How does Bojangles determine the cost of its inventories?

According to Bojangles's 2025 Franchise Disclosure Document, the company values its inventories, which include food and paper products, at the lower of cost or net realizable value. The cost of these inventories is determined using the first-in, first-out (FIFO) method. This means that the items purchased or produced first are assumed to be the first ones sold. Bojangles also maintains a provision for potential inventory spoilage, indicating they account for potential losses due to expiration or damage. Marketing and maintenance supplies are expensed as purchased.

For a prospective franchisee, understanding Bojangles's inventory valuation method is crucial for financial planning and management. The FIFO method generally reflects the actual flow of inventory in a restaurant setting, where older items are used before newer ones. This can help in accurately tracking the cost of goods sold and managing inventory levels to minimize waste and spoilage. The provision for inventory spoilage is a standard accounting practice in the food industry, acknowledging the risk of perishable goods becoming unusable.

Furthermore, the practice of expensing marketing and maintenance supplies as purchased simplifies accounting for these items, as they are typically not held in inventory for extended periods. This approach provides a clear picture of the expenses incurred during a specific period, aiding in budgeting and financial analysis. Franchisees should ensure they understand and adhere to these accounting practices to maintain accurate financial records and comply with Bojangles's reporting requirements.