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FDD Talk 2016: The Moe’s Southwest Grill Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on June 13, 2016

in FDD Talk 2017: Food Franchises, Franchise Earnings, Mexican Restaurant Franchise

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Moe's Southwest Grill Exterior

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Moe’s Southwest Grill franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Moe’s Southwest Grill franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Moe’s Southwest Grill’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average gross sales, cost of goods sold, personnel expenses, advertising, operating expenses, occupancy expenses, general and administrative expenses, and EBITDA for the 194 franchised Moe’s Southwest Grill Restaurants open continuously during Moe’s fiscal year 2013, fiscal year 2014, and fiscal year 2015 (the “Period”), and that provided Moe’s with complete financial information for the full fiscal year 2015 sufficient for it to complete the profit and loss statement
  • 2015 average and median net sales for the top quartile, 2nd quartile, 3rd quartile, and bottom quartile of the 397 franchised Moe’s Southwest Grill Restaurants located in traditional retail venues that were in operation throughout the Period

Section I – Background Information

Moe’s Southwest Grill got its start back in December 2000 in Atlanta and started franchising in 2001. It’s a fast-casual chain that brings freshly-made southwest fare to consumers in a hip atmosphere.

In 2007, the chain joined FOCUS Brands Inc., the franchisor of such brands as Carvel Ice Cream, Cinnabon Bakery, Schlotzsky’s Deli, Auntie Anne’s Pretzels, and McAlister’s Deli.

The number of locations has jumped in recent years up to more than 640 (of which 5 are company-owned and two are outside the U.S.).

Here’s how Moe’s Southwest Grill spices things up in the super-competitive fast-casual restaurant segment:

The Menu

The southwestern fare at Moe’s includes all the staples you’d expect, including burritos, tacos, nachos, quesadillas, and salads. Everything is made from more than 20 fresh ingredients such as all-natural chicken, grass-fed steak, and organic tofu.

The food is made to order right before your very eyes and every order comes with free chips and salsa.

Pop Culture Themed Menu Items

Many of the menu offerings are named after popular movies and TV shows. Examples include the following: The Joey Bag of Donuts burrito (Italian-American slang in the Philly area for a fat person), the Homewrecker burrito (referencing the hit reality MTV show), the Art Vandalay Burrito (a Seinfeld reference), Billy Barou nachos (a reference to the movie Caddyshack), and the Close Talker salad (another Seinfeld reference). Then there’s the John Coctostan quesadilla (a reference to the movie Fletch) and El Guapo salsa (a reference to the move Three Amigos).

Can you tell the chain is a big fan of Seinfeld and Chevy Chase?

Killer Playlist

There’s always rockin’ music playing at Moe’s, and the selection of tunes has a method to its madness. The chain’s Dearly Departed Playlist features classic songs from musicians who have passed on. Examples include Substitute by the Who, Fire on the Mountain by the Grateful Dead, Revival by the Allman Brothers Band, Mojo Queen by Ike and Tina Turner, Gimme Some Lovin’ by the Spencer Davis Group, Stop Breaking Down by White Stripes, and Rhumba Girl by Nicolette Larson.

Moe’s Philanthropy

The chain’s locations will be happy to help out local community organizations to raise funds (little league or high school sports teams, church groups, cheerleading squads, parent/teacher organizations, etc.). On the national scene, the chain supports the Juvenile Diabetes Research Fund (JDRF) in the battle against Type 1 Diabetes.

Unseating Chipotle?

The Harris Poll EquiTrend annual study benchmarks brand strength in all kinds of categories, one of which is fast-casual Mexican restaurants. Chipotle held the number one ranking on this list for three years running, from 2013-2015. The fact that Chipotle has certainly had its media troubles lately might explain why Moe’s took over that number one slot as of 2016. It just goes to show how nasty E. coli outbreaks can be – both to consumers and brands.

Section II – Estimated Costs

  • Please click here for detailed estimates of Moe’s Southwest Grill franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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