This month we look at: bell pepper prices, how often you should be taking inventory, the importance of a digital presence for your restaurant, and national restaurant sales and inflation trends from December.
Even though I'm sure you've heard it at least 6 billion times this month, I can't believe it's already 2024.
While many of you are likely recovering from a busy holiday season, we thought there was no better time to focus this newsletter on a few restaurant resolutions like taking inventory more (or at all) and improving your restaurant's digital presence.
And as we approach Valentine's Day, I have an ask for anyone who'd be willing to share some love with their favorite restaurant. Since we know Valentine's Day can be kinda rough for restaurant workers, we at MarginEdge like to use it as an excuse to shower our industry with extra warm fuzzies to help power through.
If you have a favorite restaurant, a special restaurant memory or just know a restaurant team that deserves some extra ❤️ this Valentine's Day, we'd love to hear all about it! Share your restaurant love story with us and them here (secret admirers are also welcome if you're feeling shy!).
Know someone who would like to join our 59,891 subscribers? Forward to a friend or send them this link.
- Rachel & the MarginEdge team
MONTHLY SALES METRICS & UPDATE
Fast Casual ended the month dead even with December 2022's numbers and Full Service was not far behind with -2%. Both segments' saw their best performance on Christmas Eve and Day, with Full Service peaking at around 14% and Fast Casual at 17%. Given the strong growth for both segments over Christmas 2022, these numbers are especially ones we're celebrating.
The average food category costs as a percentage of sales dropped slightly from last month for MarginEdge customers, with food costs averaging 27% of sales.
2023 might've been the hottest year on record, but that doesn't mean bell pepper-growing regions got the message. Prices for red, yellow and orange bell peppers have been increasing lately, with their immature green counterparts holding steady.
The slow maturation is likely due to poor weather conditions and a hurricane in growing areas like California and Mexico. This means supply is low and the growing season has been delayed so prices could remain high for the time being. Thankfully, the quality of pepper imports does not appear to be impacted despite a lesser amount making it from green to red.
Seems our capsicum comrades are suffering from Pepper Pan syndrome. (I'll see myself out.)
Oak & Ola | Tampa, FL
ASK [me] ANYTHING
How often should I be taking inventory (and do I really have to)?
The first question you should be asking yourself if this is something you're wondering about is, "Do I care about food costs and cash flow?" If the answer is yes, then yes, you should be taking regular inventories. There's no other way to have accurate food costs, plain and simple. And if you don't care about food costs, you should buy a lotto ticket. 🍀
Taking inventory prevents over-ordering, limits waste and makes surprise DOH visits a little less nerve-wracking. So how often should you be taking them? Sadly, there isn't a one-size-fits-all answer, but it's a little like getting a toddler to eat their veggies, often is best, but once in a while is still better than never.
Some restaurants take inventory weekly, others monthly, and some even do smaller counts when deliveries show up. The best answer for your business is going to depend on factors like how many perishable products you purchase, how many high-cost items you keep on hand and your labor resources (aka how much your team is going to hate their lives). If you're a pizza joint and most of your products are shelf-stable like flour and canned tomatoes (and your margins are pretty good to begin with), taking inventories more than once a month might not be worth it. Here's a breakdown:
High volume of perishables: spoiled food is literally throwing your money in the trash. Weekly, bi-weekly or when deliveries come are going to be your best bet for frequency. If you choose the delivery method, you can take smaller inventories for the products that are being delivered at that time rather than big counts of everything on hand. This is going to help manage waste better, tighten up those food costs and prevent spoiled products from hanging out on your shelves.
High-cost products: your biggest benefit here is helping with cash flow. You can even pick your top five or ten highest-cost items, throw them on a count sheet and do a quick count once or twice a week before ordering. Knowing your on-hand for these ensures you won't over-order and that there isn't excess waste (or theft) happening, both of which directly impact your cash flow.
Labor resources: inventories can only be accurate if they're consistent, so you need to consider what your team is capable of doing. If you have a solid team that is motivated to keep costs low, make sure to train them on the benefits of inventory and how it contributes to their own success too (like adding a new, marketable skill to their resume if they haven't done it before).
Tl;dr - taking inventory is important if you want to control costs. Shoot for as often as you can do consistently and don't be afraid to prioritize counting your higher-priced items more often to get better control over cash flow.
💬 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.
Clyde's | Washington, D.C.
Order Inflation Up (still)
While not the most amazing news, December's inflation numbers are in and things are, well, steady. Food away from home came in at 0.3% which is down from November's 0.4% increase, and overall food inflation rose 0.2%. Meats, poultry, fish and eggs rose 0.5% driven by an 8.9% increase in the index for eggs (our item to watch 👀 last month).
Compared to last year, the index for food away from home rose 5.2% overall, with Limited Service meals increasing 5.9% and Full Service rising just 4.5% over the last 12 months.
The market responded well, but strategists are pushing their timeline for a Fed interest rate cut back a few months with the news. Year over year, the overall index closed 2023 at 3.4%, which is still high but much better than December 2022's 6.4%.
Cane and Table | New Orleans, LA
'TIS THE SEASON
Managing your digital presence
While your level of interest in having an online presence for your restaurant may depend on whichever generation you ascribe to, no one can deny that we are in a digital age and your restaurant is a part of it (whether you like it or not).
Shout out to the old-school owners who'd rather go through daily, voluntary health inspections than start an Instagram account. We see you and we love you. And your guests love you too — which is what makes a digital presence all the more important.
Let's start with the basics — what is a digital presence? Basically, it's any way your guests can interact with your brand online whether that be review sites (like Google and Yelp), social media channels, your website or even online ordering apps.
Why should you care (and should you even care)? According to a recent study by Toast, yes, you should definitely care because 48% of diners use digital methods to find new restaurants, and 43% of diners won't go to a restaurant if its rating is below 3 to 3.5 ⭐.
We recommend (at the very least) monitoring and responding to reviews on Google and Yelp (just like you already do in your dining room), as well as having either a website or Facebook page to post basic information like hours of operation, phone numbers and location(s). If you're not sure where to start or don't have the resources to hire someone to manage your digital presence, there are a lot of tech options out there including some from your POS.
Chefs Without Restaurants- While this podcast shares stories from food industry entrepreneurs not operating out of a traditional restaurant, this recent episode about the ins and outs of pop-ups still applies.
ABR - Restaurant Marketing Secrets- These quick (we mean it), daily snippets offer practical insight into every operator's favorite topic: how to successfully market your restaurant.