What index is used to determine the pricing for HFCS Sweetener at Moes Southwest Grill?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
- c. Company agrees that the pricing for HFCS Sweetener purchased in the 48 contiguous United States and the District of Columbia in any given calendar year will be determined as follows. Company will calculate the difference between the monthly average of the Producer Price Index for Corn Sweetener as published by the Department of Labor ("PPI") for (i) the most recent prior October through September period ("PPI Most Recent Average") and (ii) the second most recent October through September period ("PPI Second Most Recent Average"). Company will then calculate what the percentage of this difference is as compared to the PPI Second Most Recent Average. If the percentage is positive (i.e., the PPI Most Recent Average was greater than the PPI Second Most Recent Average), then Company will not increase its HFCS Sweetener pricing in the given calendar year over the prior calendar year's most recent pricing by more than this percentage. If the percentage is negative (i.e., the PPI Most Recent Average was less than the PPI Second Most Recent Average), then Company will decrease its HFCS Sweetener pricing in the given calendar year by this percentage compared to the prior calendar year's most recent pricing. See Example 2 in Exhibit 5-2. The published PPI can be found at: http://www.bls.gov/ppi/ppi
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to Moe's Southwest Grill's 2025 Franchise Disclosure Document, the pricing for HFCS (High Fructose Corn Syrup) Sweetener is determined by the Producer Price Index (PPI) for Corn Sweetener, as published by the Department of Labor. Specifically, Moe's Southwest Grill calculates the difference between the monthly average of the PPI for the most recent prior October through September period and the second most recent October through September period. The percentage change between these two averages dictates how much Moe's Southwest Grill will adjust its HFCS Sweetener pricing for the upcoming calendar year.
If the PPI has increased, Moe's Southwest Grill will not increase its HFCS Sweetener pricing by more than that percentage over the prior year's pricing. Conversely, if the PPI has decreased, Moe's Southwest Grill will decrease its HFCS Sweetener pricing by that percentage compared to the prior year's pricing. This mechanism aims to provide some predictability and transparency in the pricing of this particular ingredient, linking it to an external economic indicator.
For example, the FDD provides an example calculation. To determine HFCS Sweetener pricing for 2016, the company determined that the monthly average of the PPI from October 2014 through September 2015 was 202.73. The monthly average of the PPI from October 2013 through September 2014 was 197.78. The difference between these two averages was then divided by 197.78, resulting in a positive 2.5% increase. Therefore, the company would not increase 2016 pricing for HFCS Sweetener by more than 2.5% over the most recent HFCS Sweetener pricing in 2015.
It's important to note that if the Department of Labor discontinues publishing the PPI or materially changes it, Moe's Southwest Grill reserves the right to establish a different pricing methodology for its nutritive sweetener. This ensures that the company can adapt to changes in data availability and continue to manage its ingredient costs effectively. The FDD also provides a website link to the published PPI, offering franchisees the ability to monitor the index themselves.