What Is a Narrow Moat? What is it, How it Works, Example

By Jeremy Bowman – Updated Jun 16, 2025 at 12:53 PM EST

Key Points

Narrow economic moats may protect a company for around 10 years compared to over 20 for wide moats.
Invest in both narrow and wide-moat firms to balance identification ease with growth potential.
Diversify with narrow-moat companies in varied industries to enhance competitive positioning.

The phrase "economic moat" was coined by Warren Buffett as a description of sustainable competitive advantages. Traditionally, a moat protects a castle from invaders. In business, a moat protects a company from a different kind of invader -- competition. However, not all moats are created equal.

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A woman shopping for cleaning products in a supermarket. — Image source: Getty Images.

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Economic Moat

An economic moat is an advantage that makes it more difficult for a business' rivals to compete.

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According to Morningstar, a narrow moat implies a company can fend off rivals for 10 years. It considers a wide moat to be one that lasts more than 20 years.

The timeline is just an estimate, however. The point is that a narrow moat is not as strong as a wider moat.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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Jeremy Bowman has positions in Cava Group and Chipotle Mexican Grill. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends Cava Group and recommends the following options: short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.