casual dining restaurant that features Mexican
based foods. Qdoba Mexican Grill was founded in 1995 in Denver, CO. Qdoba currently
operates over 600 restaurants in 42 US states as well as 1 location in Brandon Manitoba. With a
strong emphasis on its franchise-based business model, about half of its total operations are
franchised stores (Qdoba, 2012). Qdoba’s menu features a variety of Mexican-style dishes that
are of an American-influenced variety. Qdoba offers burritos, tacos, nachos, quesadillas, tortilla
soups, taco salads, salads, naked burritos, as well as a variety of beverages (Qdoba, 2012).
Qdoba also operates an open kitchen atmosphere where customers can see the preparation of
their food which helps Qdoba have an air of transparency.
1.1 Easy Eats
Our business, Easy Eats, operates here in Saskatoon and our objective will be to own and
operate one of Qdoba’s franchises with a strong possibility of growing Qdoba’s brand in
Saskatchewan as well as across Western Canada. Qdoba offers a lot of support to its
franchisees and will aide our marketing, site selection, and merchandising. Also a variety of
store equipment and design packages are available as well as training, management software,
and other tools to aide our business as we start to grow our company as well as the Qdoba
brand here in Saskatchewan (Qdoba, 2012). Initially our business will start out with 2 main
investors, Ryan Janckila and Brad Simonson, but we hope to attract more equity financing
through more investors. As our company grows it will be important to strategically position
ourselves as well as plan for growth as to be able to take on the extra strains of more locations
as well as finding the right human capital to keep our business successful.
1.2 Mission Statement
Easy Eats mission is to provide a friendly, healthy, and inviting atmosphere and menu that will
make our restaurants a routine dining destination. This mission statement encompasses our
beliefs of providing healthy food at a fair price. We also aim to provide an atmosphere that
encourages our customers to sit down and enjoy our fresh cuisine while relaxing in the
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Introducing: Qdoba
Qdoba Mexican Grill
ambiance of our modern dining arrangements. Our friendly and inviting staff always promise to
send you away with a smile on your face and a meal in your stomach.
1.2.1 Goals
In order to achieve the lofty expectations set forth in our Mission Statement, the management
of Easy Eats understands the importance of setting goals for both our organization as well as
our individual employees. As part of the effort to sustain our growth and establish our brands,
Easy Eats believes that the following Goals need to be engrained in our Management.
Goal # 1: Seek and provide the best dining experience for our customers
The objective of our first goal sets the emphasis of our business model on our customers.
Attracting and maintaining a strong customer base is our main objective and priority and by
providing the best dining experience in our atmosphere, our management is going to attract
and maintain our targeted customers. Customer surveys with incentives will need to be
administered to ensure our success as well as determine how many of our customers are
coming back.
Goal # 2: Attain profitability over the first two years
In order to prove the success of our goals we need to experience financial results that will make
sure our restaurants are successful within the first two years of operation. The two-year rule
applies to all our operations and should be a key objective for our management to reach and
achieve.
Goal #3: Create trust and brand recognition for our brands
Our third goal focuses on the importance of providing a positive experience to all of our diners.
Focusing on creating a consistent, healthy, and tasty product will allow our brand to flourish in
the Saskatoon market as well as the new markets our brands reach. Our success depends on
the trust that we can instill in our customers and our recognition can be measured through our
surveys as well through our online media presence.
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Introducing: Qdoba
Qdoba Mexican Grill
Employee Goals - Our Goals for our Employees will be instilled in our cooks, cashiers, line
servers, and Team Leaders.
Goal # 1: Seek and provide the best dining experience for our customers
Our first goal remains the same for both our management and our employees. This is more
essential in our employees as they become the face of our franchise. Our employees must be
focused on providing our customers with the best service and make sure that our customers
never leave our place dissatisfied.
Goal #2: Focus on improving ourselves first
The focus on our second goal is to help our employees achieve the most for themselves. We
want to create a working atmosphere that supports our employees and gives them the
opportunity to support themselves and improve their skills. Skilled and successful employees
will be given the opportunity to move up in our business which will help incentivize them to
provide better service and work hard. This can be measured through bi-annual reviews as well
as through customer compliments.
All of our Goals are focused improving our product and service offering and instilling our
business into the communities we become a part of. This means that all of our goals will be
treated as high-priority goals.
1.3 Industry Overview
1.3.1 Industry Background
Qdoba Mexican Grill operates in the fast casual industry that differs from fast food in several
ways. Where fast food typically offers a drive through, Qdoba operates only to through the
door customers. This makes Qdoba less convenient but distinguishes Qdoba’s position as fastcasual. Customers can come in and take their food out, or sit down and eat their food in a
contemporary, relaxed atmosphere. The perceived value to customers is the quality of the food
as well as a perception of healthiness. The product is also offered in transparent setting that
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Introducing: Qdoba
Qdoba Mexican Grill
allows customers to see the freshness and quality of the food they are buying. The Fast Casual
industry has seen rapid growth over the past ten years and has really exploded across the
United States (Sena, 2014). The reason for this growth is that the fast casual “concept marries
the age-old need to eat on the run to the much newer consumer demand for healthier options
(Sena, 2014).” Healthy living and eating has become more valuable to the average consumer
and the trend of eating healthy and living a healthy lifestyle will really help give Qdoba a corner
in the Saskatoon market.
The fast casual industry here in Saskatoon is currently quite limited. Direct competitors include
Deli’s, Subway, Extreme Pita, Pita Pit, Five Guys Burgers, some TacoTime locations, as well as
some pizzerias. Qdoba’s focus on healthy cuisine would narrow down the direct competition to
Extreme Pita and Pita pit. In 2008, Qdoba earned a “Smart Meal” seal from the state of
Colorado for “four of its ‘naked’ dishes (Caldwell, 2009).” The current competition for Mexican
Cuisine is very limited with TacoTime, and 3-4 fine dining establishments. The contemporary
Mexican food offered at Qdoba locations is not as spicy as traditional Mexican foods and is
more marketable to the predominantly Caucasian demographic located in Saskatoon. What
differentiates Qdoba from its competitors is the quality of the food and the flavours. “We
figured out what people like about Qdoba,” says Karen Guido, Qdoba’s Vice President of
Marketing, “Everybody (likes) the great food and the great flavours that we have (Bonnie,
2002).”
1.3.2 Opportunities
The Fast Casual industry is also one that remained strong during the recent 2007 economic
recession. When consumers began to feel the strains of the recession, their disposable income
spending changed, consumers “sought to spend them on healthier but still relatively
inexpensive restaurant options (Sena, 2014).” The industry also sees several opportunities in
the current market:
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Introducing: Qdoba

Qdoba Mexican Grill
Eating Out - The first opportunity is the increasing trend of eating out. Double income
families and baby-boomers are focusing on health and convenience and Qdoba is
positioned to attract both of these consumers.

Expansion -The second opportunity is the expansion of Qdoba recently into Brandon
Manitoba. The success of this franchise shows that Qdoba can be successful here in
Canada and that there is a market for the fast casual Mexican cuisine.

Growth in Restaurant Industry - Lastly there is also a recovering restaurant industry
within the United States and Canada (Qdoba, 2012). Growth is expected over the shortterm and with a new product offering here in Saskatoon there is an ample market to
serve with the Qdoba brand.
1.3.3 Threats
The industry also faces a few threats as strong growth often results in more competition.

New Restaurants - There have been many new restaurants opened in the Saskatoon
market and Qdoba will have to provide a differentiated product offering in order to
capture its share of the currently growing market in Saskatoon.

Threat of Substitutes - There also is a very high threat of substitutes as consumers can
fall back on competitors like McDonalds, Subway, KFC, and Tim Horton’s which many
consumers are very comfortable with. Also healthy home-prepared meals are becoming
more in-demand as consumers like to know what they are consuming.

Consumer preferences - Changing Consumer preferences also provides a threat to the
industry as consumers taste and diets change. Offering a variety of dishes ranging from
vegetarian to gluten-free can alleviate some of the threat but continual consumer taste
tests are important to maintaining a corner in the industry (Qdoba, 2012).

Untested Market - The contemporary Mexican cuisine is an untested market in
Saskatoon and there is always the chance that consumers may reject the taste as well as
the atmosphere.

Labour Costs - The last threat we identified for the fast casual industry is the rising
labour prices in Saskatoon. The recent economic prosperity experienced in Saskatoon
has pushed labour costs upward. The labour pool is also more limited in the Saskatoon
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Introducing: Qdoba
Qdoba Mexican Grill
market given the amount of jobs available throughout the entire market. This will make
operating costs slightly higher but they should be offset by the ability to charge
premium prices on the food Qdoba offers.
1.4 Financing
Ryan Janckila, an Edwards School of Business Student and Entrepreneur, and Brad Simonson a
successful businessman from Outlook, SK will provide equity financing of $200,000. A further
amount of financing will be needed and we are working to secure bank financing of $300,000.
With the expectation of solid growth and financial return Ryan will run the business as a soleproprietorship initially with a move to incorporate expected at a future date. Our conservative
financial projections show a solid foundation that gives that Qdoba the opportunity to achieve
profitability within the first two years. See Table 1.1 below
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Introducing: Qdoba
Qdoba Mexican Grill
2.0 Operations Plan
Qdoba is a fast casual contemporary Mexican restaurant with an emphasis on high quality,
healthy, and affordable food. Together with its inviting atmosphere, Qdoba will offer its
product in a contemporary setting with an aesthetic taste as well as transparent focus. The
restaurant will be managed by a General Manager who will supervise a group leader, 3 Line
Cooks, as well as 5 FTE line servers/cashiers. The restaurant will operate from 10:30 AM to
10:00 PM daily and operate 360 days/year. The location has been chosen and is located in the
Ironwood Crossing which is a new development on the corner of Preston Avenue South and
Hunter Rd. near the Stonebridge residential area.
2.1 Location
The location chosen for Qdoba is on the corner of Preston Avenue South and Hunter Rd. near
the Stonebridge residential area. The location chosen is adjacent to a new Stonebridge
shopping center that is anchored by Sobey’s and Shoppers. The Ironwood Crossing location is
also has attracted many medical tenants as well as a Tim Horton’s. This location is also located
close to Circle Dr. South and the neighborhoods of Nutana Park, Eastview, and Stonebridge.
Another benefit of choosing this building is the ability to attract the young professional
demographic residing in Stonebridge, many of whom are health conscious, fast-paced, with
considerable disposable income. Also the new development promises to attract many visitors
that are curious of the new offerings as well as commuters that find the area easy to access.
The newly developed area also has more flow available to the location with the recent
completion of the Circle Drive South access as well as the continual improvement to the
Preston Avenue/Circle Drive South interchange. With commercial areas located close by and
the continued expansion of the Stonebridge residential area, there also is blue collar workers
that frequent the area. Figures 2.1 and 2.2 show the map view and site plan of our desired
location.
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Introducing: Qdoba
Qdoba Mexican Grill
Figure 2.1 Aerial View of Property
Figure 2.2 Site View of Ironwood Crossing
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Introducing: Qdoba
Qdoba Mexican Grill
2.2 Floor Plan
The floor plan of a Qdoba franchise is very simple. The entrance door enters directly into the
queue line which flows to the Food Counter. The Food counter is located approximately 1/2 of
the way toward the back of the units which allows the back to be used for preparation of the
food and is directly viewable to customers standing in the queue line. The customer’s order
their food and progress toward the cashier who offers drinks and directs traffic to the drink
counter as well as a counter that holds napkins, forks, spoons, as well as spices and trash. The
seating area is located in the front of the restaurant with patio seating often available outside
for summertime operations. Washrooms and offices will also be located in the back. Because of
the tendency for customers to take-out their orders we only require 1300 sf and approximately
20 tables located inside our restaurant.
Figure 2.3 Floor Plan
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Introducing: Qdoba
Qdoba Mexican Grill
2.3 Quality Control
Consistency is the main priority of any fast casual restaurant and therefore it is important for
the food to maintain rigorous standards. Qdoba prides itself on its taste and quality and these
are some of the qualities that keep customers around. The importance of maintaining quality
will ensure that Food is tested frequently and quality products are always used. The importance
of using fresh ingredients is also evident in Qdoba as we use our fresh, healthy ingredients to
attract and maintain customers.
2.4 Day to Day operations
Qdoba will operate daily from 10:30 am to 10:00 pm and this operation will require a different
compliment of employees that will serve our two busy times: Lunch and Dinner. This will
require our first shift to start at approximately 10 am and our last shift to get off at 10:30. Our
staff needs will approximately be:

Opening to End of Lunch Shift (10 am – 4 pm) 1 Line cook, 1 Team Leader and 3 line
servers.

Beginning of Dinner to End of Day Shift (4pm – 10:30 pm) 2 Line cooks, 1 Team Leader,
and 3 line servers/cashiers.

The manager will start at 10 am and compliment all positions during heavy traffic times.
The manager can also fill in as Team Leader during alternating shifts. The Team leader
will be familiar with all positions and will fulfill any duties that need additional help.
2.5 Organization Structure
Our organization is focused on our customers so our organization chart shows them as the
biggest part of our corporate structure. Our Board of Directors will at first consist of the Equity
owners, Ryan Janckila and Brad Simonson, and they will provide strategic insight to the general
manager. Initially Ryan will fulfill this role and it is his obligation to oversee the team leaders as
well as anyone below him in the structure. The team leaders will overlook operations as well as
the line cooks and help out in any areas when deemed necessary. The line servers, cashiers, and
line cooks fulfill an important duty as they interact directly with the customers and provide the
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Introducing: Qdoba
Qdoba Mexican Grill
customer with the experience. Finally it is the customer’s duty to report any inadequacies
which will help make Qdoba more successful and adapt to its customer’s needs.
Figure 2.4 Organization Structure
Table 2.1 Operating Expenses
Schedule 4: Operating Expenses
Lease (5 year)
Franchise Royalty
Advertising Royalty
Accounting and Legal
Advertising (Marketing)
General Supplies
Insurance
Telephone
Utilities
Repair and Maintenance
Wages
Employee Benefits
Misc Variable Costs % Sales
Capital Cost Allowance
Debt Interest
Total operating Expenses
Ryan Janckila
2015
$
30.00
5%
2%
$
9.50
13.96%
0.5%
39,000
32,400
12,960
2,000
6,000
2,000
2,500
2,400
12,350
4,200
226,400
31,605
3,240
29,250
21,000
427,305
2016
2017
2018
2019
39,975
39,852
15,941
2,050
6,150
2,050
2,563
2,460
12,659
4,305
241,132
33,662
3,985
53,725
17,348
477,857
40,974
46,976
18,790
2,101
6,304
2,101
2,627
2,522
12,975
4,413
275,325
38,435
4,698
45,023
13,441
516,704
41,999
50,557
20,223
2,154
6,461
2,154
2,692
2,585
13,300
4,523
296,724
41,423
5,056
37,856
9,260
536,966
43,049
54,412
21,765
2,208
6,623
2,208
2,760
2,649
13,632
4,636
320,155
44,694
5,441
31,939
4,787
560,957
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Introducing: Qdoba
Qdoba Mexican Grill
2.6 Capital Budget
Our capital budget consists of the initial franchise fee as well as considerable leasehold
improvements. The contemporary design in Qdoba’s restaurants is very aesthetic and provides
a relaxed atmosphere that encourages customers to sit down and enjoy themselves. The
leasehold improvements of $165/SF will ensure this atmosphere and provide our location with
the desired look that will attract and retain customers (Qdoba,2013). The value for furniture
and fixtures also includes all the equipment necessary to make our location ready for business
as well as the tables, chairs, and other fixtures that are necessary (Qdoba, 2013).
Table 2.2 Capital Budget
Schedule 5: Capital Budget
Franchise Fee
Leasehold Improvements
Furniture and Fixtures
Total
2015
30,000
215,000
185,000
430,000
2016
-
2017
2018
2019
-
-
-
2.7 Working Capital
Inventories
Qdoba will have an average of 7 days of inventory on hand at any time. This will require
inventory turns of 52 times and orders will be appropriately placed from suppliers.
Accounts Payable
Qdoba will be able to get an average day’s payable of 14 days which is standard for restuarants.
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Introducing: Qdoba
Qdoba Mexican Grill
3.0 Human Resources Plan
As the owners and main equity investors, Ryan Janckila and Brad Simonson will oversee the
profitability and monthly operations. Ryan Janckila will also serve as General Manager and
oversee the day-to-day operations. Also there will be Team Leaders, Line Cooks, Line Servers
and Cashiers.
3.1 Job Descriptions
Owners- Owners are primarily involved in the monthly and yearly operations of Qdoba. There
strategic planning and financial management will ensure that Qdoba becomes and remains
profitable.
Monthly Activities:

Hiring and Firing of Key Employees

Crisis Management

Monthly Analysis of Operations – Review Key metrics
Yearly Activities:

Budgeting – Planning the budget for the next year

Year-end obligations
General Manager- The General Manager will oversee the day-to-day operations of Qdoba to
ensure that the business is well-run and managed.
Daily Activities:

Oversee Team Leaders/Employees

Ensure food quality and Freshness

Staffing and Scheduling

Inventory management
Monthly Activities:

Review Inventory levels, create new projections

Tentative staffing and scheduling

Review monthly key statistics and make changes
Yearly Activities:
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Introducing: Qdoba

Employee Reviews

Customer Satisfaction Surveys
Qdoba Mexican Grill
Team Leaders- Team leaders are responsible for overseeing the day-to-day operations in the
Food prep and serve areas. When any of the 3 other positions are in need of help the Team
Leader can also contribute to those areas.
Daily Activities:

Oversee the daily operations

Help in all aspects

Train new employees

Clean sitting area when frequently

Help GM schedule employees

Oversee Inventory
Monthly Activities:

Order More Inventory

Longer term Staff Scheduling

Provide Feedback to GM
Line Cooks, Line Servers, Cashier- These positions are focused on the day-to-day operations of
the franchise. They are essential to the business and must have a good attitude and a focus on
customer service.
Daily Activities:

Cook, Prepare, and Serve Food

Maintain and clean work areas

Clean bathrooms

Clean sitting areas

Serve Customers
Monthly Activities:

Provide feedback to Managers on day-to-day operations

Listen to customer needs and report to Team Leader or GM
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Qdoba Mexican Grill
Qdoba is focused on growing and building its employees and understands the importance of
maintaining a good report with all of the employees that make Qdoba functional. Our high
standard of customer service requires that sub-standard employees be released immediately.
Also the nature of this business will require Part-time labour which will require rigorous
scheduling and staffing requirements. Initially room for employee growth will be low but as we
expand to new locations there will be opportunities for the right employees to advance and
become General Managers of new locations.
3.2 Staffing Requirements
Qdoba will initially need 1 full time manager and 6 FTE. This will ensure that our human
resources needs are met with minimal overtime hours. We also will require additional staff for
every $125,000 in sales that we make in order to keep up to our customers’ demands. We will
initially pay our manager $50,000 a year and adjust that number for inflation. Our staff will be
paid generously at $15/hr for full time staff and $12/hr for part time staff. This is necessary to
improve the quality of the staff that is hired and to maintain employees for as long as possible.
Table 3.1 Human Resource Needs
Number of Employees:
Manager (full time)
Full time staff
Part time staff
125,000
1
6
1
6
0.38
1
6
1.52
1
6
2.09
1
6
2.71
50,000
176,400
226,400
40%
51,250
180,810
9,072
241,132
34%
52,531
185,330
37,464
275,325
33%
53,845
189,964
52,916
296,724
33%
55,191
194,713
70,252
320,155
34%
-
Table 3.2 Human Resource Expenditures
Salary and Wage Costs
Manager
Full time staff
Part time staff
Total Salaries and Wages
Total Wages/Total Sales
3.3 Employee Training
Initially Qdoba offers 4 weeks of employee training as part of its franchise fee. This will involve
finding qualified staff before our start-up date and training the staff which will involve 4 weeks
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Introducing: Qdoba
Qdoba Mexican Grill
of training at their Wheat Ridge, CO. Headquarters (Qdoba, 2012). The initial staff members
that are trained will then be responsible for training the other staff and help get them
acquainted with the operations of the Qdoba. Ideally the staff that will be sent to the initial
training will include both the General Manager and the Team Leaders. Employee Training will
be ongoing after the start-up and will be necessary for any and all new staff that is hired on to
any of the staff positions. The ongoing staff training will be the responsibility of the Team
Leaders but it will also be crucial for the other employees to mentor new employees. This will
instill pride in the work that employees do as well as help foster friendship between all the
employees. Employee hardships and issues will be the responsibility of the Team Leaders.
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Introducing: Qdoba
Qdoba Mexican Grill
4.0 Marketing Plan
Qdoba currently has the second most Contemporary Mexican food locations in the United
States with over 600 locations. Located primarily in the Southwest, Qdoba is slowly gaining a
footing throughout much of the rest of the US and is now located in 42 states as well as in
Manitoba (Qdoba, 2012). Its current positioning in the fast casual industry has allowed for
consistent growth and its focus on quality and health will make it a successful fit in Saskatoon.
4.1 Market Analysis
Competitor Overview
The overall restaurant industry is a very hard one to enter and become successful. With a lot of
established competition as well as substitute products, limiting forces, and many new
competitors, the restaurant industry is one that is hard to enter. The fast casual industry here in
Saskatoon however is quite limited. As seen from its growth in the United States, the fast casual
industry is generally recession-proof and provides more quality at a fair price. This leaves
Qdoba with fewer well-known competitors and provides a niche market in Saskatoon that is
waiting to be filled.
Direct Competitors
Qdoba’s direct competitors are limited to restaurants that specialize in the fast casual industry
and operate within the city of Saskatoon. The restaurants that focus on fast casual usually
provide healthier food, higher quality, in a timely manner. The average time to serve a
customer is under 5 minutes.
Table 4.1 Direct Competitors
Fast Casual Restaurant
Location
Value Proposition
Extreme Pita
Centre Mall
Pita Pit
8th Street
Customized food, Healthier,
Pita Focused, Counter Served,
Smoothies, Eat good feel good
Avg. Price – 6-12$
Customizable, Healthier,
Counter served, Pita Focused
Fresh thinking, Healthy Eating
Avg. Price – 6-12$
Ryan Janckila
17
Introducing: Qdoba
Qdoba Mexican Grill
Taco Time
Clarence & Taylor
Subway
Stonebridge Shopping Centre
Quizno’s
Clarence & Melville St.
Authentic Food and Friendly
Service, Fast food, Mexican
themed
Avg. Price – 6-10$
Submarine sandwich, Counter
served, customizable,
Healthy? Avg. Price - 5-12$
Counter served, toasted sub,
customizable, Flatbread,
Flatbread Pizza
Avg. Price – 5-14$
Indirect Competitors
Indirect competitors are those that offer fast food without the focus on quality. Recently
however, chains have started to move toward focusing of fast food and healthy alternatives as
the The more traditional branded fast-food locations such as A&W, McDonalds, Dairy Queen,
KFC, Burger King and Dairy Queen are more focused on fast food and consistency than on
quality flavour and healthy foods.
Figure 4.1 Position Map
Ryan Janckila
18
Introducing: Qdoba
Qdoba Mexican Grill
Given Qdoba’s unique industry position and its value proposition of offering consistent, healthy
and high quality Mexican cuisine, Qdoba has the opportunity to capture a large portion of the
Saskatoon market. The hardest part of our marketing plan will be to get customers through the
door and provide the best initial offering possible to the customer. By providing strong
customer service, a unique atmosphere, and a healthy product, Qdoba can be successful in the
Saskatoon market.
4.2 The Marketing Mix
4.2.1 Product
Qdoba offers a variety of fresh contemporary Mexican Food with a focus on healthy, consistent
product. Qdoba’s menu consists of counter served items that include burritos, tacos,
quesadillas, soups, salads, naked burritos, and nachos. Qdoba also offers a variety of drinks
including soft drinks, alcoholic beverages, and iced tea. Qdoba’s menu focuses on healthy, highquality food, made with fresh ingredients and with a focus on affordability. Qdoba also has a
focus on flavour that routinely brings new product offerings in trial formats to the customer
base.
4.2.2 Pricing
Qdoba has a value-oriented menu that focuses on providing products at a price that is
reasonable for the products it offers. The quality and freshness of the product also allows
Qdoba to charge a premium price over competitors. Since our Qdoba is the lone location in
Saskatchewan this means that some of the prices will be higher than different locations across
the United States. This is due mainly to the higher cost of produce and the materials needed to
make the product that Qdoba will offer. Our prices will be monitored by Qdoba headquarters
but the prices will be slightly higher in the U.S. given the higher costs (Qdoba, 2012). Prices on
the Menu will be as follows:
Burritos
Burritos are one of the main products offered by Qdoba and one of the products that really
distinguish Qdoba. Burrito’s offer fresh produce, protein, tortillas and legumes all in one
offering and are reasonably priced at $9.
Ryan Janckila
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Introducing: Qdoba
Qdoba Mexican Grill
Tacos
Tacos are another of Qdoba’s main product offerings which come in smaller volumes and in
Quantities of one, two, or three. The cost for the first taco is $4 and $2.50 per taco after that.
Grilled Quesadillas
Quesadillas are offered in the made to order setting and depending upon the ingredients
included the price varies from $7.50 - $8.50.
Naked Burrito (Taco Salad)
Naked burritos use basically the same ingredients that are used in the burrito simply without
the tortilla shell. The naked burrito will have a slightly lower cost of $8.50
Soup
Qdoba offers a Mexican gumbo soup that can either complement the entrées or stand alone.
Size in the key distinguishing factor and the cost is $8.50 for an entree and $4.00 for side.
3-Cheese Nachos
Nachos make up another item on Qboba that either can complement and entrée or stand
alone. The cost is the same as the soup at $8.50 for the entrée and $4.00 for the side.
Craft 2 Menu
Qdoba’s answer to McDonald’s dollar menu, the Craft 2 menu aims at appealing to cost
conscious consumers or those looking to get the better of 2 entrees. The Craft 2 menu allows
customers to hand pick reduced size entrees and combine them together to make a Cheaper
meal. Cost of $7.
Qdoba also provides kids meals, chips and dip, and breakfast at some locations. We are not
going to focus on these items but we have chosen not to operate during the breakfast hours.
4.2.3 Place
Location, Location, Location
The location that has been picked will enable Qdoba to market its products to a variety of
demographics. Qdoba can use the location to appeal to all the consumers in the Saskatoon
Market. We believe that the new business plaza at Ironwood Crossing will give us a competitive
advantage in the local market and allows us to identify with the current atmosphere in the
Stonebridge neighborhood which emulates growth. Qdoba has the opportunity to grow with
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Introducing: Qdoba
Qdoba Mexican Grill
the neighborhoods it is part of. High volume sof traffic through this area during business
operating hours at lunch and dinner gives this location opportunities to showcase Qdoba. The
development of the retail and commercial area in this part of the city also attracts attention
and it’s important for the initial marketing campaign to get these curious consumers through
the doors.
Market Segmentation
Qdoba focuses on attracting a market that is determined mostly on the psychographic
characteristics of the consumers. The consumer that is most interested in Qdoba has a need for
healthy food and strives to fulfill this need in the most convenient way possible. When looking
at these characteristics there are a few different target markets that must be focused on for
Qdoba to be successful.
Target Markets
Young Professionals
The most important market that Qdoba must attract is the young professional segment. This
segment is made up of males and females ages 21 – 35 that are unattached, recently married,
or Married for 5-10 years. The young professional segment is focused on finding healthy
alternatives that are often convenient to their consumption and provide ample nutrients in one
meal. This segment is expected to fuel the lunch hours as well as become frequent visitors
during the supper hours as they rush between work and entertainment obligations. It is
important to note that the aesthetic atmosphere also provides a place for the consumers to
quickly eat during lunch and dinner.
Families
As consumers have become more knowledgeable about their dietary needs, the importance of
finding food that is fresh, healthy, and readily available is important to families. Given the large
amount of Medical tenants in the Ironwood Crossing development it becomes critical to attract
the families that are coming and going from appointments. With the rush acquainted with
some family appointments, this segment can be counted on to come in for both lunch and
supper and capitalize on the value of Qdoba’s menu as well as the healthy, high quality food
that Qdoba delivers.
Ryan Janckila
21
Introducing: Qdoba
Qdoba Mexican Grill
Students
This segment includes both high school students with their driver’s license as well university
students. Students have become a lot more health-conscious over the last decade and their
eating habits have changed. Students who can afford quality and even those that can’t often
will spend their limited resources on higher quality food. This is important in the Stonebridge
neighborhoods as a large amount of low-middle income housing has attracted students into the
Stonebridge area. Given Stonebridge’s location away from the U of S campus we would expect
less traffic from students during the day but also hope to achieve higher volumes during the
evening hours. The relaxed atmosphere and new food also promises to attract local high school
students during the lunch and supper times.
Value Proposition
When Qdoba targets the segments listed above it is important to remember that all
demographics of the marketplace must also be reached and our message should not dissuade
baby boomers and other demographics from frequenting our place. It is also important for the
Qdoba brand to be distinguished from competitors and for consumers to associate Qdoba as a
new, but well managed brand to the Saskatoon market. Qdoba’s value proposition includes the
following elements:

High Quality products made from fresh ingredients

Healthy food that is both convenient and cost friendly

Aesthetic Transparent Atmosphere that attracts and retains new customers
Positioning Statement
Qdobas positioning statement is: “Qdoba provides an aesthetic, transparent atmosphere that
offers high quality, healthy, contemporary Mexican cuisine at an affordable and cost friendly
price.”
4.3.4 Promotion
Qdoba is focused on growing community identity with its brand, attracting and maintaining
new customers, and reaching its key target markets through targeted advertising campaigns.
Ryan Janckila
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Introducing: Qdoba
Qdoba Mexican Grill
Brand
Qdoba currently lacks any type of brand strength and this makes its brand less of a competitive
advantage. The quality and consistency of Qdoba’s brand offers ample opportunities of growth
within the Saskatoon community. A strong consistent brand will help customers identify with
the positioning statement above and allow them to make dining choices in the future as Qdoba
expands across Western Canada. The importance maintaining product consistency, keeping an
aesthetic environment, and maintain prices at their current value will help attract consumers to
the Qdoba brand.
Marketing Blitz
Since Qdoba is a new franchise to the Saskatoon market it is important that the initial push to
attract consumers is made and all avenues are pursued. Print and Radio advertising, pamphlets
and brochures, coupons, and sampling of Qdoba’s product are all avenues that must be used to
push customers through the doors. Our initial marketing cost is included in our budget and we
project the cost including the cost of food to be around $10000. Some of the initial cost and
marketing is initiated by Qdoba on behalf of its franchises and it uses the money that it gains
from the advertising royalty fees to do local advertising on behalf of the franchise. Qdoba does
this because local branches often do not set aside enough funds to ensure their brand is
reaching the right segments of the market (Qdoba, 2012). The initial Grand Opening will be a
week-long event that will highlight one menu-item each day and reduce its cost significantly or
offer it for free. This tool will help create a buzz in the Saskatoon community and provide
Qdoba with first time customers. It is unfeasible to maintain all the initial customers as some
may not identify with the product offering. However, a strong dedication to consistency of
product and service will ensure that customers come back again, and again, and again.
Table 4.1 Advertising Budget
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Introducing: Qdoba
Advertising Royalty
Advertising Budget
Funds Available
Grand Opening
Local Advertising
Pamphlets
Coupons
Samples and New Ads
Qdoba Mexican Grill
2015
15,120
6,000
21,120
5,000
5,280
2,112
2,112
6,616
2016
18,598
6,150
24,748
6,187
2,475
2,475
13,611
2017
21,922
6,304
28,226
7,056
2,823
2,823
15,524
2018
23,593
6,461
30,055
7,514
3,005
3,005
16,530
2019
25,392
6,623
32,015
8,004
3,202
3,202
17,608
5.0 Financial Plan
A financial model will be available with this Business Plan. It includes a base case scenario with
average daily customers of 175 customers and an average transaction price. The financial
model also includes a sensitivity analysis that attempts to address the sensitivity of our model
to adjustments in the number of customers and the average transaction price. This model also
includes the projected income statement, cash flows, and balance sheet for next 5 years.
5.1 Financing Structure
As we discussed earlier our capital needs are $500,000. Forty percent of this will be financed
through equity and the other sixty percent will be financed through a bank loan with a several
assets of the investors held as collateral for the $300,000 loan. The terms of the loan will be 5
years and that balance will be paid off by the fifth year of operation.
Table 5.2 Debt Amortization Table
Schedule 7: Debt Ammortization
Beg Balance
Addition
Payment
Interest
Principal Reduction
End Balance
2015
5
300,000
73,167
21,000
52,167
247,833
2016
247,833
73,167
17,348
55,819
192,014
2017
192,014
73,167
13,441
59,726
132,288
2018
132,288
73,167
9,260
63,907
68,381
2019
68,381
73,167
4,787
68,381
-
5.2 Dividend Policy
Our dividend policy will pay out dividends in the second year of operations. These dividends are
determined from the ending cash balance of the previous year and when it reaches a certain
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Introducing: Qdoba
Qdoba Mexican Grill
threshold dividends are paid out. This is to ensure the investors remain happy and see some
return on their investment.
Retained Earnings Account
Beg RE
Net Income
Dividends
End RE
50,000
26,549
26,549
26,549
50,155
29,821
46,883
46,883
98,888
49,367
96,404
96,404
122,251
85,433
133,221
133,221
145,410
96,836
181,795
5.3 Net Income and Cash Flow
The profitability of Qdoba is evident in its first year of operation and our operations show an
average net income of $88,650 over the first 5 years.
Taxable Income
Income Taxes
Net Income
88,650
30,516
3,967
26,549
57,649
7,494
50,155
113,664
14,776
98,888
140,518
18,267
122,251
167,138
21,728
145,410
The cash flow of Qdoba is evident with its short term Cash needs being adequately provided
for.
Net Cash Flow
Cash Bal Beg of Year
Cash Bal End of Year
79,821
79,821
19,546
79,821
99,367
36,066
99,367
135,433
11,402
135,433
146,836
12,817
146,836
159,652
5.4 Net Present Value, IRR
Under Qdobas base case model our net present value prediction of $129,140 and an IRR of
39.9% show positive numbers that will positively affect our outlook on this proposition. It is
important to note that the numbers reflect conservative numbers and we feel that the niche
market has ample room to provide more customers than we project.
5.5 Risk and Sensitivity Analysis
Our sensitivity analysis revealed the following:
Table 5.1 Sensitivity Analysis
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Introducing: Qdoba
Qdoba Mexican Grill
Sensitivity Analysis
Customers/day
135
155
175 (Base)
195
215
Average 5 year Profit
Net Payback
15,386
(83,043)
52,754
182367
88,650
440,413
121,546
683,460
154,443
926,507
IRR
-9.9%
18.3%
39.9%
56.7%
72.0%
Avg Transaction Price
$10
$11
$12 (Base)
$13
$14
Average 5 year Profit
Net Payback
36,200
63,583
62,537
252,558
88,650
440,413
112,637
617,635
136,624
794,857
IRR
6.8%
24.6%
39.9%
52.3%
63.8%
Looking at the sensitivity analysis there is minimal risk in the movement of transaction price
down as the avg transaction price still returns a net payback after 5 years. However the loss of
40 customers a day could result in a negative net payback and would render this business
infeasible. Our break even Analysis revealed:
Figure 5.1 Break even Analysis
Conclusion
In conclusion we can see that our business plan is financially feasible with some risk involved.
However given the conservative nature of our predictions there is room for growth and we
believe this business can become very profitable in 5 years.
Ryan Janckila
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Introducing: Qdoba
Qdoba Mexican Grill
6.0 Summary
As we have determined with our analysis of Qdoba and with this business plan, Qdoba is both
financially feasible and has the opportunity to grow quickly in the Saskatoon market. Given the
limited competition in the fast casual industry, a focus on high quality, healthy food, and
Saskatoon’s thriving Economy we have chosen to proceed with this business. We look forward
to acquiring financing and opening our location later next year.
Ryan Janckila
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Introducing: Qdoba
Qdoba Mexican Grill
7.0 References
Bonnie, B. C. (2002). Regional powerhouse chains: Qdoba mexican grill. Nation's Restaurant
News, 36(4), 168-169. Retrieved from
http://search.proquest.com/docview/229332376?accountid=14739
Caldwell, M. (2009). Qdoba's smart meals. Nation's Restaurant News, 43(16), 54. Retrieved
from http://search.proquest.com/docview/229415273?accountid=14739
Cebrzynski, G. (2005). 'Emotional' qdoba campaign to reinforce positioning. Nation's Restaurant
News, 39(18), 15. Retrieved from
http://search.proquest.com/docview/229376020?accountid=14739
Thorn, B. (2007). Ted stoner: Qdoba mexican grill. Nation's Restaurant News, 41(36), 42.
Retrieved from http://search.proquest.com/docview/229353121?accountid=14739
Qdoba mexican grill(R) introduces new kids meals to give kids nutritious choices. (2009, Dec
14). Business Wire Retrieved from
http://search.proquest.com/docview/443714580?accountid=14739
Qdoba mexican grill rolls out enhanced qdoba rewards program. (2011). Food and Beverage
Close - Up, Retrieved from
http://search.proquest.com/docview/848274794?accountid=14739
Qdoba mexican grill(R) invites guests to "craft 2". (2010, Jan 26). Business Wire Retrieved from
http://search.proquest.com/docview/443602994?accountid=14739 Qdoba(R) frees the
flavor; "extras" no longer cost extra. (2014, Oct 03). Business Wire Retrieved from
http://search.proquest.com/docview/1567030003?accountid=14739
Qdoba restaurant corporation: Foodservice - company profile & SWOT report. (2013). ().
Basingstoke: Progressive Digital Media. Retrieved from
http://search.proquest.com/docview/1552394934?accountid=14739
Sena, M. (2014). Fast Casual Industry Analysis 2014 - Cost & Trends. Franchise Help.
Retrieved from: https://www.franchisehelp.com/industry-reports/fast-casual-industryreport/
Spielberg, S. (2005). QDOBA MEXICAN GRILL. Nation's Restaurant News, 39(5), 172-172,174.
Retrieved from http://search.proquest.com/docview/229393443?accountid=14739
Ryan Janckila
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Introducing: Qdoba
Qdoba Mexican Grill
8.0 Appendices
Financial Model – See Attached Spreadsheet
Ryan Janckila
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