Brandau: Qdoba’s ‘extra’ special marketing win

Qdoba Mexican Grill’s latest marketing move is brilliant, calling out competitors for “nickel and diming” customers who request special extras on their burritos and entrees, namely guacamole and queso. But ask any consumer who loves fast-casual Mexican restaurants and can’t resist getting guac (guilty!), and that person will say he or she wishes it were just another 5 cents or 10 cents more. Part of the brand’s public-relations coup for this offer is a great event in which a truck full of nickels and dimes will be unloaded and consumers will be allowed to take a handful of change as they pass by. But sometimes a couple cups full of change can’t get you guacamole for your burrito. The guacamole or queso up-charge typically can be $1.50 or more, which makes Qdoba’s announcement last week that it would no longer charge extra for those condiments all the more significant. It’s also a prominent zig toward creating high perceived value when the rest of the industry is ready to zag toward steep discounts that would probably give franchisees severe vertigo. Days after Qdoba made its announcement, Burger King made a splash with a 10-piece chicken nugget deal for $1.49, which compares even more favorably with McDonald’s super-affordable 20-piece Chicken McNugget offer for $5. For National Pizza Month, the major players are offering a little money off their large pizzas, including a $7.99 Digital Deal at Pizza Hut and a $7.99 carryout deal Monday through Thursday at Domino’s Pizza. That’s to say nothing of Little Caesars, which for the past few years has owned the price and convenience angles of the pizza segment, offering a large Hot-N-Ready for $5 or a Deep! Deep! Dish Pizza for $8. Don’t get me wrong: I love those offers and make use of them as often as I encounter them, which typically is a matter of where I am when I get hungry and how convenient any location of those brands is to me. We see these offers emerge and re-emerge because they create value for guests in an absolute-dollar sense. But Qdoba including premium extras like guacamole or queso in its entrée pricing going forward is just as significant, even though the brand could probably raise the standard price of its burritos or quesadillas to protect its food costs in this new menu strategy. The appeal to me as a consumer is just as strong as the discount that lets me save the same $1 to $2 at some of the quick-service chains. Were I choosing between Qdoba and a Chipotle or a Moe’s Southwest Grill nearby next time, the prospect of leveling up my quesadillas with guac and no upcharge is a huge draw. I foresee two things happening differently for Qdoba’s offering than for the discounts I seek and so easily find at quick-service brands. First, I’d speculate that the free-extras policy at Qdoba would engender more loyalty from me as a customer. Rather than eat there only when I find a discount I’m hunting for, I could probably come to expect a decent amount of food for the money every time at Qdoba and could put it at the top of the consideration set when I want fast casual, Mexican or both. Second, speaking not as a consumer but as a journalist covering the franchise industry, I’m guessing Qdoba would have a better time getting franchisees on board for a new pricing structure like this, compared with pushback occasionally seen in the industry when owner-operators worry that the deep discounts suggested by the franchisor won’t produce the traffic the franchisees need to execute the offer profitably.