JACK IN THE BOX BUYS FRESH-MEX CHAIN FOR $45 MILLION

Qdoba Mexican Grill Purchase a First for No. 4 Burger Company

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CHICAGO (AdAge.com) -- Jack in the Box today became the latest fast-food chain to gain footing in the fast-casual dining segment, acquiring Qdoba Restaurant Corp., which franchises Qdoba Mexican Grill, from a private investment group for $45 million in cash.

85 units in 16 states
Qdoba Mexican Grill, a Denver-based fresh-Mex chain founded in 1995, posted $65 million in sales in 2002 for its 85 units across 16 Western states. This is the first such purchase for Jack in the Box, which is revamping its own menu amid sluggish sales.

The deal between Jack in the Box and ACI Capital Co., Western Growth Capital and other private investors closed today.

Qdoba sales at stores open at least

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a year grew 12.3% for the year ended Dec. 29, 2002, with a compound annual growth rate of 43% for systemwide sales since 1999. The chain's menu features large burritos and salads, and its signature Naked Burritos, a so-called burrito salad without a tortilla.

"Qdoba Mexican Grill is a unique concept with significant national growth and franchising potential that is consistent with our long-term strategic direction," Robert J. Nugent, chairman-CEO of Jack in the Box, said in a statement.

Sales down
The San Diego-based Jack in the Box ended its fiscal 2002 with a 0.8% decline in same-store sales on heavy price competition and economic woes. Last September, the company, the No. 4 burger chain in the U.S., detailed a five-year plan to expand the core brand through a convenience store and gas station concept, while offering lighter non-hamburger foods at its restaurants. At the time, executives said the company will "evaluate other restaurant concepts for acquisition" to supplement its growth and balance the risks of the quick-service category.

Investors bridled at the news in early trading, sending shares down to $16.25 from is earlier close at $16.41.

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