In this FDD Talk 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 2018 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 2018 FDD
- Section IV – Number of franchised and company-owned Moe’s Southwest Grill outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Moe’s Southwest Grill’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 average gross sales, discounts, net sales, cost of goods sold, personnel expenses, advertising, operating expenses, occupancy expenses, general and administrative expenses, and EBITDA for the 384 franchised Moe’s Southwest Grill Restaurants located in traditional retail venues that were open continuously during Moe’s fiscal year 2015, fiscal year 2016, and fiscal year 2017 (the “Three-Year Period”), and that provided Moe’s with complete financial information for the full fiscal year 2017 sufficient for it to complete the profit and loss statement
- 2017 average, median, lowest, and highest net sales for the top quartile, 2nd quartile, 3rd quartile, bottom quartile, and all 461 franchised Moe’s Southwest Grill Restaurants located in traditional retail venues that were in operation throughout the Three-Year Period
- 2017 average, median, lowest, and highest net sales for the top quartile, 2nd quartile, 3rd quartile, bottom quartile, and all 549 franchised Moe’s Southwest Grill Restaurants located in traditional retail venues that were in operation throughout the entire fiscal year 2017
Section I – Background Information
14 Things You Need to Know About the Moe’s Southwest Grill Franchise
Launches Search for Chief Taco Officer
1. In early April 2018, Moe’s Southwest Grill partnered with Monster.com, the global leader in connecting people to jobs, to find a Chief Taco Officer (CTO) to lead the charge of introducing fans to the brand’s newest menu item — Three Amigos tacos. The Moe’s CTO will help spread Southwest flavor across the country; plus, there are killer perks. The CTO will travel on the Moe’s food truck for the brand’s first-ever Taco Tour giving away free Three Amigos tacos to fans across the country.
2. Bruce Schroder, president of Moe’s Southwest Grill, said, “At Moe’s, we’re always looking for ways to engage with our fans whether it’s helping name a new menu item, showing them a behind-the-scenes look into our culinary innovation or just rewarding them for being rock star brand ambassadors. We wanted to take this engagement to the next level and there is no better way to do that than appoint our biggest taco fanatic to Chief Taco Officer and help spread the word about our newest menu item — Three Amigos tacos.”
3. Moe’s opened up the search nationwide through its social media platforms and asked interested candidates to tell the brand why they’d be a perfect fit for Moe’s Chief Taco Officer. Moe’s chose three finalists and asked fans to vote for their favorite finalist. At the end of May, Moe’s Southwest Grill announced that it had selected Kate Munoz as Chief Taco Officer. In her new role, Munoz will lead the charge of spreading Southwest flavor across the country with Moe’s first-ever Taco Tour — a traveling, multi-city food truck tour where Moe’s will give lucky fans more than 10,000 free Three Amigos tacos.
4. Schroder said, “The mission for the newly-named CTO and the Taco Tour she will be leading this summer is to bring tacos to the people and let our fans experience firsthand how delicious our new Three Amigos tacos are. We are confident that Kate, Chief Taco Officer, is the ideal taco professional to help spread the word about tacos across the country. We hope that fans come out to meet the CTO, be part of the tour and indulge in Moe’s newest menu item.”
5. Moe’s Taco Tour kicked off on June 1 and stopped in twelve cities, including Atlanta and Athens, Georgia; Columbia, South Carolina; Durham, North Carolina; Greensboro, North Carolina; Roanoke and Richmond, Virginia; Washington, D.C.; Baltimore, Maryland; Philadelphia and Pittsburgh, Pennsylvania; and Cleveland, Ohio.
Launches Three New Queso Flavors
6. At the end of January 2018, Moe’s Southwest Grill launched three new queso flavors at all locations nationwide. Each queso flavor is created in-house by adding fresh ingredients to Moe’s Famous Queso resulting in: Chile Con Queso, which features ground beef, fresh jalapenos, and pico de gallo; Black Bean Queso that has black beans, corn pico, and cilantro; and Spicy Queso featuring pork carnitas, Hard Rock ‘N’ Roll hot sauce, and fresh jalapenos.
7. Bruce Schroder, president of Moe’s Southwest Grill, said, “We know that Moe’s fans are extremely passionate about our famous queso and bold flavor combinations, so we’ve worked with our culinary team to create three southwestern queso flavors. Whether you’re looking for a vegetarian queso, a spicy queso that brings the heat or even the original familiar liquid gold — we have you covered at any of our 700 locations.”
Brings Frozen Breakfast Bowls to Grocery Stores
8. In June 2017, Moe’s Southwest Grill partnered with the Kellogg Company to develop a line of breakfast products, Moe’s Breakfast Bowls. The bowls were inspired by Moe’s burrito and bowl varieties and contain a minimum of 12 grams of protein and meats raised without hormones and no artificial colors or flavors.
9. Kat Cole, COO and president of FOCUS Brands (Moe’s parent company), said, “We are thrilled to increase access to the delicious experience of Moe’s through the debut of Moe’s Breakfast Bowls at supermarkets nationwide. The Southwest flavor profile is growing in appeal, but until now, not widely available in the breakfast category. Moe’s Breakfast Bowls are meeting the demand for better-for-you, flavorful options for a high protein breakfast or breakfast-as-snack option.”
10. Moe’s Breakfast Bowls are available nationwide in the frozen food aisle of grocery store giants like Walmart, Giant Eagle, Wegmans, Kroger, and HEB. There are five varieties, including:
- Chorizo & Eggs – Spicy and zesty, this bowl provides a winning blend of fluffy eggs, cilantro lime rice, hormone-free pork chorizo, and black beans; pico de gallo and queso sauce topping take it to another level.
- Chorizo Benedict – Mild in spice, intense in flavor, this bowl features fluffy eggs, Yukon gold potatoes, hormone-free pork chorizo, pico de gallo, jalapeno lime hollandaise, and avocado.
- Southwest Vegetarian – Enjoyable by all, this meat-free bowl still boasts 12g of protein and features fluffy eggs, pinto and black beans, cilantro lime rice, salsa verde, roasted tomatillo salsa fresco, queso fresco, and avocado.
- Chicken Chilaquiles – Medium kick with a whopping 17g of protein, this bowl features fluffy eggs with hormone-free pulled chicken atop a bed of tortilla chips and pinto beans, with salsa, queso, and cilantro to seal the deal.
- Huevos Rancheros – Featuring a fried egg, corn tortilla, and black beans, this bowl provides 14g of protein and mild spice with salsa rojo, pico de gallo, and queso fresco on top.
11. Moe’s Southwest Grill was founded in 2000 in Atlanta, Georgia by Raving Brands, Inc., which was started by Martin Sprock and his business partner Daryl Dollinger. Raving Brands had previously started the successful smoothie franchise Plant Smoothie in 1995. After the success of Planet Smoothie, Sprock was interested in launching a new restaurant concept and decided on Moe’s Southwest Grill, which he described as a “Mexican Subway.”
12. Moe’s stands for Musicians Outlaws and Entertainers; music is so important to the brand that each Moe’s location plays a hand-selected playlist. Sprock wanted Moe’s to feature fresh, scratch-made food that would pair well with Planet Smoothie’s healthy drinks. He also wanted Moe’s to be a fun place; the brand’s menu items are named after aspects of popular culture such as “Who is Kaiser Salsa,” which is a reference to the film The Usual Suspects.
13. Sprock started franchising Moe’s Southwest Grill in 2001. In 2007, Sprock sold Moe’s Southwest Grill to FOCUS Brands, an affiliate of private equity firm Roark Capital Group. Today, Moe’s Southwest Grill has locations across the U.S., Turkey, and Russia and continues to seek franchisees worldwide.
Entrepreneur’s Franchise 500
14. Moe’ Southwest Grill ranked No. 219 on Entrepreneur’s 2018 Franchise 500 list.
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 2018 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 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 577
- Outlets at the End of the Year: 633
- Net Change: +56
- Outlets at the Start of the Year: 633
- Outlets at the End of the Year: 675
- Net Change: +42
- Outlets at the Start of the Year: 675
- Outlets at the End of the Year: 701
- Net Change: +26
- Outlets at the Start of the Year: 4
- Outlets at the End of the Year: 5
- Net Change: +1
- Outlets at the Start of the Year: 5
- Outlets at the End of the Year: 5
- Net Change: 0
- Outlets at the Start of the Year: 5
- Outlets at the End of the Year: 4
- Net Change: -1
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
Part 1 – Profit and Loss Statement for Three-Year Group of Franchised Restaurants
- This financial performance representation reflects the average 2017 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 31, 2017 (“fiscal year 2017”) for franchised Restaurants open continuously during Moe’s fiscal year 2015, fiscal year 2016, and fiscal year 2017 (the period from December 28, 2014 to December 31, 2017) (the “Three-Year Period”) and that provided Moe’s with complete financial information for the full fiscal year 2017 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 31, 2017, there were 701 franchised Restaurants in operation. Of these 701 franchised Restaurants, 461 franchised Restaurants located in traditional retail venues were in operation throughout the Three-Year Period. Of these 461 franchised Restaurants, Moe’s received complete financial information for the 2017 fiscal year from 384 Restaurants (representing 83% of the 461), which are the Restaurants included in the Three-Year Group.
- The Three-Year Group does not include 146 franchised Restaurants located in traditional retail venues that were not in operation throughout the entire Three-Year Period, 94 franchised Restaurants that were excluded because they were located in non-traditional locations, and 77 franchised Restaurants that did not report complete financial information for fiscal year 2017.
- Two of the franchised Restaurants reflected in the Three-Year Group had a Carvel Express Shoppe that operated within the Restaurant for the Three-Year Period.