October 11, 2024
This month we look at: blueberry prices, adding mocktails to your holiday menus, the best retirement plans for restaurant employees, inflation and national restaurant sales trends from September.
Anyone who knows me knows that October is my favorite month, thanks in all parts to Halloween. I have even been known to start decorating in August (a habit I am trying desperately to break). Spooky movies, cute kids running around in costumes and the return of soup season (here's my favorite recipe) - what's not to love?
And even though it's my favorite month, it goes without saying that October has been off to a rocky start. Between Helene and Milton, the Southeast has been going through it and it's incredibly inspiring to see how our industry has been at the heart of recovery efforts.
If you're interested in supporting impacted communities, here are a few resources that may be helpful:
- World Central Kitchen
- NC Hospitality Worker Relief Fund
- FLRA EF Disaster Relief Fund
- East Tennessee Neighbor to Neighbor Disaster Relief Fund
- Georgia Relief Resources
Wishing you all a much safer end to October and sending love and support to subscribers impacted by these horrible storms.
Know someone who would like to join our 98,235 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 October mantras are here (plus a bonus personality type-inspired Halloween costume recommendation)!
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MONTHLY SALES METRICS & UPDATE
Both Fast Casual and Full Service had positive sales growth for most of the month, before ending at -1% for Full Service and -2% for Fast Casual on a 7-day moving average.
Food costs averaged 28% percent of sales last month, reflecting a slight drop from last month's average.
ITEM TO WATCH
Blueberries
Blueberry costs giving you déjà vu to this time last year? Unfortunately, you're not hallucinating. Median blueberry prices jumped a whopping 48% last month. It turns out last year's spike from El Niño weather impacts to Peru, the largest blueberry grower, was a gift that kept on giving even into this year.
Demand has remained steady, with an 8% increase year over year. This year's production won't see the same peak as last year, but growers are working on cultivating more weather-tolerant varietals that aren't up to peak producing performance yet. So, the good news is that blueberry prices should be more steady in future years, but unfortunately, for now, prices aren't looking berry good.
Acropolis Greek Taverna | Tampa, FL
ASK [me] ANYTHING
What is the best retirement benefit plan to offer my employees?
A 401(k) plan can set a restaurant apart in a fiercely competitive labor market. It attracts and retains top talent, thanks to flexible employer contributions and higher deferral limits. By positioning your restaurant as an employer who invests in their team (by literally giving them a way to invest in themselves), this benefit provides a strategic edge.
While there are a few options for small businesses, the best retirement plan to offer your employees, especially in the restaurant industry, is a 401(k) plan. But in the spirit of giving you the info and deciding for yourself, here's an overview of the three types available to small businesses thanks to our friends at The Fork CPAs.
SIMPLE IRA
- Elective Deferral: Employees can defer up to $16,000 ($19,500 if age 50+), which is lower than a 401(k).
- Employer Contributions: Requires a mandatory match of up to 3% of employee compensation or a 2% nonelective contribution. This offers less flexibility and control for employers compared to a 401(k).
- Vesting: Employees are always 100% vested, which isn't ideal for high-turnover industries like restaurants.
- Employee Limit: Only available for employers with fewer than 100 employees, disqualifying many restaurant groups.
SEP IRA
- Elective Deferral: Does not allow elective deferrals; the employer funds everything, making it costly with little ROI if employees don't value retirement savings.
- Employer Contributions: Contributions must be the same percentage for all employees, which can be disadvantageous for owners wanting to contribute more towards their retirement.
- Vesting: Employees are always 100% vested, similar to SIMPLE IRA.
- Employee Limit: No limit on the number of employees, but the contribution scheme is less advantageous.
401(k)
- Higher Deferral Limits: Allows up to $23,000 ($30,500 if age 50+), offering the highest deferral limits.
- Flexible Employer Contributions: Employers can choose whether to contribute each year, providing more control and predictability.
- Vesting Options: Can include a vesting schedule, which is beneficial for retaining employees in high-turnover environments.
- No Employee Limit: Suitable for larger restaurant groups.
- Additional Features: Can include a Roth option, allowing contributions without income limits.
Overall, a 401(k) offers the highest elective deferral limits, flexible employer contributions, and can be designed with a vesting schedule, which is ideal for high-turnover industries like restaurants. While 401(k) plans have strict compliance requirements, modern solutions can make them cost-effective to administer. To learn more, check out The Fork CPAs 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.
Luna's Tacos & Tequila | Windsor, CO
THE ECONOMY
Order Inflation Steady
The September 2024 Consumer Price Index (CPI) report is in, and indicates the following month-over-month changes in food inflation:
- Overall Food Inflation: Up 0.4% from August, and is up 2.3% YOY.
- Food At Home: Up 0.4% from August, and is up 1.3% YOY.
- Food Away from Home: Up 0.3% from August, and is up 3.9% YOY.
- Limited Service Meals: Up 0.2% from August and by 4.1% YOY.
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Full Service Meals: Up 0.4% month-over-month, and by 3.9% YOY.
Overall, inflation came in at 0.2% up from August, the exact same amount as the last 3 months, meaning year-over-year inflation is at its lowest point since 2021 once again, at 2.4%. Although this is relatively stable news in terms of inflation, jobless claims for September came in above projections, making November's potential rate cut still likely, but not guaranteed.
Tl;dr - Food at home's increase indicates grocery prices are back on the upswing. Lowest YOY inflation to date (again), food away from home up 0.3%.
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Bill-E's | Fairhope, AL
'TIS THE SEASON
Make Room for Mocktails
The holidays are practically synonymous with drinking, but even if family dynamics that tend to drive drinking aren't necessarily changing, consumer trends are. Younger generations just don't drink that much anymore. A recent Gallup poll found that 65% of adults aged 18-34 believe even drinking in moderation is bad for your health (up from 34% in 2018), compared to just 37% of adults 35-54 and 39% aged 55+.
Could this be bad news for restaurants, seeing as liquor margins are some of the best ways to balance climbing food costs and boost profits? Maybe, but maybe not. The proverbial hangover cure to rescue those margins might lie with mocktails.
They're typically cheap to make, averaging around 5-10% food costs (sometimes lower!), and can be made in batches like regular cocktails, further reducing waste and labor to make them. While sodas, juices and seltzers usually need to stick to a lower price point, mocktails can be priced a little higher thanks to the close association with cocktails and craft beverages. If you decide to use zero-proof spirits, prices can be on par with alcoholic cocktails.
And there's a market for them. Tony Mosca, the director of food and beverage at the Carlyle Hotel in NYC told the New York Times that non-alcoholic beverages make up 5% of their overall sales. So if you're looking for a way to diversify your holiday beverage offerings and give your profits a little boost, consider shaking things up by adding a few mocktails to your mix.
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