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Moe's Southwest Grill President: Fast-Casual Is Still Hot

Stocks in this article: CMG JACK

NEW YORK ( TheStreet) - "Welcome to Moe's."

Walk into any Moe's Southwest Grill locations in the U.S. and the first thing you will hear is the entire staff enthusiastically greeting you. Saying "Hello" is part of the Atlanta-based fast-casual Mexican chain's appeal to creating a friendly and inviting atmosphere for families.

The menu at Moe's reflects that. Offering fresh, made-to-order Tex-Mex food with an emphasis on all-natural ingredients, is a staple at the 10-year-old franchise. It also has some amusing names for its menu items, such as the signature Homewrecker burrito, Close Talker salad and Coctostan quesadilla.

This past spring, Moe's was named the top Mexican chain restaurant above its two larger competitors Chipotle Mexican Grill (CMG), with 1,399 stores at year-end and Qdoba Mexican Grill, with about 636, according to food consulting and research firm Technomic. Qdoba is owned by Jack in the Box (JACK).

Also see: Cinco de Mayo Is Hot

Also see: 16 Handles Aims To Win In Frozen Yogurt Consolidation

Moe's is starting to close the gap. This week Moe's celebrated its 500th store opening in New York City. It plans to open an additional 50 stores by year end.

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Moe's Southwest Grill is owned by Focus Brands, which in turn is owned by private-equity group Roark Capital. Under the Focus Brands umbrella are a handful of other popular franchised names including Auntie Anne's Pretzels, Schlotzsky's Deli, Carvel Ice Cream, Cinnabon and Seattle's Best Coffee. Roark Capital owns roughly two dozen franchise brands overall including Massage Envy, FastSigns and Primrose Schools.

TheStreet caught up with Moe's president Paul Damico at its newest store this week. An edited transcript of the interview is below.

Moe's competes in the ever-growing category of fast-casual Mexican. What do you think is the appeal of this specific category?

Damico: Fast-casual Mexican is in the hottest segment. It's not just the Mexican category. Fast casual is so popular today because people are continually trading down from full-service restaurants where they don't have customizable options and they don't have to pay a 20% gratuity. So we're still seeing people trade down to fast casual.

How does Moe's specifically distinguish itself from other competitors?

Damico: There's lots of distinguishing factors, but a favorite of mine is our kids' meals. All the great attributes that we talk about at Moe's - cage-free, hormone-free, steroid-free, organic and all-natural -- all those same great attributes are part of our kids' meal program, which is really nothing like what you see in the industry today.

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