Handling small bits of background story

Question

I have a scene in which two characters are introduced to the reader. They met once before at a party, prior to the start of the story. In the following excerpt, I add a short explanation of that first meeting for the reader's sake. Is it appropriate to inject background in the dialog? Is there a better way to handle it?

“Oh yes. Jake Hayden. The guy who thinks chocolate milk is a health drink.” Jake’s mouth froze in place. His gaze shifted down and off to the side. Last time they met, he was drinking a chocolate protein beverage, while Sara was drinking ginger-kale juice. He had made playful remarks about her plant juice then. Jake’s lips formed a tight smile. Eyes still lowered, he muttered “Yeah, that was me.”

Answer 1

That works fine. It's not a huge description and it fits in well with the dialogue.

I would change the "was" to "had been". "Last time they met, he had been drinking a chocolate protein beverage, while Sara had been drinking ginger-kale juice." Or you could shorten it to "he'd been drinking..." if you want. The use of "was" just sounds weird to me and doesn't really fit.

Answer 2

Its a teensy bit awkward to me, possibly because I have an extreme aversion to past perfect ('He had made...')

The gag about the milk is a good one, but the exchange would probably be better if the ginger-kale juice were introduced in a comeback (either witty or awkward) rather than reaching into the past for an explanation.

For example...

“Oh yes. Jake Hayden. The guy who thinks chocolate milk is a health drink.”

Jake’s mouth froze in place. Last time they met, he was drinking a chocolate protein beverage. "So says the girl," he said, "last seen trying to get drunk on ginger-kale juice?"

Apologies for changing the nature of the exchange (and the party) but hopefully you can see it's a bit clearer and more immediate. You can probably think of a more appropriate response for Jake.