In this FDD Talk post, you’ll learn the following:
- Section I – Estimated initial investment (franchise costs) for a Moe’s Southwest Grill franchise, based on Item 7 of the company’s 2022 FDD
- Section II – Initial franchise fee, royalty fee, and marketing fee for a Moe’s Southwest Grill franchise, based on Items 5 and 6 of the company’s 2022 FDD
- Section III – Number of franchised and company-owned Moe’s Southwest Grill outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD
- Section IV – Background information on the Moe’s Southwest Grill franchise opportunity, including relevant news updates
- Section V – Presentation and analysis of Moe’s Southwest Grill’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:
- fiscal year 2021 average, median, highest, and lowest net sales for the 482 franchised traditional Moe’s Southwest Grill restaurants, including strip shopping centers, power centers, and street-level retail, that reported sales in all 52 weeks of fiscal year 2021 and were owned by the same owner throughout fiscal year 2021
- Section VI – Key ratios, comparables, computations, and analyses for the Moe’s Southwest Grill franchise opportunity (exclusive content for Platinum subscribers)
Section I – Moe’s Southwest Grill Franchise Costs
- Moe’s Southwest Grill franchise costs, based on Item 7 of the company’s 2022 FDD:
- Initial Franchise Fee: $30,500
- Construction and Build Out Costs: $275,000 to $935,000
- Permitting: $1,700 to $2,500
- Equipment Package: $79,000 to $127,000
- Millwork: $35,000 to $44,000
- Furniture: $24,500 to $35,000
- Menu Board, Graphics, and Interior Signage: $2,600 to $12,000
- Exterior Signage: $12,000 to $73,200
- Computer System: $12,000 to $47,000
- Smallwares: $12,500 to $19,000
- TV/Music: $1,000 to $3,600
- Architect/Engineer: $11,500 to $32,000
- Rent: $4,500 to $20,000
- Grand Opening Marketing: $5,000 to $25,000
- Legal and Accounting Fees: $3,500 to $50,000
- Insurance: $7,000 to $9,000
- Miscellaneous Opening Costs/Office Supplies: $2,500 to $5,000
- Security Deposits: $1,500 to $8,000
- Training Fees: $0 to $5,810
- Travel and Living Expenses During Training: $10,000 to $40,000
- Opening Inventory: $10,000 to $12,000
- Additional Funds for 3 Months: $25,000 to $50,000
- Total Estimated Moe’s Southwest Grill Franchise Costs: $566,300 to $1,585,610
Section II – Moe’s Southwest Grill’s Initial Franchise Fee, Royalty Fee, and Marketing Fee
- Moe’s Southwest Grill’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:
- Initial Franchise Fee: $30,500
- Royalty Fee: 5% of Net Sales
- Advertising Contribution: 2% of Net Sales
- Advertising Cooperative Contribution: an amount set by your Advertising Cooperative
- Local Marketing Obligation: each calendar quarter, you must spend not less than 2% of Net Sales on local market advertising
Section III – Number of Franchised and Company-Owned Moe’s Southwest Grill Outlets
- Outlets at the Start of the Year: 714
- Outlets at the End of the Year: 719
- Net Change: +5
- Outlets at the Start of the Year: 719
- Outlets at the End of the Year: 679
- Net Change: -40
- Outlets at the Start of the Year: 679
- Outlets at the End of the Year: 658
- Net Change: -21
- Outlets at the Start of the Year: 5
- Outlets at the End of the Year: 3
- Net Change: -2
- Outlets at the Start of the Year: 3
- Outlets at the End of the Year: 2
- Net Change: -1
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 1
- Net Change: -1
Section IV – Background Information on the Moe’s Southwest Grill Franchise
13 Things You Need to Know About the Moe’s Southwest Grill Franchise
Partners with T-Pain to Launch Frank’s RedHot Buffalo Queso Taco
1. At the end of June 2021, Moe’s Southwest Grill announced the launch of the first-ever Frank’s RedHot Buffalo Queso Taco that was available for a limited time only from July 9 through September 5 with prices starting at $6.99 for 2 tacos. The offering was a hard shell taco wrapped in a soft tortilla with buffalo queso in between, which brought together two craveable, flavorful items: Moe’s famous queso and Frank’s RedHot. Customers could customize the taco with the protein of their choice and choose from 20 fresh and free toppings. In addition to the new taco offering, customers could purchase the buffalo queso as a side, cup, or bowl to enjoy with chips or add to any other entrée.
2. Moe’s gave their most loyal fans early access to the Frank’s RedHot Buffalo Queso Taco. From July 6 through July 8, Moe Rewards members were the first people to try the new menu item in-store and through online ordering via the Moe Rewards App or online. In honor of the launch, Moe’s offered $0 delivery fee on all orders more than $10 placed through the Moe Rewards App or Moe’s online from July 9 through July 11 at participating locations.
3. To help launch the Frank’s RedHot Buffalo Queso Taco, Moe’s teamed up with award-winning artist T-Pain to create video content showcasing the new product for a social media campaign. T-Pain said, “As a self-proclaimed taco connoisseur, I’m excited to help launch the new Buffalo Queso Taco at Moe’s. The hard and soft shells lined with the mix of Frank’s RedHot and the famous liquid gold queso from Moe’s is the perfect combination.”
4. Caroline Morris, executive chef at Moe’s Southwest Grill, said, “We love finding new ways to create unexpected and craveable flavors and we can’t wait for our guests to get a taste of this twist on a fan favorite. Frank’s RedHot gives just the right kick to our famous queso and the pairing together of the hard shell and soft tortilla make for satisfying, delicious texture customers are sure to love – get it while you can!”
Unveils Modernized Restaurant Design in Greater Atlanta Area
5. In early July 2021, Moe’s Southwest Grill announced the modernization and refresh of more than 50 restaurants in the Greater Atlanta market. Home to Moe’s and the brand’s largest market, Atlanta is the latest city to experience Moe’s evolution following refreshes in Nashville, TN; Charleston, SC; and Rochester, NY.
6. These restaurants in Atlanta now feature a dedicated off-premise service line to support growing digital business driven by online orders and an increase in catering demand, especially for items like the popular Fajita, Taco, and Nacho Bar options. Additional upgrades include new front and back-of-house design, exterior signage, logo and menu boards, as well as a new POS system to make checkout faster and more secure.
7. Alex Williams, chief brand officer of Moe’s Southwest Grill, said, “It’s important that we continue to invest in our brand to remain relevant and increase guest accessibility. Our refreshed look and feel in Atlanta will provide our loyal fans the opportunity to experience a modern Moe’s that still offers the familiar menu items they crave. The Moe’s brand has been beloved for more than 20 years and we’re excited to present a design that matches the ‘Welcome to Moe’s!’ energy and enthusiasm we’ve conveyed for two decades.”
8. In addition to an improved aesthetic, Moe’s evolved design is yielding good results for franchisees. Locations in Nashville and Rochester are showing positive sales growth and traffic. A new service training program, aptly called W2M (Welcome to Moe’s!), will also help franchise owners maintain a welcoming environment for guests and team members. Additionally, Moe’s launched Kids Eat Free nationally in April to drive family dining on Sundays. As a result, the innovative fast-casual leader is seeing significant comp sales growth and larger check sizes.
9. According to Mark Monroe, a Moe’s franchisee, “I’ve spent everyday for the last 12 years inside a Moe’s restaurant hearing our crews proudly shout ‘Welcome to Moe’s!’ to each and every guest. That famous greeting has stood for the promise that everyone is welcome at Moe’s. This modernization effort is imperative to making sure that we provide our loyal guests with a more seamless online ordering experience, updated interiors with engaging in-store graphics showing our bold personality and a new logo – all while serving the same delicious food they crave and greeting them with the familiar ‘Welcome to Moe’s!’ that started it all.”
10. Moe’s Southwest Grill is also investing in consumer-focused innovation to remain competitive in the growing fast-casual space. The brand recently updated its app to focus on the digital ordering experience. The app also features a compelling loyalty program with offers tailored for its guests. Moe’s also piloted a new beverage offering and had plans to roll out exciting LTO menu items throughout the remainder of the year, the most recent LTO being the Buffalo Queso Taco.
11. Moe’s Southwest Grill was founded in 2000 by Raving Brands, Inc. – which was started by Martin Sprock and his business partner Daryl Dollinger – in Atlanta, Georgia. Sprock and Dollinger are also the founders of Planet Smoothie. While many people think that Moe’s is a real person, the brand’s name actually stands for Musicians, Outlaws, and Entertainers. Sprock and Dollinger developed Moe’s to offer high quality, fast-casual Mexican food and to be a challenger to Chipotle.
12. The Moe’s concept was a hit from the start and by 2004 there were already 100 locations in operation. Moe’s continued to grow over the next few years and in 2007, the company was acquired by FOCUS Brands, an affiliate of private equity firm Roark Capital Group. FOCUS Brands also owns Schlotzsky’s, Carvel, Cinnabon, McAlister’s Deli, and Auntie Anne’s. Today, there are Moe’s Southwest Grill locations all across the United States.
Entrepreneur’s Franchise 500
13. Moe’s Southwest Grill ranked No. 268 on Entrepreneur’s 2022 Franchise 500 list.
Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Moe’s Southwest Grill Franchise (Item 19, 2022 FDD)
- This Item 19 presents information about the financial performance during Fiscal Year 2021 (the fiscal year ended December 26, 2021) of certain Traditional Franchises that were eligible franchises in Fiscal Year 2021.
- A “Traditional Franchise” is a franchised Restaurant located in a traditional location, including strip shopping centers, power centers, and street-level retail.
- An “eligible franchise” is a franchise that reported sales in all 52 weeks of Fiscal Year 2021 and was owned by the same owner throughout Fiscal Year 2021.
- This Item 19 does not include data related to (i) franchised Restaurants located in non-traditional locations (such as airports, colleges, convenience stores, government buildings, hospitals, hotels, lifestyle centers, malls (including open air, traditional, and outlet malls), military bases, office building interiors, theme parks, transit hubs, and travel plazas); (ii) Traditional Franchises that are co-branded with another brand; (iii) affiliate-owned Restaurants; and (iv) Traditional Franchises that were not eligible franchises in Fiscal Year 2021.
- The financial performance and operations of these excluded Restaurants can vary significantly from the performance and operations of the Traditional Franchises that are represented in this Item 19.
Average Net Sales by Quartile for Traditional Franchises for Fiscal Year 2021
- Average Net Sales: $1,573,535
- Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales: 45/121 (37%)
- Median Net Sales: $1,497,392
- Lowest Net Sales: $1,284,349
- Highest Net Sales: $2,727,632
- Average Net Sales: $1,139,685
- Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales: 60/120 (50%)
- Median Net Sales: $1,139,789
- Lowest Net Sales: $1,015,975
- Highest Net Sales: $1,283,875
- Average Net Sales: $911,233
- Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales: 55/120 (46%)
- Median Net Sales: $904,254
- Lowest Net Sales: $809,513
- Highest Net Sales: $1,015,143
- Average Net Sales: $667,010
- Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales: 66/121 (55%)
- Median Net Sales: $680,200
- Lowest Net Sales: $346,152
- Highest Net Sales: $808,673
- Average Net Sales: $1,073,062
- Number and Percentage of Restaurants Attaining or Exceeding Average Net Sales: 212/482 (44%)
- Median Net Sales: $1,015,559
- Lowest Net Sales: $346,152
- Highest Net Sales: $2,727,632
- As of December 26, 2021, there were 553 Traditional Franchises. Of those 553 locations, 482 (87.2%) Traditional Franchises are represented in this table.
- This table does not include (i) 33 Traditional Franchises that did not report sales in all 52 weeks of Fiscal Year 2021, (ii) 24 Traditional Franchises that transferred ownership during Fiscal Year 2021, (iii) 10 Traditional Franchises that opened during Fiscal Year 2021, and (iv) four Traditional Franchises that were co-branded.
- This table also does not include 25 Traditional Franchises that permanently closed during Fiscal Year 2021, all of which had been open for at least 12 months prior to closing.
- No Traditional Franchises were reacquired by Moe’s in Fiscal Year 2021.
- Some Restaurants have sold or earned this amount. Your individual results may differ. There is no assurance that you’ll sell or earn as much.
- “Net Sales” includes all revenues generated by a Restaurant or conducted from or with respect to a Restaurant, whether the sales are evidenced by cash, check, credit, charge, account, barter, or exchange, but does not include (a) the initial sales or reloading of gift cards, (b) discounts, (c) the sale of food or merchandise for which refunds have been made in good faith to customers, (d) the discounted portion of employee meals, (e) sales, meals, use, or excise tax imposed by a governmental authority directly on sales and collected from customers, provided that the amount for the tax is added to the selling price or absorbed therein and is actually paid by you to a governmental authority, (f) the sale of equipment used in the operation of the Restaurant, or (g) tips.
- These sales figures do not reflect the costs of sales, operating expenses, or other costs or expenses that must be deducted from the Net Sales figures to obtain your net income or profit.
- Moe’s calculated the figures in the tables in these financial performance representations using financial reports submitted by franchisees. Moe’s has not audited or independently verified these financial reports nor has it asked questions of the submitting franchisees to determine whether they are in fact accurate and complete, although Moe’s has no information or other reason to believe that they are unreliable. No certified public accountant has audited these figures or expressed his or her opinion concerning their content or form.