In this FDD Talk 2017 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 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Moe’s Southwest Grill franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Moe’s Southwest Grill’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average gross sales, cost of goods sold, personnel expenses, advertising, operating expenses, occupancy expenses, general and administrative expenses, and EBITDA for the 188 franchised Moe’s Southwest Grill Restaurants located in traditional retail venues that were open continuously during Moe’s fiscal year 2014, fiscal year 2015, and fiscal year 2016 (the “Period”), and that provided Moe’s with complete financial information for the full fiscal year 2016 sufficient for it to complete the profit and loss statement
- 2016 average, median, highest, and lowest net sales for the top quartile, 2nd quartile, 3rd quartile, bottom quartile, and all 429 franchised Moe’s Southwest Grill Restaurants located in traditional retail venues that were in operation throughout the Period
- 2016 average, median, highest, and lowest net sales for the top quartile, 2nd quartile, 3rd quartile, bottom quartile, and all 527 franchised Moe’s Southwest Grill Restaurants located in traditional retail venues that were in operation throughout the entire fiscal year 2016
Section I – Background Information
14 Things You Need to Know About the Moe’s Southwest Grill Franchise
Opens 700th Location
1. On September 21, Moe’s Southwest Grill opened its 700th restaurant, located in East Brunswick, New Jersey. To celebrate the new location’s opening, Moe’s gave the first 100 customers in line free burritos for an entire year (one burrito per week for a year).
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2. Since it was also the brand’s 700th location milestone, Moe’s also gave away 700 free t-shirts, custom Coca-Cola bottles, and several other prizes. Additionally, customers were able to get $5 burritos all day on September 22 and 23.
3. Bruce Schroder, president of Moe’s Southwest Grill, said that the brand had opened 66 new restaurants in 2016. He said Moe’s growth “in new and existing markets wouldn’t be possible without (its) passionate and dedicated franchisees.”
4. The New Brunswick location is owned and operated by franchisee Nori Khan, who owns seven additional Moe’s locations throughout New Jersey.
Calls Chipotle’s New Cheese Dip a “Queso Impostor”
5. In early July, after news spread that Chipotle was selling a queso dip at its test kitchen in New York City, Moe’s issued a (tongue-in-cheek) public announcement “concerning multiple alleged ‘queso’ dishes posing as cheesy authentic goodness.” Moe’s noted that it has been serving authentic queso for over 17 years and that it was trying to “protect” the public from “queso impersonators.”
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6. While Moe’s did not directly name Chipotle in its announcement, its “public warning” was issued two days after Chipotle debuted their queso dip. Moe’s encouraged people to report any queso “copycats” by sharing a photo of the queso with @Moes_HQ on social media using the hashtag #QuesoImpostors.
7. To further drive home the message that it thought Chipotle’s queso was unacceptable, Moe’s also invited anyone who tried Chipotle’s queso that week to come into the Moe’s on Avenue of the Americas in New York City to receive a free cup of queso on July 13.
8. Bruce Schroder, president of Moe’s Southwest Grill, said, “When we caught wind that there were poser cups of queso on the loose, we decided to act fast.”
Named America’s Favorite Mexican Chain for the Second Year
9. In early May, Harris Poll released its annual EquiTrend Study, and for the second year in a row, Moe’s Southwest Grill was named number one in the Mexican fast-casual category. The study asked respondents to rate brands on familiarity, quality, and how likely they are to consider purchasing the brand’s items.
10. Moe’s once again beat the one-time category favorite Chipotle, which led the Mexican fast-casual category from 2013 to 2015. Baja Fresh Mexican Grill (number two) and Taco Bell (number three) also beat Chipotle as the latter has struggled to recover in the poll since its E.coli scare in late 2015.
11. Joan Sinopoli, Vice President of Brand Solutions at Harris Poll, said, “Moe’s has a unique tie to pop culture and a knack for engaging customers that’s appealing to its core consumer.”
12. Moe’s Southwest Grill (commonly referred to as Moe’s) was founded in 2000 by Raving Brands in Atlanta, Georgia. The fast-casual Mexican food chain boasts made-to-order Southwest fare made with fresh ingredients, including all natural chicken, grass fed beef, and organic tofu. Many of the menu items at Moe’s are named after references from popular culture such as “Who is Kaiser Salsa,” a reference to the villain in The Usual Suspects.
13. Moe’s began franchising in 2001. In 2007, the company was purchased by Focus Brands, the franchisor and operator of Auntie Anne’s Pretzels, Cinnabon, Schlotzsky’s Deli, Carvel, and McAlister’s Deli. Today, there are over 700 Moe’s Southwest Grill restaurants around the world.
Entrepreneur’s Franchise 500
14. Moe’s Southwest Grill has ranked on Entrepreneur’s annual Franchise 500 list ever year in the past decade. The company’s highest rank was No. 50 in 2017, while its lowest rank was No. 123 in 2010.
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 2017 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Moe’s Southwest Grill’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.
Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis
Part 1 – Profit and Loss Statement for Three-Year Group of Franchised Restaurants
- This financial performance representation reflects the average 2016 Gross Sales, Cost of Goods Sold, Personnel Expenses, Advertising, Operating Expenses, Occupancy Expenses, General and Administrative Expenses, and EBITDA, during Moe’s fiscal year ended December 25, 2016 (“fiscal year 2016”) for franchised Restaurants open continuously during Moe’s fiscal year 2014, fiscal year 2015, and fiscal year 2016 (the period from December 30, 2013 to December 25, 2016) (the “Period”) and that provided Moe’s with complete financial information for the full fiscal year 2016 sufficient for it to complete this profit and loss statement (“P&L Statement”) (the “Three-Year Group”).
- Moe’s did not use any reports that were incomplete or for which the information was presented in a manner that prohibited it from applying the information to one of the categories in the P&L Statements.
- As of December 25, 2016, there were 675 franchised Restaurants in operation. Of these 675 franchised Restaurants, 429 franchised Restaurants located in traditional retail venues were in operation throughout the Period. Of these 429 franchised Restaurants, Moe’s received complete financial information for the 2016 fiscal year from 188 Restaurants (representing 44% of the 429), which are the Restaurants included in the Three-Year Group.
- The Three-Year Group does not include 143 franchised Restaurants located in traditional retail venues that were not in operation throughout the entire Period, 103 franchised Restaurants that were excluded because they were located in non-traditional locations, and 241 franchised Restaurants that did not report complete financial information for fiscal year 2016.
- Two of the franchised Restaurants reflected in the Three-Year Group had a Carvel Express Shoppe that operated within the Restaurant for the Period.