How does Bojangles value its food and paper product inventories?

According to Bojangles's 2025 Franchise Disclosure Document, the company values its food and paper product inventories at the lower of cost or net realizable value. This means that Bojangles assesses the value of its inventory using two methods: the original cost of the inventory and the net amount the company expects to realize from the sale of the inventory, and then uses whichever is lower. This is a standard accounting practice to ensure that inventories are not overvalued on the balance sheet.

The cost of inventories is determined using the first-in, first-out (FIFO) method. FIFO assumes that the first units purchased are the first ones sold. This method is commonly used in the restaurant industry because it aligns with the natural flow of perishable goods. It also helps in managing inventory spoilage, as older items are assumed to be used before newer ones.

Bojangles also maintains a provision for inventory spoilage. This is an accounting practice where the company sets aside a reserve to cover potential losses from spoiled or obsolete inventory. This is particularly important for a restaurant franchise like Bojangles, where food spoilage can be a significant concern. Marketing and maintenance supplies, however, are expensed as purchased, meaning their cost is recognized immediately rather than being included in inventory.