Forecasting for Restaurants: How to Forecast Restaurant Sales
Forecasting for restaurants is an important part of restaurant management. Without effective and accurate forecasts, restaurant managers and owners have no clue how much revenue to expect from a given period, making it extremely difficult to formulate a budget, plan staffing levels, and order food.
But forecasting isn’t just about predicting the future – it’s also about understanding the past. By analyzing historical sales data, restaurateurs can better understand what trends are happening in their industry and what changes they might need to make their business stay ahead of the competition.
Learn more about restaurant forecasting from this helpful restaurant blog post.
What Is Restaurant Forecasting?
Forecasting is a process of using past data to predict future trends. In the restaurant industry, forecasting can be used to estimate everything from predicting profits and ingredient needs to staffing levels.
Forecasting is an important tool for restaurants because it can help them plan for peaks and valleys in customer demand. By knowing when business is likely to be slow or busy, restaurants can better staff their front- and back of house teams and avoid costly overages or shortages.
Restaurants can use several methods to forecast demand, including trend analysis, regression analysis, and time series analysis. The most accurate method will depend on the type of data available and the specific goals of the forecast.
No matter which method you choose, forecasting is only as good as the data you use to create it. Be sure to use accurate and up-to-date information when creating your forecasts, or you may end up with inaccurate predictions.
How to Forecast Restaurant Sales
Forecasting restaurant sales can be a tricky business. Several factors can affect sales, from the time of year to the weather to the local economy. And, of course, there’s always the possibility that a new competitor will open up shop and steal some of your business.
However, by analyzing past data and keeping an eye on recent trends, you can get a good idea of what to expect in terms of sales for your restaurant. Here’s a step-by-step guide on how to forecast restaurant sales for existing restaurants.
- Look At Past Data
The first step in forecasting restaurant sales is looking at your past data. You should look at sales data for at least the past year (or more) from the same time each year (such as a shift, day, week, month, or season).
If you don’t have detailed sales data for your restaurant, start tracking it now. This will give you a baseline to work from and help you identify any trends that may be emerging.
This information will be invaluable as you move forward with your forecasting process.
- Identify Trends
After you have reviewed your past data, it is time to identify trends. Do certain promotions or events lead to a bump in sales? Which holidays do you see an increase in sales? Do certain menu items sell better at certain times? Are there certain times of year that are consistently slower or busier than others?
By identifying these trends, you can predict how your restaurant’s sales will fluctuate.
- Adjust Based On Recent Trends
As you identify trends, you may also want to adjust your forecast based on recent trends. For example, if sales have been increasing over the past few months, you’ll need to adjust your forecast upward. Conversely, if sales have declined, you’ll need to change your forecast downward.
If you know that business is always slow in January, for example, you can plan for lower sales during that month. Similarly, if you know that a certain menu item is always popular during the summer, you can adjust your forecast to account for that.
- Break Down the Sales Forecast by Menu Items
Once you’ve considered all the above factors, it’s time to get down to the nitty-gritty and start forecasting sales for specific menu items.
Forecasting sales for specific menu items is essential for accurate inventory ordering. By looking at past sales data, you can get a good idea of how popular certain menu items are and how that popularity fluctuates over time. This will help you more accurately predict food costs and ensure you have enough of each menu item.
- Plan Your Schedule
Once you know what to expect in your sales projections, it’s time to start planning your staffing schedule, inventory needs, and marketing programs. Planning your schedule will help prepare you for busy and slow periods.
- Account for External Factors
Finally, you need to account for any external factors affecting your sales. These could include things like the weather, economy, competition, holidays, and events in the community.
External factors can always impact your sales, so it’s crucial to account for them in your forecast. For example, if a big event happens in your city, you can expect an uptick in business. Similarly, if the economy worsens or a competitor has a sale, you may see a decrease in sales.
By following these steps, you can develop a pretty accurate forecast for your restaurant’s sales. However, it’s important to remember that no forecast is perfect. There will always be some uncertainty when it comes to predicting future sales. But by being prepared and keeping an eye on trends, you can minimize the risk of being caught off guard by a sudden drop in sales.
How to Forecast Sales for a New Restaurant
When opening a new restaurant, you have to start from scratch in terms of forecasting sales. This can be difficult, as no historical data exists to analyze. However, there are some methods you can use to estimate sales for your new restaurant.
- One approach is to look at similar businesses in the area and use their sales data as a starting point. This can give you a good idea of what to expect in terms of overall sales volume.
- Another method is to use market research data to estimate the potential demand for your type of restaurant in the area. This can help you understand how many people will visit your restaurant and spend money there.
Once you have estimated the potential demand, you can start to generate a sales forecast. This will involve making assumptions about how much each customer is likely to spend and how often they will visit.
Here’s how you can forecast restaurant sales for a new restaurant:
1. Choose a time period and the number of days you’ll be open each week:
For example, let’s say you’re planning on opening your restaurant for business in the next month or so. In this case, you should select at least one month or four weeks.
2. Determine which hours and days you will work:
Once you’ve selected your time, you’ll need to determine the working hours and days within that time frame. For example, let’s say your restaurant will be open seven days a week, from 11 am to 10 pm.
3. Determine the average number of customers you will serve every day/week:
This is where you’ll need to make an educated guess based on your location, target market, and other factors. If you’re located in a busy area with a lot of foot traffic, you may want to predict a higher number of customers than if you’re located in a more rural area.
4. Determine the average number of customers served within the selected time frame:
To calculate the average number of customers served, take the total number of guests you expect to serve in your chosen period and divide it by the number of days/weeks.
For our example, let’s say we expect to serve 1000 guests in our four-week period. This would give us an average of 250 guests served per week.
5. Calculate how much money each guest spends on average:
This is another area where you’ll need to make an educated guess based on your menu prices and the type of restaurant you’re running. A casual dining establishment typically has a lower average spend/guest than a fine one.
For example, let’s say we expect our guests to spend an average of $15 per person.
6. Calculate Sales Forecast:
To calculate your sales forecast, multiply the number of days you’re open, the average number of customers you expect to serve, and the average spend/customer.
Calculate Sales Forecast = Number of Days Open x Average Number of Customers Served in Chosen Time Period x Average Spend/Customer
For our example, this would give us a sales forecast of $105,000 for our four-week time period (7 days x 250 guests x $15).
Now that you have a sales forecast for your new restaurant, you can start planning inventory, staffing, and other operational needs. Remember to revisit your sales forecast periodically and make adjustments as needed – especially in the early days of your business – to ensure accuracy.
Who In a Restaurant Is Responsible for Production Forecasting?
The person responsible for production forecasting in a restaurant is typically the head chef or executive chef. This individual estimates how much food will be needed to meet customer demand. They must consider factors such as the time of day, special events, and menu items that are popular or seasonal. Production forecasting is important to avoid wasted food and ensure that customers always have their favorite dishes available.
In some cases, the responsibility for production forecasting may be delegated to another kitchen staff member. For example, sous chefs or line cooks may be tasked with keeping track of popular menu items and estimating how much each dish needs to be prepared. This information is then relayed to the head chef, who can adjust the overall production forecast.
Whichever individual is responsible for production forecasting must have a good understanding of the restaurant’s business and customer base. They should also be able to communicate effectively with other kitchen staff members. This will ensure that everyone is on the same page and that the forecast is accurate.
Why Forecasting Is Important For Restaurants?
Forecasting is important for restaurants because it can help them manage their inventory, plan more effectively, predict profitability, and set goals accordingly.
- Better inventory management: Forecasting can help restaurants keep track of their inventory levels and avoid overstocking or running out of items. This is especially important for perishable goods.
- Informed planning: By forecasting future trends, restaurants can make better decisions about menu planning, marketing campaigns, and even expansion plans.
- Predict profitability: Knowing how much business a restaurant is likely to do in the future can help owners make financial projections and budget accordingly. This information can also be used to negotiate better deals with suppliers.
- Set goals accordingly: Having realistic sales goals is crucial for any business, and forecasting can help restaurants set achievable targets. This information can also be used to measure progress over time and identify areas that need improvement.
Forecasting is not an exact science, but it can give restaurant owners and managers a better idea of what to expect in the future. By using historical data and market trends, businesses can make informed decisions that will help them stay ahead of the competition and keep their customers happy.
How Technology Can Help With Restaurant Forecasting
Undoubtedly, technology plays a big role in the restaurant industry. From online ordering platforms to mobile apps, restaurants use tech to make things easier for their customers. But what about when it comes to forecasting? Can restaurant technology help with that?
It turns out that it can.
Restaurant POS systems can be an excellent tool for forecasting, thanks to the data they collect and how they integrate with other systems. Here’s a closer look at how restaurant POS systems can help with forecasting:
- Data collection: One of the main benefits of POS systems is that they collect data. This data can be used to track sales patterns and trends, which can be helpful when it comes to forecasting.
- Restaurant POS Integration: POS systems typically integrate with other restaurant systems, such as restaurant accounting and inventory. This integration can make it easier to track data and trends over time, which can be helpful for forecasting purposes.
- Reporting and Analytics: Most POS systems have reporting features that make it easy to see sales data and trends over time. This data can be helpful when forecasting future sales.
- Automation: many POS systems offer restaurant automation features that can help with forecasting by automatically generating reports and alerts based on sales data.
Are you interested in learning more about Revolution Ordering’s reporting and POS integration feature? Request a demo today to see how it will make a difference for your business.
Frequently Asked Questions About Forecasting for Restaurants
There are many questions that restaurateurs have when it comes to forecasting their business. Below are some of the most frequently asked questions and their answers about forecasting for restaurants.
What Type of Forecasting Is Done In Restaurants?
Restaurants use several different types of forecasting to predict future sales and traffic patterns. Some of the most common methods include:
- Trend analysis
- Regression analysis
- Time series analysis
All these forecasting methods can be useful in predicting future sales and traffic levels for a restaurant. However, it is important to choose the right method or combination of methods for the available, specific type of data.
What Are the 3 Types of Forecasting?
These are the three types of forecasting:
- Qualitative techniques
- Time series analysis and projection
- Causal models
What Is the Restaurant Industry Forecast for 2022?
The restaurant industry is forecast to reach $898 billion in sales by 2022. The food service industry workforce is projected to grow by 400,000 jobs, for total industry employment of 14.9 million by the end of 2022.