The Board: November 2024
This month we look at: turkey prices, some dos and don'ts for holiday prix fixe menus, how the election results might impact restaurant taxes, inflation and national restaurant sales trends from October.
Well folks, the holiday season is finally upon us and whether the election results left you feeling thankful or not, it's safe to say that restaurants are likely in for some changes over the next four years (more on how that may impact you below!). Everything from eliminating taxes on tips and overtime to raising state minimum wages were key talking points on the campaign trail, so rest assured we'll be keeping our eyes and ears open for what that means for our industry moving forward.
I know many of you are either preparing for the rush of the holidays, preparing your end-of-year tax docs, preparing for the new year or a bit of all three! We are also preparing for the new year here at MarginEdge, and have a little secret we've been keeping quiet about. But in the spirit of giving (and being thankful!), I can now share that we will be launching a MarginEdge podcast!
Of course, there will be more of the industry insights and trends powered by MarginEdge data you read about every month, but we know there are so many topics to discuss in our community (and person-to-person conversations are way more fun if you ask me!).
Your responses will help us make sure our content is always helpful and relevant, and bonus - you'll be my favorite forever ??.
Wishing you all a safe and profitable Thanksgiving, whether you're spending the day with your work family, real family or friends that became family. We're thinking of you and feeling extra thankful for the work you do feeding our communities and making this season so special.
Know someone who would like to join our 80,445?subscribers? Forward to a friend or send them this link. - Rachel & the MarginEdge team
P.S. If you took our very, very accurate Restaurant Personality Type quiz, your November mantras are here (plus a bonus personality type-inspired Thanksgiving side dish recommendation)!
MONTHLY SALES METRICS & UPDATE
Both Fast Casual and Full Service had strong, positive sales growth for most of the month, before ending at +3% for Full Service and +1% for Fast Casual on a 7-day moving average.
Food costs averaged 29% percent of sales last month, reflecting a slight uptick from last month's average.
ITEM TO WATCH
Whole Turkeys
Turkey prices are a bit of a mystery at the moment - but thankfully a good one! Every month I comb through our data and look for the top price movers and droppers across invoice prices from our 8k+ clients. During October, and now continuing into November, the median price per pound for whole turkeys has been dropping - by 35% from September to October alone.?
Whenever I see big swings like this, I dig in and try to find out why to help inform you, our readers. Well, this month stumped me. By all accounts, turkey production is actually down this year compared to last year, and demand has remained steady. On top of this, winter seasonal bird migration can also lead to increases in avian flu outbreaks further impacting supply.
This would typically lead to increased consumer prices (you know, the whole supply/demand thing). But turkey prices are giving that logic the bird.?
As you can see below, prices for whole turkey, turkey breast, and ground turkey have all dropped slightly. Ground turkey prices have gone up a little in the last week or so, but still lower than this time last year by about $0.40 per pound.
Some analysts estimate grocers will still keep their prices low to stay competitive and attract shoppers to their stores for all the other Thanksgiving supplies, but that doesn't necessarily explain wholesale prices staying low, either. Either way, this is a great time to consider adding turkey specials to your menu so guests can gobble them up.?
ASK [me] ANYTHING
What could the election result mean for federal restaurant taxes?
While campaign promises don't always turn into reality - it's still important to plan for (or at least think about) potential changes especially when they directly impact our industry. The AP has confirmed that Republicans will retain control of the House of Representatives, which gives them a clearer path to passing legislation like what was promised on the campaign trail. So, what could those promises mean for restaurants?
Our friends at The Fork CPAs recently sent out a very informative rundown on their In the Know newsletter (which you can sign up for here!). Here's the rundown:
This list is meant to be by no means exhaustive and does not include state-level tax changes which are also likely to change. For example, Alaska and Missouri voted to increase their minimum wages and increase paid sick leave accrual, and California's minimum wage proposition is still being counted. We recommend keeping up with your local restaurant association for resources and state-specific updates.
?? 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.
THE ECONOMY
Inflation Steady
The October 2024 Consumer Price Index (CPI) report is in, and indicates the following month-over-month changes in food inflation:
Overall, inflation came in at 0.2% up from September, the exact same amount as the last 4 months, but year-over-year inflation is at 2.6% which is slightly up from last month. The Fed also announced a rate cut earlier this month and is still likely to announce another at their December meeting, although the number of further cuts in 2025 will probably lessen.?
Tl;dr - Same old, same old. Food away from home prices are steadily up month-over-month, but less year-over-year.?
'TIS THE SEASON
The Dos and Don'ts of Holiday Prix Fixe Menus
Prix fixe menus are often an excellent idea for busy restaurant holidays like Valentine's Day and soon-approaching New Year's Eve. They're great for margins because you can limit the number of products you have to order ahead, reduce waste with bulk or batch prep and cooking and likely know how many seats are on the books thanks to reservations.
Some guests love them and some don't, so navigating how to successfully implement a holiday prix fixe menu can sometimes be a tricky situation and you don't want to risk leaving anyone with a bad taste.
Here are a few helpful dos and don'ts for implementing a holiday prix fixe menu successfully, and keeping patrons coming back for more (at least once their hangovers wear off):
Do's:
1. Make your pricing CLEAR. If you are only offering a prix fixe menu for certain nights, like NYE, be sure to make the expectation clear on your website, social media channels, and with physical signage at your restaurant. You should also train your staff to tell guests calling for reservations on that date that the menu will be prix fixe. The worst thing you can do is hit your guests with a surprise at the end of the meal.
2. Keep the menu tight, but the drinks a little looser. Liquor, wine and beer margins are often much better than food costs, so you can safely offer guests a bit more flexibility without compromising profits. Try festive drinks, curated wine pairings or specials on whole bottles to encourage guests to buy more and boost check sizes.?
3. Add thoughtful surprises for better guest experiences. The good (and bad, to some) part about prix fixe is you know what you're getting. That also makes it the perfect time to plan small surprise supplements to wow and impress your guests. This can be anything from a surprise champagne or sparkling apple juice toast to start the meal, a warm bread selection to accompany entrees, or something inspired by one of my favorite restaurants, Localis in Sacramento, a sweet treat to take home - like the chef's mom's banana bread already packaged in a to-go container. Just be sure to build the supplements into your menu costing so you're still staying profitable.
Don'ts:
1. Don't go with a menu that doesn't fit your restaurant. While it may seem like the "right" thing to offer steak, caviar and champagne all night for NYE, if that's not your restaurant's typical fare we recommend trying something closer to what your guests already know. Chances are if they're picking your restaurant to celebrate with, they're familiar with your menu and ambiance. Stick to what you do best, and do it really well to impress your guests and have them keep you top of mind year-round.
2. Don't wait to make sure you've got a solid reservation system. The real key to winning the prix fixe game is to fill the books and order accordingly. The whole point of this kind of menu is to limit surprises so you can make it through busy nights as unscathed (or just lightly scathed) as possible. Having a solid reservation system and hosting team trained to know what to expect leading up to the holiday is crucial to not only ordering correctly but also ensuring positive guest experiences when they show up.?
3. Don't be careless with portion sizes. Yes, three or more courses is a lot of food so there should be some reduction from your normal portion sizes. But going too far in either direction of over or under-portioning can be a big mistake. Keeping portion sizes too large is wasteful and cuts into your profits (and you also have to be prepared with more doggy bags on hand), but under-portioning too much can leave guests feeling like they're not getting what they paid for. There's a careful balance and it's an important part of menu design to seriously consider.
While these tips mostly apply to Full Service restaurants, Fast Casual restaurants can take a page from this strategy and offer bundled combos or pre-packaged to-go bundles to reap the same cost-saving benefits during the holiday season. Offering curated food selections can help take one more thing off guests' minds during a busy time and boost sales for you!
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