On one Columbia block, a burrito battle simmers

Amid shouts of joy, a herd of hungry college students rushed through the doors at the new Moe’s Southwest Grill in Columbia.

It was official: The burrito wars were on.

Moe’s Columbia location, on 9th Street across from the University of Missouri, opened on Oct. 23. It’s the first of 30 burrito shops Columbia-based franchisee Jeff Offut plans to open in Missouri. And it’s located just a few steps away — right across an alleyway — from a Chipotle.

Though Offut says Chipotle is the undisputed king of the fast-casual dining sector, he hopes to capitalize on some of the demand for burritos from college students near MU.

“Chipotle does a great job, but at 12:15, they often have 50 to 70 people in line, and that 50th person can take 20 to 25 minutes to get through the line,” Offut said. “There’s more demand than Chipotle can handle. So we’re coming in to fill some of that demand.”

People like Brooke Sushka, Kelsey Maffette and Jodi Sabino started lining up outside the restaurant around 1 p.m. the day before Moe’s grand-opening because the first 100 customers received a punch-card good for 52 free burritos. Moe’s also offered $3 burritos on opening day. The restaurant gave away $42,000 worth of burritos between the two promotions.

Suska said she likes Moe’s better than Chipotle because it has a larger menu and offers queso with its chips. Sabino said she likes Moe’s lower price for burritos than Chipotle.

| Phil Joens/Missouri Business Alert
Lines formed outside Moe’s before its grand opening on Oct. 23. | Philip Joens/Missouri Business Alert

Students who stood in long lines on the day of Moe’s debut said they were tempted to try the restaurant because of the $3 promotion. Opinions differed on which burrito joint was better.

Offut said Moe’s is hoping to appeal to students in particular by offering them a better deal than he says they get at Chipotle.

“We also appeal on value,” Offut said. “We give free chips and salsa away with every entree, every day. We have a salsa bar over there with five handmade, fresh salsas. So you could come in here, order one toping with a glass of water and chips and salsa for $3.50.”

Moe’s has its fans, but Chipotle is the clear leader of the fast-casual dining sector, analysts say. In the third quarter of 2014, same-store sales for the Denver-based chain were up 19.8 percent, and revenue increased 31 percent over the prior-year period. That follows a strong second quarter that saw same-store sales grow 17.3 percent from 2013.

Robert Bielinski, managing director of the restaurant industry practice for CIT Corporate Finance, says Chipotle blows away the competition because it uses some of the freshest ingredients in the fast food industry.

“The food that you’re eating at Chipotle is some of the best food you’re going to eat,” Bielinski said.

Atlanta-based Moe’s has more than 500 locations, mostly in the Southeast and on the East Coast.  The restaurant has two locations in St. Louis, one in Joplin and another in Overland Park, Kan. Offut told the Columbia Daily Tribune in May that he hopes his expansion plans for Moe’s will make the chain more recognizable in the Midwest.

| Phil Joens/Missouri Business Alert
Chipotle sits directly across from the new Moe’s in downtown Columbia — and occupies the top spot in the U.S. fast-casual dining sector. | Philip Joens/Missouri Business Alert

A Chipotle spokesman said the company has been relatively unaffected by competition from other fast-casual Mexican restaurants like Moe’s, Qdoba and Freebirds.

“We have competition at every location, whether that is a pizza place, a sandwich shop or another Mexican restaurant,” spokesman Chris Arnold said. “If we run our restaurants the way we are capable of, we’ll succeed regardless of the nature of competition. If someone else wants to put a restaurant close to ours to try to pick the crumbs off our plate, that’s up to them, but we’ll be fine.”

In an earnings call last month, Chipotle co-CEO Steve Ells acknowledged that long lines can be a problem, but he said the company was working to improve speed of service. Chief financial officer John Hartung added, “We need to get faster because as more customers want to come to Chipotle, if we don’t get faster we’re going to be repelling them. They’re going to walk off the back of our lines.”

Chipotle also found in a recent customer survey that the fast-casual industry is thriving in general.

“Younger consumers, the Millennials, were more inclined to skip traditional fast food in favor of restaurants like Chipotle,” Ells said. “Millennials are turning away from traditional fast food in favor of better food and a more enjoyable experience overall. They’re more concerned with how food is raised and prepared than previous generations and are willing to seek out and pay a little more for something they recognize as better.”


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