A Fresh Start

By Reid A. Paul | August 01, 2005

In the world of fast-casual Mexican restaurants, freshness is key: Fresh ingredients, fresh concepts, fresh approaches. In the late 1990s, when concepts like Chipotle, Baja Fresh, Qdoba and Rubio's first began to get noticed, everyone in the industry wanted to see what worked. While analysts (and a few filmmakers) were roundly criticizing the QSR segment, fast casual was the next big thing. The concepts may have been fresh, but the question remained: What would work?

Not surprisingly, the industry's biggest players also wanted a piece of the action, with McDonald's acquiring a 90 percent stake in Chipotle in 1998, and four years later Wendy's and Jack in the Box followed suit purchasing Baja Fresh and Qdoba Mexican Grill respectively.


While Baja Fresh has cooled off significantly, both Chipotle and Qdoba continue to grow, expand and remain profitable. Recently, Hospitality Technology caught up with Qdoba's Bill McMillan, vice president of information technology, to find out how Qdoba has handled its rapid growth and where it is planning to go.

Young at heart
One of the advantages of starting fresh for Qdoba is the opportunity to start its franchisee agreements from scratch. Rather than coping with legacy systems and legacy agreements, Qdoba has ensured that all its units are on the same level.

"Franchises are required to have the same POS as corporate-owned locations, which gives us huge advantages," McMillan explains. "We can tell them when it's time for updates, we can coordinate the updates for them. When we rolled out new programs such as our Qdoba Cash Card or Qdoba Loyalty Rewards Program it was a very smooth transition. Because that fit is there, we offer a lot of support to our franchisees."

"We really have a very talented IT support staff," McMillan insists. "We recently started offering our franchisees the use of our support services. While we do charge for these services, it is a not for profit model."

When McMillan joined Qdoba in October 2001, the company had few of the requisite technologies in place to help it meet its growth expectations. McMillan joined Qdoba as it struggled to roll out a new MenuLink back-office system. "We had two desktop computers running the network and doing all of the data collections from the stores," he recalls. "Our two offices were separated by an alley, with a network cable out the window going across the alley to the other office. As we have grown as a company we gradually moved from that to a very sophisticated, technically advanced IT environment."

Getting up to speed
At the time Qdoba had 61 restaurants, but larger scale growth was clearly in the cards for the young company. In 2002 Jack in the Box bought Qdoba to ensure that it did not miss out on the hot new fast-casual category. Since the acquisition, Qdoba has continued to expand aggressively with more than 220 restaurants today.

According to McMillan, Jack in the Box mostly lets Qdoba be. The design and technology implemented at Qdoba differs so much from Jack in the Box that there would be few advantages to integrating the technology for the two concepts.

"We do get some cost savings from our relationship with Jack in the Box," McMilllan admits. "We can use their vendors and special pricing to make IT related purchases. Whenever we can, we try to take advantage of the relationship to save a buck.

"We are at the point right now where I think we have the infrastructure in place to do just about everything we want to," explains McMillan. "We have gone through tremendous growth in the last three and half years. In our early years the biggest challenge was going to the CEO [Gary J. Beisler] with an expenditure request, it can be a tough sell to get large sums of money to build up an IT infrastructure when that money could be used to build restaurants."

A wild ride
Since much of the effort to get everything up to speed and ready for expansion has been within the last three years, Qdoba now finds itself in an enviable position. All its locationsÃ.‚¬"corporate and franchisedÃ.‚¬"are on the same technology platform, up to date and even under warranty. It hasn't been easy, McMillan admits, but the technology is finally in place.

"It has been very difficult for the last couple of years, as we grew out of our server capacity and we didn't have anything to put it on," McMillan adds. "You do what you have to do to make it work. When I arrived at Qdoba it was me and one other guy and we were both on call 24 hours a day. Now we've built that up and have full time help desk people. It has been a wild ride, but now we are about to reap those benefits."

One of the key transformations for Qdoba has been to move to a far more flexible technology architecture that simplifies systems in the restaurants, while at the same time allowing for speedy updates pushed out for the corporate headquarters.

Qdoba communicates with all its units (franchised and corporate owned) through its extranet site. Units can access forms, direction, as well as key messages from corporate through the site, but just as importantly, they can also communicate with each other, keeping the lines of communication open throughout the company.

That Internet-based technology strategy also led Qdoba to Microsoft .Net as the preference for its technology architecture. From its back-office systems to its loyalty program, .Net rules the Qdoba roost. "We focused on the Internet-based applications because Internet development is cheap and available to everybody, explains McMillan. "We make use of a lot of fairly new technologies like Microsoft .Net web services to move information back and forth."

Now everything Qdoba develops is in .Net. "Every program we write, whether it is Windows-based or Internet-based has been .Net," McMillan insists. "Microsoft .Net does everything we want it to do."

In fact, keeping with the mainstream is a topic that McMillan feels strongly about. "In the last few years we have seen a mini revolution in that IT managers have started to move away from mainstream products such as Microsoft to open source products like Linux," he continues. "In my opinion this is a big mistake. While products such as these might initially be free, the cost of hiring someone qualified to implement and maintain them is not free and these folks, at least in our geographical area, demand a much greater salary."

Always on, always open
Moving to an online approach and architecture necessarily requires a secure and consistent broadband connection. Every Qdoba location is now required to have broadband as a matter of course. Just as significantly, McMillan notes, the restaurants are also required to have a static IP address. "That has been a challenge across country," he admits.

Fortunately, as Qdoba has grown and expanded over the past few years so too has the accessibility of broadband connections risen, even as costs have fallen significantly. Many Qdoba locations have been able to take advantage of the expanding DSL (digital subscriber line) networks, providing enough broadband connectivity at a relatively minor cost.

Like many things, determining the ROI (return on investment) for broadband isn't easy, but as McMillan notes, having a strong operations background has helped him in dealing with restaurant managers. "Having an operations background helps me with the intangibles; the things that aren't directly related to IT or generating profits but are very important to our operators, he insists. "I think I have a good understanding of our restaurants and I try to get into them from time to time to keep up with the culture and what our managers want and need."

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