Yahoo Finance Signs Moe's Southwest Grill Won't Be Around Much Longer
We never like to see restaurants fail, but there are a lot of signs that point to the possibility that Moe's Southwest Grill won't be around much longer. Of course, it's not too late for the company to make a turnaround, and it certainly is trying. However, a lot of the changes the company has made so far, which include remodeling locations, changing up prices, and adjusting the menu, have been met with unhappy customer responses. Changes are necessary and good in the restaurant world, but restaurants have to make the right ones to thrive, keep loyal customers happy, and get new customers to try the food.
We've looked at a lot of areas where Moe's is not doing well to reveal the company's vulnerable underbelly, from location stats to customer complaints. We can't pretend to predict the future, but the signs aren't looking good for Moe's Southwest Grill. However, we'll let you read about what's been going on to draw your own conclusions.
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Many Moe's Locations Are Have Been Closing Down
Within just 10 years, Moe's Southwest Grill has gone from opening lots of new locations to closing quite a few of those down. In 2014, everything seemed to be going great, as the chain opened 120 new locations within six months that year. However, the success was short-lived. In 2019, Moe's had 726 locations, but it closed 109 in the five years between 2019 and 2024. As of 2022, there were only 637 restaurants. As of spring 2024, there were only 617 Moe's restaurants in 37 states. As Chief Brand Officer Tory Barlett told Franchise Times in 2023, "The reason those locations aren't there anymore is because the unit economics weren't there. And that could also be real estate-driven in some cases."
When franchise owners talk about why they're closing, they tend to be a little cagey, saying only that they're not renewing their lease or sometimes giving no reason at all. One of the more surprising closures was when seven locations closed in Indiana in 2023, without warning or reason and leaving surprised customers to speculate about what was happening.
Its Sales Lag Behind Competitors
Moe's Southwest Grill's biggest competitors, Chipotle and Qdoba, are both fast casual Mexican restaurants that use a similar assembly line concept. However, their sales remain in the billions, unlike Moe's sales, which lag in the millions.
Sadly, Moe's operational costs are sometimes higher than its sales in individual locations. While the average sales for a single location were $1.15 million in 2022, its franchise costs can run from $6,500 to $1.8 million. So, Moe's is not always as profitable as it should be. With profitability fluctuating, it's understandable why some locations have closed. Meanwhile, the average Qdoba was making $25.23% more in sales than its highest operating costs, and the average Chipotle was making 14.58% more than its operating costs.
Like every other restaurant, Moe's has been increasing its prices. However, its sales are lower than they were back in 2019. Systemwide sales at Moe's in 2019 were $731 million. Unfortunately, those dropped down to $563 million in 2020. By 2022, sales were still only $705.3 million -- 3.52% lower than before the COVID-19 pandemic. Meanwhile, Qdoba was making 2.12% more than before the pandemic and Chipotle was making a whopping 55.35% more.
It's Had To Make Big Marketing Changes
Marketing can be everything when it comes to whether a restaurant thrives or dies. So, with relatively few remaining locations and low overall sales, Moe's decided to make some big advertising and operational changes with Project VICTORY. Whether Moe's is able to strike that balance or not remains to be seen.
In 2023, Chief Brand Officer Tory Bartlett told Franchise Times that "VICTORY" stands for "Validate necessary ingredients; Improve line efficiency and speed of service; Clean up the appearance of food; Transform flavor profiles; Optimize omnichannel guest experience; Redesign menu board; Yield a brand that is built to grow." Some of the other changes at Moe's are ones that we've seen enacted at other restaurants over the last few years, like upgrading menu offerings, redesigning the menu board, and streamlining operations so that the same things are happening at every store. The idea is for everything to be and look better, while making the service even faster with possibly more fun.
The company is trying to go back to its roots, changing its marketing to emphasize its earlier rebel spirit image. After, all, the three letters in Moe's name actually stand for "musicians, outlaws, and entertainers" rather than the name of a real person.
Moe's Remodeling Efforts Are A Grasp For More Customers
In 2023, some Moe's franchise owners spent millions on remodeling their locations to improve guest experiences and draw in new customers, in keeping with the suggestions in Project VICTORY. The last time Moe's did a redesign was in 2018, a move that included a new logo and different colors. Unfortunately, it was followed by a nosedive in location numbers and earnings.
Unfortunately, customers aren't handing out compliments about the latest remodel. A disgruntled Redditor said, "[O]ur Moe's used to be so thoughtfully designed on the inside (painted yellow walls, interesting artwork on walls, even TVs in there) ... and now it's just plain white walls, literally no interesting menu names ... bare basic boring artwork and no tvs ... It feels like zero personality now."
Some of the other remodeling is related to machinery changes. For example, the Coca-Cola Freestyle beverage station now has a customizeable ICEE machine. Plus, the ice machines now dispense the satisfyingly crunchy ice that customers love at Sonic and Chick-fil-A. Those are certainly good changes, but will they be enough to get customers back in the door?
It Keeps Revamping The Menu To Try To Save Money, But Customers Aren't Happy
Moe's has made a lot of menu changes as of late, but customers aren't liking the food as much as they once did. One Redditor said, "I don't get it. They had a perfect business model. Why destroy it?"
Part of the motivation behind removing items is a lack of sales. Although foods like its shredded pork carnitas was only responsible for 2% of sales, customers are petitioning to get it back. Customers are also upset that the chain no longer has mushrooms, peppers (those are now mixed in with onions), limes, or cotija. Of the decision to remove carnitas in particular, Chief Brand Officer Tory Bartlett told Restaurant Dive that "We didn't remove it just because it was a slow mover, but also so we could innovate and grow. There's only so much space you have on those hot and cold lines."
The company tried out birria for a while at the beginning of 2024, and it was so good that some customers even decided they liked Moe's better than Chipotle. Sadly, it only lasted a handful of months and is gone now, too. When the company stopped including a drink or guacamole with its Moe Monday deal and raised the price of its Monday deal from $6.99 to $9.99, some customers were unhappy enough to abandon the chain altogether, saying it was the last thing keeping them coming in the door.
It's Been Collecting More Reviews From Disgruntled Customers
If you look at the reviews at your local Moe's Southwest Grill, you may well see more negative reviews lately than positive. Many customers say it's getting worse and more expensive, while previously loyal customers are finding the food to be merely okay .
There have been complaints of getting old food and cold food, as well as hard rice or beans. Other customers complain that their order is never right. The ingredient portions seem smaller, they say, with meat amounts being especially skimpy. Some customers have even talked about getting a burrito that had so little filling that the tortilla made up the bulk of the meal.
The prices are also a point of contention. Yes, everyone is charging more these days, but a restaurant can price itself out of customers. One Redditor who was excited to visit a city with a Moe's again said, "I was flabbergasted to see that my veggie burrito made as a meal was SEVENTEEN DOLLARS???????? ... [I]n the past that entire meal would've cost less than $10..." Plus, some of the upcharges have become ridiculous. One customer who asked for queso on their burrito was charged nearly $2.50 extra -- a 25% upcharge when told it would only cost a little extra.
It Added Drive-Thru Service, But It's Reportedly Inefficient
Moe's Southwest Grill started adding drive-thrus to some locations around 2021 because of changing customer habits. As part of that change, the drive-thrus include a touchscreen kiosk so customers can get both pre-set menu items and craft customized options like a Build Your Own Bowl or Burrito. Yet, time has shown that it's a challenge for an assembly-line-type restaurant to take orders like this at the drive-thru, and not everyone likes it.
Speed, accuracy, and quantity seem to suffer in particular here. For one thing, it takes two or three minutes to navigate through order options on the kiosk. While it doesn't take long to get your food after you've made your order, the line can get long behind the person using the kiosk. One lament from a Tripadvisor reviewer is that "[y]ou don't get as much food as you would if they were making it in front of you. They skimp because you're not there to keep an eye on them!"
Other customers have mentioned drive-thru problems like missing items in their order, which they would have realized if they'd been watching the employees make it. Customers have also reported making an online order and not being allowed to pick it up in the drive-thru despite no other customers waiting in the car line.
It's Changed Operating Hours To Maximize Sales
In July 2023, Moe's decided it could make more money if it opened earlier. Instead of opening for lunch at 11:00 A.M., it's now open 30 minutes earlier. The decision to open early came after the chain took note of changes in customer habits. Ever since the COVID-19 pandemic, people have been ordering more catered lunches from places like Moe's, so employees have been coming in early to prep for those orders. The company decided that it made sense to open up the restaurant doors early, too, since employees were already working in the building.
Moe's Chief Brand Officer Tory Bartlett told Restaurant Dive, "We tested [opening early] and we were getting upwards of three guests per day per store during that half hour. And the impact of that is just enormous from a financial margin standpoint." Yet that speaks to some deeper issues. When three guests in an hour makes an enormous difference in profits, it sounds like locations are not making much profit in the first place. But it does make sense to make all the money you can when you can.
Some Of Its Florida Employees Went Weeks Without Paychecks
You know things aren't going well for a chain when some of its employees stop getting paychecks on time. In July 2023, employees at 18 Moe's locations in Florida owned by franchisee Tony Friel didn't get paid when they should have.
Because of the low profit margin, there wasn't enough money in the account to make payroll, so Friel had to give employees paychecks four days late, as he told local news outlet WFLA. He then blamed the bank for employees going more than two weeks between paychecks. Supposedly, $325,000 that the locations got from credit and debit card sales over the Fourth of July holiday didn't show up in the bank account until after payday.
Not surprisingly, the affected Moe's employees weren't happy. Some took it upon themselves to put up closed signs at the restaurants because they weren't willing to work with no promise of payment. To prevent this type of problem from happening again, Friel opened up a line of credit with the bank that would allow him to borrow money for payday. However, running the businesses on such tight margins can't be a good sign. The U.S. Chamber of Commerce suggests businesses keep enough money available to keep their business running for three to six months in case of emergency. Instead, Friel reportedly even dipped into personal funds to pay employees.
Many Moe's Franchises Were Sold To Quality Restaurant Group
In early 2020, four different franchisees decided that they wanted out of the Moe's restaurant business. The sale represented 67 stores that needed new ownership. North Carolina-based Quality Restaurant Group bought all 67 locations, making it the current largest Moe's franchisee. These restaurants range up and down the East Coast, including locations in Washington, D.C., Maryland, Virginia, South Carolina, and Florida. Quality Restaurant Group also owns hundreds of other franchise locations, including a large number of Pizza Huts, Arby's, and Sonic restaurants. Quality Restaurant Group CEO Matt Slain told Franchise Times that his company has a habit of picking up complex "assets that others might be afraid to buy."
The old owners had different reasons for wanting to offload their franchises, ranging from wanting to take advantage of a good buying price to simply running out of ingredients due to COVID-19-related food shortages. One franchisee even decided to join the new restaurant group rather than try to continue on their own. Being under a bigger franchise umbrella should theoretically prevent problems like payroll issues, especially with a company that owns multiple types of franchises instead of putting all its eggs in one Moe's-branded basket. However, only time will tell if that's a wise decision.
Customer Satisfaction And Promotion Are Low
When we look at customer satisfaction and customer promotion at Moe's Southwest Grill, it's valuable to compare that to its biggest competitor: Chipotle. And it doesn't look great. In just about every category, customers are far more satisfied with Chipotle
According to Comparably, Moe's still enjoys 77% customer loyalty, but those customers are less satisfied with food quality, prices, and customer service than Chipotle patrons. Moe's customers rate its food quality at 3.1 out of five, whereas Chipotle's customers rate it at 3.7 and give the prices a slightly better rating, too. Even the customer service is worse, with Moe's diners rating it at three stars, while Chipotle's at 3.5.
Even more telling is Moe's Net Promoter Score (NPS), which shows how likely customers are to recommend the restaurant to others. The score comes from taking the percentage of customers who are willing to promote the restaurant and subtracting those are more likely to smack talk the place. In the case of Chipotle, 51% of customers are promoters, while 34% are detractors, giving it an NPS score of 17 (51 minus 34). Unfortunately, there are more detractors (47%) than promoters (40%) for Moe's, giving it a glum score of -7 (40 minus 47).
There Have Been Lots Of Rumors About Moe's Closing (Although It Claims It's Not)
Is Moe's going out of business? Well, a lot of the restaurant's franchise locations have certainly closed down in the last few years. The chain's challenges and negatively perceived changes have made some customers question whether it's on its last legs or not.
Despite rumors of the chain closing, there aren't any such plans on the horizon — at least not publicly. The marketing team is still churning out new ideas and the chain has not made any announcement that might indicate a plan to close across the board. However, when individual stores fail or are struggling along under poor leadership, it can fuel rumors that others nearby may be shuttering, too. When seven Moe's restaurants closed in Indiana in 2023, the franchise owner of one still-thriving location in Zionsville took to Reddit to defend their location, saying, "We are open and doing great. We still have the best queso in Indy." Best queso or not, only time will tell what the future holds for Moe's Southwest Grill.
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