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Moe's targets Chipotle-hungry fans with new ad

Chipotle’s (CMG) nearly 2,000 stores were closed for lunch on Monday (from 11 am to 3 pm in all time zones), when employees attended a company-wide meeting on food safety. One of its leading (though much smaller) competitors, privately owned Moe’s Southwest Grill, took advantage of the closure with a new full-page ad in USA Today which touts in bold lettering – “We’re Open – Especially on February 8.”

Source: Moe's, USA Today
Source: Moe's, USA Today

The ad’s timing is clearly an opportunistic ploy. The Mexican chain’s website even includes a “buy one burrito get one free” coupon. But Moe’s President Bruce Schroder said (with surprising seriousness) the ad has more to do with the fact that Feb. 8 falls between the Super Bowl and Tuesday’s New Hampshire primary.

When asked whether the ad seemed to be a jab at Chipotle and its recent bad press connected to dozens of customers who were sickened at Chipotle restaurants, Schroder said: “The good news is we have played nice throughout our category growth together and I think because of that we’ve made each other better.”

Moe’s is owned by Atlanta-based FOCUS Brands, which is the franchisor and operator of chains like Carvel, Cinnabon and Auntie Anne’s restaurants. It currently has 600 stores and touts more than 20 fresh ingredients like grass-fed steak and organic tofu on its menu. The chain faces stiff competition not only from Chipotle but from other fast casual restaurants like Panera (PNRA), Shake Shack (SHAK), and Cosi (COSI).

Though the source of Chipotle’s E. coli remains a mystery, the Wall Street Journal reported that the bacteria was most likely from contaminated beef from Australia. With consumers’ higher demands for locally sourced, GMO- and hormone-free ingredients, restaurant chains are feeling the pressure to keep up with these standards.

Schroder told Yahoo Finance, “It’s this redefinition of quality. It’s a good thing in the long run but challenging in the short term. We want to make sure we have the support systems in place and do it in a safe way.”

He noted, however, that Chipotle’s E. coli outbreak reminded him that you always have to be vigilant when it comes to food safety. “No one’s immune [from food safety concerns]. It can happen to anybody at any time. We’re kind of superstitious in the industry and we have to evolve with the changing measures of quality.”

Moe’s views its competition more broadly than just Mexican. “Fast casual is all about share of stomach – people are trading up to quality, or down for value,” said Schroder. “So we’re working really hard to deliver that quality and value so we can be competitive with everyone in the fast casual segment.”

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