Revenue Recognition

9 Months Ended

May 25, 2024

Revenue from Contract with Customer [Abstract]

Revenue Recognition

3. Revenue Recognition

The following table presents the Company’s revenues for the thirteen and thirty-nine weeks ended May 25, 2024 and May 27, 2023, respectively, disaggregated by service type:

	Thirteen Weeks Ended										Thirty-Nine Weeks Ended
	May 25, 2024					May 27, 2023					May 25, 2024					May 27, 2023
(In thousands, except percentages)	Revenues		% of Revenues			Revenues		% of Revenues			Revenues		% of Revenues			Revenues		% of Revenues
Core Laundry Operations	$	528,454		87.6	%	$	501,719		87.0	%	$	1,574,863		88.1	%	$	1,456,167		87.7	%
Specialty Garments		47,582		7.9	%		49,407		8.6	%		135,713		7.6	%		135,613		8.1	%
First Aid		27,292		4.5	%		25,542		4.4	%		76,988		4.3	%		69,377		4.2	%
Total revenues	$	603,328		100.0	%	$	576,668		100.0	%	$	1,787,564		100.0	%	$	1,661,157		100.0	%

See Note 16, “Segment Reporting” for additional details of segment definitions.

Revenue Recognition Policy

During the thirteen weeks ended May 25, 2024 and May 27, 2023, approximately 83.8% and 84.1%, respectively, of the Company’s revenues were derived from fees for route servicing of the Core Laundry Operations, Specialty Garments, and First Aid segments performed by the Company’s employees at each customer’s location of business. During the thirty-nine weeks ended May 25, 2024 and May 27, 2023, approximately 84.1% and 84.2%, respectively, of the Company’s revenues were derived from fees for route servicing of the Core Laundry Operations, Specialty Garments, and First Aid segments performed by the Company’s employees at each customer’s location of business. Revenues from the Company’s route servicing customer contracts represent a single performance obligation. The Company recognizes these revenues over time as services are performed based on the nature of services provided and contractual rates (input method). Certain of the Company’s customer contracts, primarily within the Company’s Core Laundry Operations, include pricing terms and conditions that include components of variable consideration. The variable consideration is typically in the form of consideration due to customer-based performance metrics specified within the contract. Specifically, some contracts contain discounts or rebates that the customer can earn through the achievement of specified volume levels. Each component of variable consideration is earned based on the Company’s actual performance during the measurement period specified within the contract. To determine the transaction price, the Company estimates the variable consideration using the most likely amount method, based on the specific contract provisions and known performance results during the relevant measurement period.

When determining if variable consideration should be constrained, the Company considers whether factors outside its control could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal. The Company’s performance period generally corresponds with the monthly invoice period. No significant constraints on the Company’s revenue recognition were applied during the thirteen and thirty-nine weeks ended May 25, 2024 and May 27, 2023. The Company reassesses these estimates during each reporting period.

The Company maintains a liability for these discounts and rebates within accrued liabilities on the Consolidated Balance Sheets. Variable consideration also includes consideration paid to a customer at the beginning of a contract. The Company capitalizes this consideration and amortizes it over the life of the contract as a reduction to revenue in accordance with the updated accounting guidance for revenue recognition. These assets are included in other assets on the Consolidated Balance Sheets.

Costs to Obtain a Contract

The Company defers commission expenses paid to its employee-partners when the commissions are deemed to be incremental for obtaining the route servicing customer contract. The deferred commissions are amortized on a straight-line basis over the expected period of benefit. The Company reviews the deferred commission balances for impairment on an ongoing basis. Deferred commissions are classified as current or non-current based on the timing of when the Company expects to recognize the expense. The current portion is included in prepaid expenses and other current assets and the non-current portion is included in other assets on the Company’s Consolidated Balance Sheets. As of May 25, 2024, the current and non-current assets related to deferred commissions totaled $17.7 million and $77.0 million, respectively. As of August 26, 2023, the current and non-current assets related to deferred commissions totaled $16.5 million and $70.4 million, respectively. During the thirteen weeks ended May 25, 2024 and May 27, 2023, the Company recorded $4.6 million and $4.2 million, respectively, of amortization expense related to deferred commissions. During the thirty-nine weeks ended May 25, 2024 and May 27, 2023, the Company recorded $13.4 million and $12.3 million, respectively, of amortization expense related to deferred commissions. This expense is classified in selling and administrative expenses on the Consolidated Statements of Income.