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Executive Summaries For: Qdoba, Firehouse, Jimmy John's, Dunkin'

|Includes: Jack In The Box Inc. (JACK)

Restaurant Research LLC

Executive Summaries for: Qdoba, Firehouse, Jimmy John's, Dunkin'

  • Qdoba is a fast casual burrito concept which leverages skilled cooks, an open grill, a friendly atmosphere and fresh, natural ingredients. The Qdoba experience is built on four key elements: 1) an environment that showcases handcrafted preparation; 2) food that celebrates the brand's passion for ingredients; 3) a menu full of innovative flavors; and 4) service that invites guest interaction. Even though Qdoba's performance on an absolute basis has been relatively healthy, its financial underperformance relative to Chipolte (and generally weaker external customer satisfaction scores) suggests room for Qdoba's improvement - especially as Chipolte gears-up for national advertising. Further, Taco Bell's pending upscale move (with its premium Cantina menu launch expected this summer) should pose a challenge to Qdoba because of its relatively weaker positioning in the Mexican fast casual space aggravated by significantly higher price points compared to Taco Bell's Cantina menu. In conclusion, it is our opinion that with proper execution, this brand could leverage its existing stable of appealing ingredients to improve and grow into a larger, more media efficient fast casual player.
  • Firehouse Subs is a very simple, straight forward deli concept which emphasizes a firehouse theme; large, quality sandwiches; and operational simplicity in the form of an unchanging menu. This brand's unique proposition has to do with a steaming process for its meats/cheeses that compares with competitors' emphasis on baked breads and/or toasting. Pricing is higher than Subway's $5 footlong deals with $5.49 to $5.99 for 8" and $2 more for footlongs. Despite this, Firehouse has been able to leverage its quality positioning to drive above average sales growth over the last 2 years. Just like Jimmy John's, Firehouse proves that there is room for deli sandwiches done right.
  • Jimmy John's (JJ) continues to drive impressive growth with a very simple and consistent business model that seems to never change. The brand is focused on stressing a quality menu of 8" subs and club sandwiches which leverage fresh ingredients and competitive price points along with a marketing message that emphasizes "freaky fast" speedy service. Along the way, the brand has created a hip, funny identity that resonates with its very loyal customer base - some of whom have happily traded-down from casual's higher price points. While we sometimes see JJ referred to as fast casual in the media, this categorization seems misplaced to us as this chain really is just about providing quality subs in a very transparent way (without the use of LTOs, gourmet offerings or other methodologies to drive higher ticket prices). Currently, we perceive that this chain exists in a sweet spot where new unit growth drives increased sales and superior marketing efficiency rather than cannibalization. Having said that, we do wonder if the chain could be hampered over the long-term by atrophied muscles that are not used to change as JJ eventually faces the fate of all chains - maturation. However, this is merely a hypothetical concern for now as JJ continues to prove that customers cannot get enough of a "freaky" good thing.
  • Dunkin is a proven brand with staying power that is fueled by loyal coffee customers that would just assume lose an appendage rather than miss their cup 'O Joe. Over the years, the brand has introduced sandwiches which have allowed Dunkin to expand beyond a plain and simple coffee and donut (treat) shop to a serious option for a more substantial breakfast and maybe even lunch. No doubt that Dunkin has more to do with expanding sales into the second half of the day where the system has so much unused capacity, but that is all upside. In the meantime, Dunkin has proven that it can grow even after McDonald's took square aim at its beverage business. This reflects quality products and compelling marketing that consistently communicates the brand's very simple message of serving a no-nonsense clientele that works hard for a living. We believe Dunkin is well positioned to continue unit level growth as it also expands across the US.

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Disclaimer of Liability: Although the information in this report has been obtained from sources Restaurant Research® LLC believes to be reliable, RR does not guarantee its accuracy. The views expressed herein are subject to change without notice and in no case can be considered as an offer or solicitation with regard to the purchase or sales of any securities. Restaurant Research's analyses and opinions are not a guarantee of the future performance of any company or individual franchisee. RR disclaims all liability for any misstatements or omissions that occur in the publication of this report. In making this report available, no client, advisory, fiduciary or professional relationship is implied or established. This report is intended to provide an overview of the restaurant industry, but cannot be used as a substitute for independent investigations and sound business judgment. Copyright 2012.