This month we look at: a deep dive into rising egg prices, holiday bonus structures, how to attract and retain good employees, inflation and national restaurant sales trends from November.
Greetings from the last month of the year! Whether it's your busiest season or you close up shop for a few days of well-earned rest, I hope December treats you well.
If you're feeling deja vu over this month's item to watch, we can't blame you. Eggs were pretty pricey last month, once again. So was it seasonal holiday baking that led to the average price per dozen jumping up 44% from October? Scroll down to find out!
We also still have a few days left to give for our Giving Tuesday initiative with World Central Kitchen. MarginEdge has pledged to match 100% of employee donations and up to $5,000 of client donations. To those who have already donated, we cannot thank you enough.
And on the topic of thank yous, I want to take a moment to thank our readers for their feedback and comments over the last year. I read every single message (I'm a real person, I swear!) and it means a lot when you share thoughts or questions about what we write about or what you want to read each month. Feedback is always welcome and I wouldn't be able to do this without you!
Wishing you all a very profitable December and I'll see you next year!
Know someone who would like to join our 84,686 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 December mantras are here!
Fast Casual had positive sales growth during the beginning of the month and over the Thanksgiving holiday, before ending at -9% compared to November 2023. Full Service also saw positive performance over Thanksgiving, before ending at -4% on a 7-day moving average.
Food costs averaged 30% of sales last month, reflecting a slight drop from October's average.
Egg prices have been a hot topic lately - and for good reason. The average price for a dozen eggs jumped up 44 percent for MarginEdge clients from October to November and may stay high for a while. Our long-time readers may remember that eggs were also our item to watch last December.
What's causing the jump this time? The short answer is bird flu impacting supply and demand. The long answer is a little more interesting and worth diving into as these price fluctuations will likely continue.
Let's start with bird flu. Recent outbreaks in California, Washington, Oregon and Utah caused a reduction of 6 million laying birds. Anytime supply drops and demand holds steady - or in our current case, is increasing thanks to the holiday season - prices go up. It's basic economics, nothing fancy. But those birds only account for roughly 1.6 percent of the total US laying flock, so why are low prices flying the coop?
CA, WA, and OR (along with Nevada, Arizona, and Massachusetts), all have laws that require all eggs produced and sold in these states to be cage-free. Colorado, Michigan, Rhode Island and Utah have cage-free production or sale laws soon going into effect too.
Due to these laws, CA, WA and UT are some of the largest cage-free egg producers in the US, so when their supply drops and you can only sell cage-free eggs, other out-of-state cage-free producers have to pick up the slack. In March 2024, cage-free layers were reported to be about 40 percent of the U.S. flock and are projected to account for 51% of all eggs produced in the US by 2026.
To make things even more precarious, bird flu is often spread by contact with wild, migratory birds, meaning free-range, cage-free laying hens have a higher chance of exposure because they spend their lives outdoors. As shown in the chart below, egg prices in the West (where most cage-free states are) are higher than the national average by about $1, but the entire country has been impacted.
While it may go against popular rhetoric about who controls egg prices, the real culprit is bird flu outbreaks, and we can likely expect further periods of price increases if and when more occur.
Acropolis Greek Taverna | Tampa, FL
Finding and (more importantly) keeping good employees has long been a struggle for restaurant operators, and things like changes to the broader labor market, inflation and minimum wage increases have only made things more difficult in the past few years. While the total number of food service jobs has surpassed the pre-pandemic peak, growth has slowed in 2024 and is on pace to add only about half the number of jobs added in 2023.
So, what can you do to stand out to top talent and how can you make them stay? The answer may lie in a two-birds-with-one-stone approach. According to a 2024 survey by Toast, the two biggest reasons for working in food service were schedule flexibility (46%) and good hourly pay (36%). On the flip side, the two biggest pain points were poor hourly pay (32%) and having a difficult manager (32%).
While a little obvious, it's not coincidental that solving either pain point would make the reasons for working in food service even more attractive to employees. With that in mind, here are 4 things to consider when it comes to attracting and retaining top restaurant talent:
Medical benefits were reported as the most valuable benefit for both 2023 and 2024, but the percentage of respondents who ranked it #1 increased in 2024 to 33%. Other important benefits were PTO and free meals. While an expensive chunk of overhead costs, it's clear that medical benefits are significant to food service employees, and offering them can improve retention.
PTO was fifth most valued in 2023 and jumped up 10% to the second spot this year showing a clear shift in importance. This also aligns with the number one reason why employees work in food service, flexibility.
There's always a delicate and sometimes impossible balance between keeping employees happy with their schedules and still being able to run a tight and profitable shift. One of the best ways to do both is to streamline your scheduling processes and how your team communicates schedule changes with each other. For example, 7shifts lets your team submit their availability and even request shift trades in their app.
This is great for your hourly employees and makes your managers' lives easier while creating the schedules. And speaking of managers...
Having a bad manager came in tied for the biggest pain point food service employees have about working in our industry, and having difficult coworkers was not far behind in fourth place. Company culture is important, both as a way to attract top talent and also to keep them. Open communication, fostering trust between management and staff and showing appreciation are all ways to improve culture.
We know no one wants to be told their crap stinks, but welcoming and listening to feedback is just the start. Taking feedback seriously and making positive changes where you can, can go a long way in making your teams happier to be (and stay!) at work.
Good hourly pay was the second most common reason why respondents worked where they worked at 36%, and poor hourly pay was their biggest pain point about this industry. We doubt this information is news to anyone, but how do tips fit in? Making good tips was less so, but still important compared to making a good hourly pay, coming in as the fourth highest reason for working where they work.
When it comes to tips, tip pooling is not very popular, with 46% of respondents saying they don't like it. Receiving daily tips is, however, with 56% preferring that over other time intervals.
While not every topic on this list may be feasible for every business, the key thing to keep in mind is that most improvements that attract good talent will also help retain them long-term.
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Cranes | Washington, D.C.
The November 2024 Consumer Price Index (CPI) report is in, and indicates the following month-over-month changes in food inflation:
Full Service Meals: Up 0.3% month-over-month from October, and by 3.6% YOY.
Overall, inflation came in at 0.3% up from October, which was expected, but trending upward again. Year-over-year inflation is at 2.7% which is an increase from last month. The news all but cemented a December rate cut as the Fed continues to try to bring inflation down. The biggest culprit has been sticky shelter costs, accounting for nearly 40% of the monthly increase.
Tl;dr - YOY inflation increased for food at home (groceries), while food away from home decreased slightly from last month.
Eggspectation | Multiple Locations
Cash, gift cards, a subscription to the Jelly of the Month club. Holiday or year-end bonuses are an excellent way to show your appreciation for your staff and implement performance-based incentives if that's your thing. These bonuses can come in many forms, so whether you're thinking about giving them out for the first time or just looking to change things up, we've compiled a list of a few options to consider when building your holiday bonus plan.
Just like with children, picking favorites with your staff for bonuses is a recipe for disaster. Your best bet to avoid this is by setting up a policy that is consistent and transparent so your team knows what to expect. For example, you can set a tenure minimum for eligibility (must be with the company for 9 months to receive a bonus), or base your bonus structure simply on tenure ($25 per month of employment).
To keep things equal, but still recognize effort and contribution throughout the year, you can also set certain amounts by role. So managers get $500, cooks get $300, servers and hosts get $200, etc., or only bonus non-tipped roles. Whichever structure you choose, we recommend staying consistent to avoid hurt feelings and bah humbugs.
This one will take a little more pre-planning, but it's also common to implement a performance-based bonus structure for your management team(s) based on COGS, labor or sales goals. If you already do this quarterly for your managers, you can set up an additional year-end bonus for meeting numbers every quarter. One of the best ways to keep managers on track and incentivized throughout the year is to consistently share their metrics with them so they can keep tabs and make changes during the quarter or year before it's too late.
You may also consider offering bonuses for working specific days or difficult shifts, especially for salaried employees who don't get time-and-a-half on holidays.
Everyone loves a good work holiday party in January to celebrate after the holiday rush is over, and it's a great way to show your thanks and appreciation. Covering the food and bar goes without saying, but you can also throw in a raffle drawing, lotto tickets, or good ole' bottles of booze as party favors.
When I asked our team of former restaurateurs about their experiences with holiday parties, they strongly noted that while it was a party for the rest of the staff, it was still work for the managers - both in terms of planning and then supervising to make sure it didn't get out of hand (and that no one landed in jail). So if your managers are managing the party, keep that in mind and maybe send a few extra goodies their way as a thank you.
They also mentioned that no matter where they worked, there was always that one year that led to conduct rules for next year's holiday party (so no shame if that happens to you!).
Finally, we'd be remiss to talk about holiday bonuses without including a reminder to make sure whatever bonus structure you use is tax-compliant. Here are a few quick tips*:
If you pay out bonuses through regular paychecks, taxes should be accounted for and you're good to go!
If you want to give specific amounts (so a net bonus of $500 instead of $432 with taxes deducted), you will need to do a "gross to net" calculation using your payroll software. To avoid any tax issues for both you and your employees, check in with your payroll provider and ensure the payments are recorded on their W2s.
If you want to skip worrying about the taxes you may choose to send your employees a holiday gift. Gifts that are irregular or small in value are usually treated as de minimis fringe benefits and aren't subject to taxation.*
* Margin Edge does not provide taxation advice, this article is for entertainment purposes only (are you not entertained?). For advice on how gifting or bonuses may affect your tax liabilities for employers or employees, please speak to your tax advisor.
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