This month we look at: a deep dive into chocolate prices, tipping fatigue, how surplus food donations can lower your tax bill, inflation and national restaurant sales trends from January.
Can you feel the love tonight? My guess is yes, thanks to one of our industry's biggest nights (and biggest date nights) falling on a Friday. Hot off the heels of Super Bowl Sunday, this has been a busy week for restaurants, and we couldn't be more excited!
And speaking of excitement, February also marks the celebration of Black History Month, and this year we're showing our support with a Black History Month Gift Guide! Head over and pick out some gifts and goodies for friends and family, or just to #treatyourself.
A lot has happened since I last dropped into your inbox, and much of that change has directly impacted our industry. To address the elephant in the room (no pun intended!), executive orders impacting immigrant workers, tariffs on imported goods, and return-to-office mandates just to name a few, all to varying extents impact the way our industry does business.
As these changes happen, our goal to provide timely, actionable insights to help support restaurant operations will not change. And while we aren't covering politics or the price of eggs this month (here's our most recent chart, if you're curious), we will still cover impactful topics as they relate directly to our industry, and include any data we can to help tell that story.
To our Full Service community, we are sending a lot of luck (and hugs) for a smooth Valentine's Day service tonight, and will see you all in March!
Know someone who would like to join our 88,086 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 February mantras are here!
There is no need to adjust your screen; our charts went through a glow-up last month. When looking at a trailing 4-week (28-day) average year-over-year, Fast Casual sales were +1.99% and Full Service sales were -2.9 % at the end of January compared to January 2024 sales.
Food costs averaged 31% of sales last month, reflecting a slight jump from December's average.
Heart-shaped box or no heart-shaped box, there's no denying chocolate is the shining star of any Valentine's Day experience. Unfortunately, over the last year that shine has been tempered by slowly and steadily rising prices.
Is greedflation or an anti-chocolate conspiracy backed by Big Oatmeal Raisin to blame? Not this time. West Africa, one of the world's top cocoa bean producers, has experienced (say it with me now) extreme weather, along with bean disease, smuggling and land lost to more profitable gold mining businesses, all of which have cut down on supply. As one of the world's most beloved indulgences, this is a bitter bean to swallow.
Across MarginEdge restaurant clients, the most commonly purchased chocolate products are semi-sweet chocolate chips and cocoa powder. For the week of Valentine's Day 2024, the median price per pound of semi-sweet chocolate chips was $3.62, and $9.07 per pound for cocoa powder. This means last week's prices were up +24% to $4.47 for semi-sweet chocolate chips, and +23% to $11.17 for cocoa powder year-over-year.
Chocolate producers (think Hershey, Nestle and Mondelez) are hopeful for this year's crop but are still planning for high cocoa prices to put pressure on their 2025 earnings. Some are even investing in research and development for cocoa alternatives, like lab-grown cocoa (it worked for diamonds, I guess).
Luna's Tacos & Tequila | Windsor, CO
While restaurants are first and foremost a business, many of us land in the industry because we love hospitality - not figuring out business taxes. So when hospitality, like donating surplus food, and increasing your tax deductions come together, it's a win-win!
A recent article by our friends at Cherry Bekaert details how donating surplus food offers operators a chance to reduce waste, support communities, and enjoy tax benefits. Under IRS guidelines, businesses can claim enhanced deductions for food donations, allowing them to deduct up to twice the food's cost or its fair market value, whichever is less. To qualify, the food must meet "apparently wholesome" standards, go to eligible 501(c)(3) organizations, and be used for charitable purposes.
While the deduction caps at 10% (and in some cases 15%) of taxable income, excess contributions can carry forward for five years. Proper documentation is key to staying compliant and avoiding risks, making food donations not only a meaningful act but also a smart financial move for businesses. For more details and information, check out the full article here.
* MarginEdge does not provide taxation advice, this article is for entertainment purposes only. For advice on how surplus food donations may affect your tax liabilities, please speak to your tax advisor.
💬 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.
Cranes | Washington, D.C.
The January 2025 Consumer Price Index (CPI) report is in, and indicates the following month-over-month changes in food inflation:
Full Service Meals: Up 0.1% from December, and by 3.3% YOY.
Overall, inflation came in at 0.5% up from December, trending upward again. Year-over-year inflation is at 3.0% which is another increase from the previous month. The biggest culprit this time was fuel oil, and food at home saw a larger increase with egg prices coming in at 53% up year-over-year (last month that number was ~38%).
Tl;dr - YOY grocery inflation is increasing and YOY restaurant inflation is coming down!
Seven Reasons | Washington, D.C.
Tipping fatigue is hitting U.S. consumers hard, as they’re being asked to tip in more places, from car washes to repair shops, all while inflation stretches their budgets thin. As many states are passing bills either to eliminate the tipped minimum wage or increase it, this issue only gets more complex. And if that wasn't enough, the current presidential administration has promised more changes like eliminating taxes on those tips. TBD if that ends up being enacted into law, but if it does, it could further impact diners' already lukewarm feelings about tipping practices in restaurants.
A recent Popmenu survey shows tipping generosity among restaurant-goers is fading—fewer people are tipping 20% or more, and those tipping 10% or less are climbing. Delivery drivers are feeling the pinch too, with a notable drop in higher tips and a rise in no tips at all.
Interestingly, 61% of consumers are ready to pay higher menu prices if it means fair wages for staff and an end to tipping. It’s clear the pressure to tip for everything is pushing some to rethink how workers should be compensated. Has your restaurant changed tipping policies either by choice or in response to wage law changes in your state?
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