Riah VandeZande
Economics
Mr. Reuter
14 March 2017
Qdoba vs. Chipotle
One of the most raging debates of this decade lives on as consumers continue to debate whether Chipotle or Qdoba is the better buy. When choosing their preferred Mexican fast food restaurant, many cite ingredients, taste, and price, among other criteria. However, to truly compare the two chains, we can perform cost-benefit analysis of their pricing strategies, marketing, and growth.
Chipotle and Qdoba can trace their origins to Denver, Colorado in the mid-1990s. Both found immediate success and began franchising by 1998. As competitors from the start, Chipotle began marketing its natural and fresh ingredients to set itself apart from the rest of the field. This strategy proved beneficial as the number of Chipotle locations jumped from 16 to over 500 in just 8 years. Since then, Chipotle has added locations in the UK, Germany, and France while Qdoba has yet to leave the US and Canada. The figure below compares the prices of Qdoba and Chipotle in 2012, and indicates that Qdoba used to be only about $0.13 cheaper, on average. At the time, it seemed to investors that Chipotle was a better value due their high quality ingredients. However, it was not long until Qdoba dropped a shocking new promotion.
In October of 2014, Qdoba shook the world of Mexican casual food when it began including extras such as guacamole and queso at no extra charge. However, Qdoba’s decision, like every decision, involved an opportunity cost. While the new method was designed to grow sales, it also decreased profit margins and caused the price of Qdoba entrees to increase by almost $2. For many, the higher price combined with lower quality ingredients meant a switch to a new fast food restaurant, perhaps even Chipotle.
So how did this monumental decision turn out for Qdoba? Well, from the figures below, it is apparent that Qdoba’s stock, Jack in the Box, has continued to increase since 2012, whereas Chipotle has not grown steadily. That said, Chipotle still has almost 1,400 more locations and its stock market value is still 4x greater than Qdoba’s. This is partly due to the stifling effect of Chipotle’s massive economic growth early in Qdoba’s startup. As Chipotle’s stock grew by more than 600%, Qdoba simply could not keep up. But it is that same rapid growth that has recently caused investors to favor Qdoba’s stock. Simply stated, it is impossible for Chipotle to continue such rapid growth, however; Qdoba has been steadily growing and continues to project yearly growth in the double digits.
Which casual Mexican-style restaurant is better? I’ll leave that up for you to decide. However, based on statistics alone - it is difficult to say which chain will edge the other out as more and more fast casual restaurants are introduced to the free market. Additionally, as scarcity begins to play a role in the Mexican-style food industry, it will be interesting to see what tough decisions are made by the two chains in an attempt to keep their share of the market sector. I believe I speak for all consumers when I say that hopefully, there is more free guacamole in our future.
Works Cited
La Monica, Paul R. "Chipotle vs. Qdoba: Investors like the Q." CNNMoney. Cable News Network,
21 Oct. 2014. Web. 9 Mar. 2017.
Tuttle, Brad. "Chipotle Rival Qdoba Adds Free Guacamole, Queso, Extras to Menu | Money."
Time. Time Inc., 3 Oct. 2014. Web. 9 Mar. 2017.
Shen, Lucinda. "How Chipotle Is Still Putting Pressure on its Competitors." Fortune. Time Inc., 12
May 2016. Web. 13 Mar. 2017.
The numbers may lean in Chipotle's favor, but Qdoba will always be better in my opinion. They have this lime chicken that Chipotle simply can't hang with. The workers at Qdoba are great too, you can ask if they can put on a little more meat, or rice, or queso, or whatever you like, and they hook you up for free. Also Qdoba has better sauces. While numbers may decide Chipotle, I have to say Qdoba is the better chain.
ReplyDeleteThis blog post was very well written with lots of statistics and information. I also am curious as to what Chipotle and Qdoba's future holds. I think if the two businesses combined Chipotle's chips with Qdoba's food they would make large profits. It was interesting to see the statistics in 2012, how you compared it 2014, and to today. I hope that both businesses are successful, because both businesses have great tasting food.
ReplyDeleteI'm not particularly familiar with either as a consumer, so I can't voice much of an opinion on either from experience. I do however find the balance between over all quality and variety of toppings interesting. Personally, I think I'd opt for Chipotle for it's focus on quality.
ReplyDeleteIt seems that a company could opt for top quality, standard ingredients, but then not be able to afford much variety of ingredients if they're all set to the same standard due to more obscure toppings possibly being more expensive. If that opportunity cost is not the case however, and there are means that the company can obtain unique, quality toppings without a high price, Chipotle should definitely try to focus on beating Qdoba with quality ingredients AND variety.
I think that you brought up some great points showing how at first chipotle took off way faster than Qdoba and is almost 4 times bigger than it but also how Qdoba's stocks are doing way better. I think that this was a perfect comparison especially since both of these companies came out around the same time and since they are both the main competitors in the mexican fast food industry. Answering your last question, I think that Qdoba will probably be able to pull through mainly because Chipotle have already hit their peak and Qdoba has shown consistent growth but since they use lower grade products, there will most likely always be some to come buy. We don't know for sure but Chipotles high quality products may soon raise in price because of scarcity.
ReplyDeleteThis is a very interesting topic. I did not know that there was chipotles in Germany and in other countries outside of the US. I have never been at either of these restaurants. Based on the information you gave I would go to chipotle, because the food there is better quality. It is very surprising that there is such a small price difference in between these two restaurants.
ReplyDeleteComing from someone who enjoys both Qdoba and Chipotle, it is disappointing how the prices even out. Although Chipotle is trying to make a profit in their sales and add more competition with these better ingredients, it seems, from experience, more people are drawn towards Qdoba due to their cheaper price. It doesn’t matter what food tastes better, people want to save money. The benefit of receiving the option of free guacamole instead of paying the extra money, it is noticeable how people choose Qdoba. Despite the healthier ingredients and the many locations of Chipotle, some of the points you made were interesting that not many people think of when it comes to this topic. But in my opinion, Qdoba is the better choice due to pricing.
ReplyDeleteI think that you brought up some great points showing how at first chipotle took off way faster than Qdoba and is almost 4 times bigger than it but also how Qdoba's stocks are doing way better. I think that this was a perfect comparison especially since both of these companies came out around the same time and since they are both the main competitors in the mexican fast food industry. Answering your last question, I think that Qdoba will probably be able to pull through mainly because Chipotle have already hit their peak and Qdoba has shown consistent growth but since they use lower grade products, there will most likely always be some to come buy. We don't know for sure but Chipotles high quality products may soon raise in price because of scarcity.
ReplyDeleteIn my opinion Chipotle is better although it is true that Chipotle used to be more popular and has lately started to become less and less popular due to competitors. Which means that the money that they are making will slowly start to decrease since they will not be making as much profit. Also the prices at Chipotle are also more expensive which might be a downfall if there are other competitors that consumers could go to instead one of these being Qdoba.
ReplyDeleteI think it is very interesting that you compared the two as I myself go back and forth between which I like better. Seeing how each tried to grow is also interesting. By expanding and putting thousands of locations out that it is easier access to chipotle especially with them being all over the world. But I think it was smart of Qdoba to try to be different, by offering free sides, and trying to branch out that way, in which they succeeded by pulling more customers in. Both are very successful businesses and I think it is fascinating to see how quickly they grew.
ReplyDeleteOkay, first off I want to state that Qdoba is better. Secondly, in an economic standpoint, it is pretty shocking how the prices differ. I already think Qdoba is way too expensive, so to be adding on almost $0.25 for Chipotle, it's not even worth it. This was a good comparison because of the competition the two bring in. It seems that a following theme includes which has more quality food (Qdoba), and which is trying harder to get customers (Chipotle).If I ever want a little bit of extra chips or guac, they hook me up free of charge. Their customer service is more efficient than Chipotle.
ReplyDeleteI believe it is all a matter of opinion. I have had Chipotle once and wasn't a big fan, but I absolutely love Qdoba. Both of Chipotle and Qudba are fairly priced, I think Chipotle is a bit higher priced but they also have a good serving size. It all comes down to how much money you are willing to spend in the end, and what place you enjoy eating at more.
ReplyDeleteAs an avid Qdoba lover, my opinion might be slightly swayed. However, I feel that both are good options, and bring a competitive vibe to the market as they sell very similar products, at fairly similar prices. Most consumers are likely to pick the cheapest option, however that is clearly not the case, as shown by your graph and success of restaurants. I think when Chipotle had the whole salmonella and E coli scandals is when most people took a second look at their opinions and choices. That could be why the stock has slowed down. I do think that Qdoba made a good decision with the opportunity cost of adding in extras like queso and guac, because it makes them seem better when they don’t have to inform you “guac is extra”. Both are very good businesses, and offer slightly different but similar products.
ReplyDeleteIt is fair to say that Chipotle is undoubtedly the more popular Mexican restaurant in the eyes of both consumers and the stock market. It has far more locations, and gets more publicity -- both good and bad -- than Qdoba has ever seen. Personally, I think this popularity is justified. I have always enjoyed Chipotle more than Qdoba, as I find their foods to be fresher, tastier, and healthier than anything Qdoba has to offer. However, my family has dined at Qdoba for years, and my parents eat at Qdoba far more than they eat at Chipotle. Therefore, I believe that both companies are great, and I hope that both stay around for many years to come -- regardless of my preference between the two.
ReplyDeleteWhen it comes to deciding which restaurant to go to, Chipotle is the answer for me. I could go on and on about why but that is simply opinion. More importantly are facts and the major differences that set these two companies apart. Chipotle is cheaper on average than Qdoba, uses more organic and GMO free products, and gives you more food when comparing the burrito bowls. I think these are three benefits that increases the market for Chipotle, therefore, making it the better company economically.
ReplyDeleteIt is a very interesting competition between both companies. Chipotle’s supply of more quality ingredients does make their meals very attractive. Not only are the ingredients more quality, the prices of the meals are also cheaper than those of Qdoba’s. Both of these characteristics makes Chipotle a high quality option between the companies. Although Chipotle does have two big positives when it comes to dining, Qdoba did entice many consumers with the introduction to their additional sides. The addition, although making the meals a little more expensive, adds more product the consumer can enjoy. Chipotle does have higher quality ingredients but it seems that Qdoba is not far behind in that department. Also looking at more meal add ons such as drinks, Qdoba has the unlimited, choose whatever soda you want, machines that everyone seems to enjoy. Personally that is a huge plus as Chipotle doesn’t offer nearly as many options to drink. In general it seems that Chipotle and Qdoba are locked in a tight race for the best Mexican fast food.
ReplyDeleteJaeger H
It is an ongoing debate in my household whether Chipotle or Qdoba is the better stop. Some of my family argues that Chipotle is healthier and has more fresh ingredients, whereas the other members argue that Qdoba is worth the expense because it simply "tastes better." Personally, I had always chosen Qdoba because I had a bad experience at Chipotle and had felt sick after eating there. I was especially skeptical when they were dealing with an E. Coli contamination. However to many people, Chipotle offers greater benefits regarding products and prices. After weighing the costs and benefits, it was evident that Chipotle provides fresh, and healthy products, despite the contamination, as well as a cheaper price. Because of these components, Chipotle has skyrocketed. They were able to expand drastically because it is the unique, preferred stop over Qdoba. The way that they're expanding, it is possible that they will reach higher success than their competitor.
ReplyDeleteAlthough they have many benefits, I still prefer Qdoba over Chipotle and their free guacamole.
Obviously, the choice between which tastes better, and overall is better, is up to the consumer themselves. I believe Chipotle offers better ingredients, and handles their food a little better compared to Qdoba. On the other hand this raises the question of which is better in terms of price, and that lies in the hands of Chipotle who's menu is cheaper, of better value, and has quality ingredients. Whereas Qdoba seems to cut corners in their meal making, as I have witnessed first hand, and based on eating out observations, I have noticed a rush of more people at Chipotle rather than Qdoba. Qdoba opened their doors in 1995 adding to the new market of competition in Mexican casual. Chipotle opened up in 1993, two years prior, with a substantial popularity over the competitor, Qdoba. For many years, the growth of this company was far greater than Doba, and put them ahead. Now, after over a decade, Qdoba has failed to surpass the 4x lead in the stock market that Chipotle has. In addition, the spread of Chipotle has gone world wide, with locations spreading outside of the US, such as in the UK, and others, whilst Qdoba has remained in the US and CA. So which is better? It would have to be Chipotle, as their more well known, have a better financial and economic status, more locations, better prices (in most cases), and a longer stay in the market.
ReplyDeleteChipotle has obviously had more buzz over social media so it would be interesting to see if people have even tried Qdoba to compare. I personally like Qdoba better, but since Chipotle has more locations they can increase supply. Both are huge competitors and practically sell the same product. However, the decision for Qdoba to include Guac is definitely a good selling point because when a cashier says, "that'll be extra," when you want to add something to your burrito you become slightly enraged. You know it cost the company a few cents more to make the guac or queso, so you feel like they are just taking your money. By Qdoba's policy change less customers will feel taken advantage of and in turn, revenue will increase.
ReplyDeleteOverall we can say that Chipotle is the more popular, and therefore more successful restaurant between the two options. I've eaten at both places multiple times, and I actually have to vouch for Qdoba. They have more options and their ingredients are fresher and tastier, not to mention they do usually give you a larger quantity than Chipotle (in my experience). Because of Chipotle's success in the US, the company was able to expand to locations outside the US and Canada, which further increased their success. Of course, the whole E. Coli issue put a huge dent in their popularity as customers became skeptical of its safety, but it seems to be up and running again and will most likely be able to regrow its drop in stock.
ReplyDeleteThis is a debate I am quite bias in, Qdoba is one of my favorite restaurants. However by reading the article it shows how popular chipotle is. They have a very high price stock meaning they have a lot of value. All I personally know about the Chipotle franchise is when they had a food poising case. So I really never went there again. Ever since then I found great interest in Qdoba. This article is very interesting because it shows more than the taste of these food companies and the economics aspect.
ReplyDeleteI've always wondered the numbers behind which restaurant was better. Through the numbers it seems chipotle wins, and I'm not too surprised, since social media has done a lot more with chipotle than Qdoba. I've always liked Qdoba more though, one because of the food, and two because of the vibe. Qdoba seems to be more cheerful since chipotle has a dark setting. Anyways, the article was an interesting read on the debate of the two restaurants.
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ReplyDeleteThis debate is really interesting, understanding how two similar restaurants deliver their differentiated products while influencing a majority of the community to decide between the two. Honestly, to me its a really hard decision to make between the two as I don't really care. The food seems the same at both restaurants while the numbers aren't that varied to pick one over the other, either. So I just end up eating at the one that is closer.
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