I'm Rachel! I'm new to The Board (but not new to MarginEdge). After two and a half years creating content with the [me] team, I'm now at the helm of this newsletter and couldn't be more excited to be here.

In the spirit of new introductions, I thought I'd share a little about myself. I am a big fan of democratizing our data and sharing it across our industry with as much sass and creativity as I can get away with. And I may or may not have gotten an interview with MarginEdge by mentioning I make a mean pot roast on my resume. Elizabeth Taylor had white diamonds for luck, I've got my crock pot.  

I can't wait to get to know you all, so please keep the requests, questions and ideas coming my way as we dish out the latest and greatest.

Know someone who would like to join our 59,682 subscribers? Forward to a friend or send them this link.

- Rachel & the MarginEdge team

MONTHLY SALES METRICS & UPDATE

Fast Casual beat out Full Service once again, with sales ending at 1% above October 2022's numbers and Full Service ending not far behind at -1%. Both segments saw a huge bump during the first week of October, both peaking at around 3-4% positive growth. 

Food, beer, wine and liquor average category costs as a percentage of sales increased slightly from last month for MarginEdge customers in October, with food costs averaging 30% of sales.

Dig in to the full report.

ITEM TO WATCH

Mango

The start of winter can be difficult for many reasons - seasonal depression, bad weather and (probably the most impactful for our industry) produce availability and/or quality fluctuations. Last month, we saw mangos taking a sharp price increase and it looks like that trend may sadly continue. 

Can we blame Old Man Winter for this tropically-flavored, depressing news? Not this time. Higher temperatures and excessive rainfall thanks to El Niño weather patterns this summer negatively impacted flowering for crops across South America, namely in Peru and Ecuador. In response, Brazil's export prices for certain varietals have increased 40% year-over-year driving up costs without much competition.

Bento | multiple locations

ASK [me] ANYTHING

We sell a lot of gift cards this time of year. How do I make sure I'm accounting for that revenue correctly?

Paytronix's 2023 Restaurant Gift Card Sales Report found that by month, November and December accounted for 45 percent of all gift cards sold in 2022, which was in line with previous years' data. While the total number of gift cards sold was two percent lower, the change in average dollar amount loaded per card increased by eight percent.  

When you sell a gift card, either physically in-store or digitally, the amount sold should be categorized as a liability on your balance sheet. This also includes discounted gift cards or cards given away for free - the total amount of every gift card's value should be recorded. When redeemed, your liability balance will be reduced and the sales revenue can be recorded as taxable income on your P&L. 

You'll also need to account for breakage, which is any type of paid service that is unused by your guests. This accounts for the revenue from the portion of gift cards sold that either expire or will never be redeemed (meaning the balance won't have to live as a liability forever).

How you account for breakage depends on whether your restaurant is required to follow Generally Accepted Accounting Principles (GAAP) or not. Operating multi-unit franchise and restaurant groups also adds another layer of complexity, so be sure to check with your accounting teams for guidance and best practices.

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.

El Rey | Arlington, VA

THE ECONOMY

Order Inflation Up (but not as much)

October's consumer price index (CPI) remained unchanged since its 0.4% increase in September. Wall Street rallied at the news, causing a market spike showing traders aren't counting on another Federal interest rate hike any time soon.

Food away from home (restaurants) costs were up 0.4% again compared to last month with the food at home (grocery) up 0.3% from September. While food and shelter contributed the most to last month's CPI numbers, they were heavily offset by a drop in energy costs, thanks to oil prices cooling off.

Even with last month's increase, consumer spending in restaurants is still continually outpacing other retail sectors. The National Restaurant Association reported that even "after adjusting for menu price inflation, eating and drinking place sales were up 3.2% during the last 8 months."