The Board: September 2024

This month we look at: cucumber prices, how to lower credit card transaction fees, making the most of slow seasons, inflation and national restaurant sales trends from August.

While Starbucks may have technically launched its infamously controversial PSL in August, September marks the true start of fall. And like any millennial woman, I myself have been known to partake in a pumpkin-flavored treat here and there (shout out to Pumpkin Creme Cold Brews).?

Sure, it's basic and cheugy (as the cool kids call it). But if imbibing in caffeinated, squash-flavored beverages is wrong, I don't want to be right.?

Have you jumped on the pumpkin train this year? SpotOn just released their annual Pumpkin Spice report and found?restaurants added 1,462 pumpkin items to their menu between just August 18 and September 4 this year. Oh my gourd, am I right?! (I'm sorry!)?

Other members of the Cucurbitaceae family have been trending online lately, including cucumbers, which inspired our item to watch this month. I've also got some tips for lowering credit card fees, a couple of killer podcast episodes, and everyone's favorite section - What We're Laughing At. And don't worry, I don't judge if you scroll down to check that out first.?

Wishing you all a profitable September and I'll see you in October!

Know someone who would like to join our 97,960 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 September mantras are here!

MONTHLY SALES METRICS & UPDATE

The Fast Casual sector showed a positive trend, ending at 1% in the 7-day moving average. Full Service ended the month at 0%, which is up from last month's metrics. Both segments were positive for most of the month, which is great to see!

Dried seaweed topped our Movers list with an 84% price increase across MarginEdge customers in August. Japanese cucumbers topped our Droppers list at a -39% average price drop.

The average food category costs as a percentage of sales decreased for MarginEdge customers last month, with food costs averaging 29% of sales.?

Dig into the full report.

ITEM TO WATCH

Cucumbers

Thanks to a recent trend on TikTok and Instagram Reels, sometimes needing to eat a whole cucumber has become a thing lately. Creator @Logagm has been slinging together sliced cucumber salad recipes in quart containers (a very chefy move, if you ask me), and the internet is getting in on the action.?

Iceland is even concerned that the trend is raising prices due to demand, but is this just a coincidence with the growing season? Maybe. September traditionally marks the end of the domestic cucumber production season, and the same is true for this year. While often caused by the start of colder weather later in September, this season ended earlier than usual due to extreme heat in July and August.

Prices jumped up last September as shown in the chart below, but this year's increase is already higher. So is TikTok to blame? Cu-can decide for yourself.

ASK [me] ANYTHING

How can I lower my credit card transaction fees?

Credit card transaction fees, often seen as a necessary cost of doing business, can quickly add up and eat into profit margins. On average, U.S. businesses pay between 2.87% and 4.35% per transaction to process payments. This fee, called the merchant discount rate, covers various costs like interchange fees and service provider charges to ensure smooth credit card transactions.

However, not all fees are created equal, and focusing on ways to lower them is a key way to enhance profitability and maintain a healthy bottom line. It can also provide a competitive edge by allowing businesses to offer better pricing or invest more in customer experience. Our friends at Square have put together a few ways to do just that:

• Accept Cards In-Person: In-person transactions typically have lower processing fees compared to online or manually entered transactions, which are considered higher risk due to potential fraud.
• Minimize Chargebacks: Reducing chargebacks can help lower fees, as frequent chargebacks can label your business as high-risk. Use credit card authorization forms and ensure clear communication with customers to prevent disputes.
• Set a Minimum Purchase Amount: For credit card transactions, setting a minimum purchase amount (up to $10, as allowed by the Dodd-Frank Act) can help offset processing costs, especially for small transactions.
• Choose the Right Payment Processor: Compare different processors to find one that offers the best rates for your business size and transaction volume. Some processors may offer lower fees for businesses with high sales volumes or low chargebacks.
• Negotiate Rates: If your business has a strong sales history or low chargeback rate, you might be able to negotiate better terms with your payment processor.
• Use Debit Cards: Encourage customers to use debit cards with PINs, as they generally have lower processing fees compared to credit cards.

Read more on everything you need to know about credit card fees on Square's blog here.

?? 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 Down (again)!

The August 2024 Consumer Price Index (CPI) report is in, and indicates the following month-over-month changes in food inflation:

• Overall Food Inflation: Up 0.1% from July, and is up 2.1% YOY.
• Food At Home:?Up 0% from July, and is up 0.9% YOY.
• Food Away from Home: Up 0.3% from July, and is up 4.0% YOY.
• Limited Service Meals: Up 0.3% from July and by 4.3% YOY.
• Full Service Meals: Up 0.2% month-over-month, and by 3.8% YOY.

Overall, inflation came in at 0.2% up from August, which was the same as July, meaning year-over-year inflation is at its lowest point since 2021 again, at 2.5%. This pretty much guarantees we'll see a rate cut (albeit probably 25 basis points rather than 50) next week so get those loan docs ready!

Tl;dr - lowest YOY inflation to date (again), food away from home up 0.3%.?

'TIS THE SEASON

Making the most of a slow month

There are notorious busy seasons and slow seasons in the restaurant industry, and according to last year's numbers, September can be on the slower side. Whether it's because kids are back in school or sports seasons are starting up again, some operators may fear an early Fall slump. The good news is the holiday season is just around the corner which also means September is the perfect time to get your back of house in order.?

Here are a few places you can consider investing some extra time before the holidays ramp up:

1. Maintenance - The worst time to schedule maintenance on your appliances is when they're not working, especially during the holidays. Plan ahead and use your downtime to ensure they're in tip-top shape.?
2. Deep cleaning - It's the oldest saying in the hospitality book: if you can lean, you can clean. Slow seasons are the perfect time to get up close and personal with a can of Carbon-off and some good ole' elbow grease (just make sure you wear protection!).?
3. Menu engineering - Make sure your food costs are what they ought to be, and make adjustments as necessary. This would also be a great time to nail down those holiday specials and ensure their profitability through the end of the year.
4. Do a finance deep dive with your accounting team - Just before the start of the new year is a great time to look back at your finances and set goals for 2025. Not sure where to start? Harmony CPAs have compiled a list of 11 financial opportunities to consider.
5. Brush up on team training - Use the slower period to train staff, improve service quality, and enhance team skills, ensuring a better customer experience when business picks up.?
6. Investing in technology - Similarly to appliance maintenance, the best time to invest in your back-of-house processes and restaurant tech stack is before you're stuck wishing you implemented them 6 months ago. Whether it's upgrading your POS, investing in inventory or recipe management, a website, payroll, or labor scheduling software - there's no time like a slow time to invest in scaling your business and ensuring you're ready for the future.?

If you know another operator who might benefit from #6, MarginEdge currently has a bonus referral program for September (expires 9/30) where you can earn up to $750 for every qualified referral. Learn more here.

What's [me] into

?? WHAT WE'RE LAUGHING AT

• Heard Chefs?- What people think being a chef is like vs. reality. ??

• Lady Line Cook - Clopens?- Do you know you have 30 minutes??

• When working at a restaurant beats watching reality TV - The tea is always served hot.?

?? WHAT WE'RE READING

• The NRA's latest economic insights blog - Over the past 12 months, personal spending grew 5.3% for food service, suggesting how consumer spending has helped buoy the U.S. economy, helping to provide resilience despite lingering challenges.?

• Restaurant math isn't working - Six chefs and restaurant owners from across the country explain why restaurants feel so expensive right now, and how they’re coping with high prices and customer complaints.

• Preparing for the holidays: profitable campaign tips for busy restaurant owners - This upcoming NRN webinar will cover a few ways to increase profits over the upcoming holiday season.

?? WHAT WE'RE LISTENING TO

• Restaurant Strategy?- This episode sits down with Justin Roberts, Co-Founder of Kickfin, to discuss the secret to employee retention (hint: it's about going digital with tip outs).?

• A Deeper Dive?- Seventeen restaurant chains have filed for Chapter 11 debt protection this year, most of them since June.