December 15, 2023
This month we look at: egg prices, ways to create new revenue streams, making the most of New Year's Eve and national restaurant sales trends from November.
It's the last month of the year, and what a year it's been! We know how busy this season is for our restaurant clients and honestly, we couldn't be more excited about it. Especially considering the NRA just released their survey results about diners' plans on using restaurants during the holiday season. They reported that 63% plan to dine in at restaurants and 48% plan to order take-out or delivery.
Our item to watch this month is (once again) eggs. Thankfully trends aren't looking as egg-septionally dire as they did earlier this year, but price jumps are still never great news - particularly as we reach peak baking season. While not technically a holiday classic, this is my hands-down, favorite cookie recipe. The flakey salt pairs perfectly with a well-earned, post-shift drink (or any drink, really).
Wishing you all a very busy and very profitable December! Know someone who would like to join our 59,721 subscribers? Forward to a friend or send them this link.
- Rachel & the MarginEdge team
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MONTHLY SALES METRICS & UPDATE
Fast Casual ended the month at -1% compared to November 2022's numbers and Full Service was not far behind with -2%. Both segments' saw their best performance during the second week of the month with Fast Casual peaking at around 6% and Full Service at around 3%.
The average food category costs as a percentage of sales dropped slightly from last month for MarginEdge customers, with food costs averaging 28% of sales.
ITEM TO WATCH
Eggs
While it may not be time to sound the egg alarms just yet (aka roosters?), prices did jump up for our ovular friends in November. MarginEdge customers saw a whopping 38.7 percent median price change from October to November, with December prices already up nearly 15 percent from that just halfway through the month.
We know many of you may have some lingering anxiety from the dramatic egg price increases earlier this year, so rest assured, what's happening now is not likely to continue in the same fashion (although we can likely blame the same culprit). The same highly contagious bird flu that infected prices earlier this year was found again in the Midwest this November. The flocks were mostly small, backyard operations but due to the nature of the virus, there is cause for caution.
Eggs being back on our watchlist does, however, bring into question how operators can best circumvent volatile prices in the future. Perhaps plant-based, lab-made egg substitutes will be the answer (although we're not expecting plant-based eggnog to hit holiday menus en masse any time soon).
What are the best ways to create additional revenue streams for my business?
Taft's Ale House | Cincinnati, OH
ASK [me] ANYTHING
What are the best ways to create additional revenue streams for my business?
Margins have always been tight for operators, even in the best of times, and thanks to inflation many have had to increase menu prices just to say above board. At some point, you can't keep increasing prices so it's helpful to know what other revenue streams are out there.
Merchandise is a great option and is a gift that keeps on giving in the form of (nearly) free advertising. Free tools like Canva make creating designs a breeze (even if you aren't an artistic type), so there are several ways to get started with a lower, upfront investment. Branded merchandise also encourages a stronger sense of connection and loyalty between your guests and your brand's identity. You can even partner with local vendors to source your swag, offering guests a sustainable and community-centric way to show their support.
If you have the space, events and parties are another great way to increase revenue. Private events are a great way to capitalize on off-peak hours with a guaranteed head count and can introduce your restaurant to new guests who might have otherwise not known about you.
If you don't have a ton of front of house space, you can also look at listing a ghost kitchen out of your existing restaurant for delivery. Ghost kitchens allow you to expand your delivery radius, showcase more profitable items and even help you operate during non-typical hours with a lower headcount.
Some other ideas include doing a pop-up event or collab with another local chef or restaurant, or (if you have more capital to work with) opening a food truck extension of your restaurant. With a food truck, you can reach more guests by coming to them rather than relying on them to come to you. Pop-ups and collabs are a great way to create buzz and most guests don't mind paying higher prices.
Ask [me] anything!
Really. Each month we’ll take a look at the questions we get and answer one here. Have a question about our product, accounting, or restaurant operations in general? Email me or message us on our social media channels.
Oak & Ola | Tampa, FL
THE ECONOMY
Order Inflation Up
November's numbers are in, and the consumer price index (CPI) for food away from home once again remained unchanged at a 0.4% increase for the third month in a row. Food at home (grocery) increased 0.1% from October. Compared to November 2022, overall food inflation is still up 2.9%. Overall inflation only increased by 0.1%, leaving us at 3.1% up from November 2022 across all categories.
While it looks like pressure on food prices from supply chain issues has calmed down, the main reason for food away from home's sustained increase is likely due to increased labor costs and low unemployment rates for the food service industry.
Supply chain issues should continue to improve, as the White House Council on Supply Chain Resilience recently announced that the USDA is investing nearly $196 million into the creation and improvement of market opportunities for agricultural producers and entrepreneurs.
And on the subject of labor, which has been a very hot (and sore) topic for restaurant operators throughout the pandemic and its recovery - we finally have some good news! Restaurant employment levels surpassed pre-pandemic levels next month, but the findings vary greatly by segment.
Imperfecto | Washington, D.C.
'TIS THE SEASON
Getting more out of New Year's Eve
The jury may still be out on which of our industry's big nights is the restaurant Super Bowl, still, everyone can agree New Year's Eve is a top contender. (And yes, Super Bowl Sunday is also included on that list along with Mother's Day, Valentine's Day, Thanksgiving, Christmas, and their respective Eves.)
As a notoriously busy night, diners know that if they want to have any plans other than ones involving their couch and a $40 last-minute, DoorDashed bottle of André Brut, they need reservations. So with an impending influx of reserved revelers (likely only in the booking sense), how can you make sure you're making the most of one of your busiest nights? Here are some tried and true ways to ensure the only ball being dropped that night is the one in Times Square.
To start, prix fixe menus are a no-brainer (there's a reason everyone does them). Creating a menu that optimizes efficiency and profit margins ahead of time will make sure your kitchen staff and bank account start the new year off on the right foot. You might also consider adding extra options to enhance the dining experience (hello, caviar toppings!) and market your special offerings through email and social media. If your books aren't full yet, this is a great way to get the attention of those last-minute Larrys who forgot to plan ahead.
Essentially, it comes down to smart planning and using tools effectively to maximize profits during the holiday rush, all while ensuring a great experience for guests and staff alike.
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