This is the 5th step in 5 steps to getting success in a changing restaurant industry.
Forecasting is a powerful way in restaurant business planning to make better and informed business decisions. Restaurant forecasting is an expectation derived from analyzing historical sales or guest-count data and drawing a conclusion about the future to save on food and labor costs using advanced mathematical algorithms.
Forecasting depends on two factors – data and analysis. Data is captured from restaurant’s POS like inventory, sales & marketing data. Historical reports are generated from these data points. The analysis is done by integrating all this information to find the production per table, per-item forecasts, and other operational forecasts.
Benefits of restaurant forecast:
Guest Forecast: You can predict the guests count and focus your operation on creating more value for your guests by making sure that they get best possible guest experience and satisfaction. Marketing teams can plan and execute promotions and loyalty programs based on the guest forecasts. Food wastage can be cut down based on guest forecasts.
Inventory Projections: You can optimize procurement and prevent food shortages by ordering ingredients to ensure you have all food products to daily demand and for special events based on past performance. You can track inventory and avoid stock-outs. You can save 5% on food cost.
Staffing: You can schedule staff shifts without under or overstaffing saving your money in labor costs and increase employee engagement. You can save 2% in labor.
Changes in the weather forecast can significantly impact a restaurant’s business. A snow day, for example, can get you fewer guests. A weather forecasting solution will track how the weather has impacted your restaurant business. Insights to optimize staff, inventory, and profits can be drawn with the weather forecast.
Restaurant Sales Forecast
Restaurant business revolves around expansion, hiring, guests, and ordering menu choices. Restaurant sales can be estimated on the number of seats in your dining area, seasonal highs & lows, and check averages. Profitability of food and liquor sales can be divided for your restaurant sales. You can forecast sales on special events, holidays, or school vacations and follow sales trends. You can predict any positive or negative impact on sales and transactions.
Table Turnover Rate
You have to estimate how many times your restaurant seats can be turned over during a shift time. Turnover rate is how fast tables fill and empty during a restaurant shift. If more people have eaten and gone, it is high turnover rate and if same people hang at the same table for a long time, it is the slow turnover rate.
Estimate your check averages:
First, you have to estimate the number of guests at your restaurant at any given shift with the help of turnover rate. Then, you can estimate your check averages. Things to remember are:
Cheapest meal is breakfast. Since people are busy with their daily schedule and are in hurry.
The mid-priced meal is lunch. Here, people are busy to go back to work.
The most expensive meal is dinner. We have pros and cons of expensive dinner – the advantage of this is people are at leisure and order more food and drinks, boosting check averages. On the other hand, the disadvantage of this is as people are leisure at dinner time, they tend to sit longer resulting in a lower turnover rate.
Sales Forecast Formula = Table Count x Seat Per Table x Average Ticket Size per-person x Table Turnover Rate
Restaurant sales forecast has a major influence in taking major decisions in your restaurant. Restaurant analytics is an essential step to decision-making that puts your data to work. By looking at the data of your previous sales reports, you can make better data-driven decisions about opening another location, inventories to order, staffing of employees for a shift, and performance.
Poor labor management strategy – scheduling too few employees or too many employees for a given shift will cost you more money.
Overstaffing your restaurant will waste your employees’ time and waste your money. Too much of staff with not enough work to do will make them bored and will affect your guest satisfaction.
Restaurant overstaffing will hurt your profit margins and increases your labor spend unnecessarily. Overschedule leads to either cutting your staff shifts or spending too much of labor cost. Too many servers in an overstaffed dining room results in lower tips for your staff and they will unhappy.
Understand your restaurants’ peaks and valleys with the help of restaurant analytics which gives you valuable insights based on your past labor data.
Your restaurant potential customer will go elsewhere when service takes too long. Your labor spend might be lower due to understaffing, but it will result in a decrease in your restaurant business. Your staff gets stressed and will not have job satisfaction if your restaurant is understaffed and your staff will seek a job elsewhere. Stretching your restaurant staff too thin can result in poor guest experience and poor service.
Your customers will get the great guest experience by proper staffing. You need to identify your restaurant staffing needs for special occasions of the year and on holidays when you will see a rapid and significant sales growth.
Restaurant analytics will forecast sales, marketing, weather, staffing and other forecasts. Restaurateurs can predict and grow their business with the reports generated based on the historical data. Missing values will affect the forecasts negatively and hence this data should be inspected to ensure that it is up to the required standard.