Imagine you own a small pizza restaurant. Every Friday night, you know you’re going to be slammed with orders. But how many pizzas should you order to make sure you have enough to meet the demand?
This is where sales forecasting comes in. By looking at your historical sales data, you can see that on average, you sell 100 pizzas every Friday night. However, you also know that there are some Fridays when you sell more than 100 pizzas, and other Fridays when you sell less.
To get a more accurate forecast, you can take into account other factors that might affect your sales, such as the weather (if it’s raining, people are more likely to order pizza delivery), or whether there are any big events happening in town.
Based on all of this information, you might decide to order 120 pizzas for next Friday night. This will give you a buffer in case you get busier than expected, and it will also help to ensure that you don’t run out of pizza.
An Overview of Restaurant Sales Forecast
Restaurant sales forecasting is like having a crystal ball for your restaurant’s future sales. It’s a way to estimate how much money you’re going to make in the future, based on what’s happened in the past and what’s happening now.
There are various ways to forecast restaurant sales, but they all start with understanding your past sales history. This data can come from your financial reports, point-of-sale (POS) system, or even customer surveys.
Once you have a grasp of your historical sales, you can start looking for trends and patterns. For instance, many restaurants see a surge in sales during summer, mainly due to tourist traffic. By understanding these trends, you can make more accurate forecasts.
Another popular method is market analysis. This involves breaking down your sales into different segments, such as breakfast, lunch, and dinner. Each segment is then analyzed separately to identify opportunities and trends. For example, you might notice that your lunch sales have been declining steadily over the past year. To address this issue, you could revamp your lunch menu or marketing efforts.
And then there are more sophisticated methods like regression analysis. This method uses historical sales data to identify relationships between different factors (such as price, weather, and promotions) and sales. Once these relationships are identified, they can be used to predict future sales.
Surveys and focus groups are also valuable tools for gathering information about customer behavior and preferences. This data can then be used to refine your sales forecasts.
Ultimately, the goal of restaurant sales forecasting is to ensure that you have enough food on hand to meet customer demand without wasting valuable resources. No matter the method, the key is to find an approach that works best for your restaurant and helps you navigate the ever-changing tides of the market.
How to Forecast?
The heart of successful restaurant management lies in accurate sales forecasting. Whether you choose to calculate your sales forecast manually or utilize a POS system, embracing data-driven insights is essential for navigating the ever-changing restaurant landscape. With accurate forecasting, you can optimize your operations, maximize revenue, and transform your restaurant into a resounding success story.
1. Calculate daily capacity
Amidst the chatter of happy satisfied diners, a question always lingers: how many patrons can you comfortably accommodate in your restaurant? This is where the concept of daily capacity comes into play. To calculate your daily capacity, consider the following factors:
1. Seating Arrangements: Assess the number of tables and chairs, the layout of your dining area, and any space constraints.
2. Staffing Availability: Determine the number of servers, bartenders, and kitchen staff who can handle the maximum number of customers without compromising service quality.
3. Kitchen Capabilities: Evaluate the capacity of your kitchen equipment, cooking stations, and storage space to ensure smooth operations during peak hours.
For instance, a cozy bistro with 10 tables seating four patrons each would have a maximum capacity of 40 guests. However, if your kitchen can only efficiently prepare meals for 35 diners, your daily capacity would be adjusted accordingly.
2. Use sales data
Sales data, the footprints they leave on your restaurant’s journey, holds the key to unlocking future sales trends.
Gather historical sales data, preferably from the past year, and delve into the patterns and trends that emerge. Identify seasonal spikes and dips, special events that drew crowds, and any marketing campaigns that impacted sales.
For example, if your restaurant consistently experiences a surge in sales during summer months due to tourist traffic, you can anticipate higher demand and prepare accordingly.
Remember, sales data is not just about numbers; it’s about understanding the rhythm of your customers, their preferences, and the factors that influence their dining choices.
How to Be Realistic?
So, you’ve set the stage with your daily capacity and unraveled the tales hidden in sales data. Now comes the crucial act – being realistic.
Forecasting for existing restaurants
If you’re forecasting sales for a restaurant that you’ve been running for a few years, you’re in luck! You’ve got a treasure trove of historical data to help you make informed decisions. Here’s a step-by-step guide to forecasting sales for your existing restaurant:
1. Dive into past data: Take a trip down memory lane and review sales data from the same time in the past few years. This could be for a shift, day, week, month, or even season.
2. Spot trends: Compare sales numbers from earlier this year to where they were in the previous similar time period(s). For instance, say you’re forecasting for the month of September, and you’ve noticed that sales from June-August were up 5% compared to those same months last year. By that logic, you would apply a 5% increase from last year’s September sales to get a more accurate forecast for this upcoming September.
3. Consider external factors: Keep an eye on the world around you. Take into account any extenuating circumstances, such as holidays, events, weather, or market changes that may have impacted the numbers from the previous period.
4. Factor in trends: Adjust the forecast with any current factors that may increase or decrease your sales forecast, such as shifts in demand or supply.
5. Get granular: Break the sales forecast down by menu items – based on historical data – to better plan for inventory ordering and employee staff scheduling.
6. Plan your schedule: Allocate your staff to the right shifts based on this projected demand.
By following these steps, you’ll be able to forecast in a way that acknowledges both your restaurant’s past and its future – both of which are key attributes to successful sales projections.
Forecasting for New Restaurants
Opening a new restaurant is an exciting venture, but it also comes with its challenges. When you’re just starting out, you don’t have the luxury of historical data to guide your sales projections. However, there are still ways to make an informed forecast.
1. Gather the basics: Start by gathering some essential numbers:
- How many days you’ll be open each week.
- How many guests you’ll serve – on average – in a given week. This number should include in-house seats filled, takeout customers, and delivery customers.
- How much each guest will spend. This number should incorporate drinks, apps, entrees, and desserts.
2. Plug and play: Once you have these numbers, you can use them in a simple sales forecast formula for one week’s forecast:
Restaurant Sales Forecast = Avg. Number of Guests X Avg. Per-Person Spend X Number of Days Open Per Week
3. Make adjustments: As a first-time sales forecaster, you’ll need to make some adjustments to this formula based on your unique circumstances. For instance, you might need to factor in any upcoming events or weather patterns that could impact sales.
4. Review and refine: After each sales forecast is complete, compare it to your actual sales to see how accurate your predictions were. Use this information to refine your forecasting skills for future periods.
Benefits of Restaurant Sales Forecast
1. Inventory projection
Have you ever found yourself running out of a crucial ingredient at the worst possible time? Or, on the other hand, have you ever been left with an overabundance of food that eventually went to waste? Restaurant sales forecasting can help you avoid these costly mistakes by accurately predicting how much of each ingredient you’ll need.
For instance, if you typically sell 50 burgers on weekdays, but your forecast indicates a potential increase due to a local event, you can adjust your inventory orders accordingly. This will help you ensure that you have enough patties, buns, and toppings to meet customer demand without overstocking and wasting food.
2. Seasonal success
Picture your seaside restaurant experiencing a surge in sales during the summer. By anticipating this seasonal fluctuation, you can staff up and stock up to meet the demand and avoid disappointing customers. This also applies to special events happening near your restaurant. For example, if there’s a big concert or festival happening nearby, sales forecasting helps you anticipate increased demand and adjust your staffing and inventory accordingly.
3. Smart staff scheduling
Have you ever felt like you have too many staff on hand during slow periods, or not enough staff during busy ones? 51% of restaurant operators cited staffing as a major challenge. Restaurant sales forecasting can help you optimize your staff scheduling, ensuring that you have the right number of people on hand to meet customer demand without overpaying for labor.
For instance, if you know you’re going to be busy on Friday nights, you can schedule more staff to work. If you’re expecting a slow day on Tuesday, you can schedule fewer staff. This will help you control labor costs and provide the best possible service to your customers.
4. Sales projection
Do you know which menu items are selling well and which ones aren’t? This information can be invaluable for making informed decisions about pricing and menu items.
Restaurant sales forecasting provides insights into customer preferences and spending patterns. If you notice that grilled chicken salads have been declining in popularity, you can consider revising the recipe or introducing a new salad option to cater to evolving tastes. By understanding which dishes are most popular and profitable, you can optimize your menu and pricing strategy to maximize revenue.
When to rework your sales forecast?
As your restaurant evolves and the market landscape shifts, you’ll need to revisit your forecast to ensure it accurately reflects your current situation. Here are some key indicators that it’s time to rework your sales forecast.
1. Seating Changes
Any change in your restaurant’s seating capacity, whether due to expansion or renovation, will impact your sales potential. Recalculate your projections based on the new seating arrangement.
2. Pricing Adjustments
If you’re making significant changes to your menu prices, either due to cost changes or competitive pressure, update your forecast to reflect the revised pricing structure.
3. Hours of Operation Changes
Expanding or reducing your operating hours will affect your sales potential. Reassess your forecast based on the new schedule.
4. Real-World Data
After your restaurant has been open for a month, you’ll have real sales data to compare against your initial projections. Analyze this data to identify any discrepancies and refine your forecast accordingly.
5. Continuous Monitoring
Regularly review your forecast as you gather more data and insights into your restaurant’s performance. Look for patterns, trends, and anomalies that may require adjustments to your projections.
End Thoughts
The restaurant industry is back on the road to recovery, with sales projected to reach $997 billion in 2023. If you’re a restaurant owner, now is the time to take advantage of this growth by using sales forecasting to make informed decisions about your business.
Remember, sales forecasting is an ongoing process. Continuously refine your forecasts as you gather more data and adapt to the ever-changing culinary landscape. With this proactive approach, you can transform your restaurant into a resounding success story, where culinary artistry meets business acumen, and profitability becomes the norm.
Frequently Asked Questions
1. Where should forecasting be implemented?
Every restaurant, whether new or established, should have some idea of the sales they can expect on any given day. This initial estimate may be based on intuition or experience, but as you gather more historical data, you can make more accurate predictions using manual methods.
2. Who should have access to forecasting data?
In larger restaurant chains, the head office should have access to individual restaurant forecasts to ensure that managers are making informed decisions about staffing and inventory management. This information also helps the head office align overall sales forecasts with financial plans.
However, the restaurant managers themselves need the most immediate access to forecasting data. They use this information to make real-time adjustments to staffing levels, inventory orders, and promotional strategies to maximize profitability.
3. What is demand forecasting in restaurants?
Demand forecasting in restaurants is the process of predicting future sales based on historical data, current trends, and external factors. It helps restaurants plan for inventory, staffing, and marketing needs to meet customer demand effectively.
4. How do you make a sales forecast for a new restaurant?
Forecasting sales for a new restaurant is more challenging due to the lack of historical data. However, several methods can be used to make informed predictions:
- Industry Benchmarks: Utilize industry-wide sales averages for similar restaurants in your region.
- Market Research: Conduct market research to understand customer preferences, demographics, and competitive landscape.
- Soft Opening Data: Gather sales data from a soft opening period to get a sense of initial customer demand.
- Consultant Guidance: Hire a restaurant consultant with experience in forecasting for new businesses.
Remember, sales forecasting is an iterative process that should be refined as more data becomes available.
