How (and Why) to Conduct an Accurate Restaurant Sales Forecast

By: Kim Warner

6 Minute Read

Oct 17, 2019

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Restaurant sales forecasting has the potential to influence every major decision in your restaurant. A restaurant sales forecast enables you to know when’s the best time to open a new location, what inventory to order for the next month, and how many employees should be scheduled for a shift in two weeks.

In this post, we'll go into detail about how to conduct a restaurant sales forecast, and why it’s so important to do so.

Free Resource: How to Measure and Increase Restaurant Sales

How to Conduct a Restaurant Sales Forecast

Calculating restaurant performance metrics is a necessary part of keeping your business afloat. The sales forecast formula is pretty straightforward, so it can easily be done by hand, or you can utilize your restaurant POS system to create your sales forecast. 

1. Calculate Your Restaurant’s Daily Capacity

Let’s say your restaurant has 10 tables of four.

On a busy evening, ideally, all 10 four-tops are full and each table seats two parties each night. So, you can project that the kitchen and your servers will be presenting 80 main courses to eager diners per evening (4 diners x 10 tables x 2 turns = 80).

The calculation would go like this: an entire evening’s dinner service would attract 80 patrons, and you know from your POS data that the per-person ticket size is $20. 

  • Sales Forecast = Table Count x Seat Allotment x Average Ticket Size x Table Turn

  • Sales Forecast= 10 Tables x 4 Guests per Table x $20 per Guest x 2 Turns per Night

  • Sales Forecast = 10 x 4 x 20 x 2

  • Sales Forecast = $1,600

Just like that, your restaurant sales forecast for a busy evening is $1,600.

To gather a useful data set, you must also apply the same process to quieter evenings. Calculate your sales forecast for nights when the restaurant is half-full, or when one seating is busier than the other. You can use this method to forecast restaurant sales for any time period from a single evening shift to a full year.

By looking at the estimated highs and lows, you’ll establish your restaurant’s weekly baseline, and get a clear vision of what your best-case and worst-case scenarios could be on a daily, weekly, and monthly basis.

Since you’re working with scenarios and estimates, at the close of each night, you can compare actual sales to your estimated sales. Sometimes your original estimate will be spot on, sometimes reality will fall short of your predictions, and on other occasions, you’ll exceed your expectations beyond belief. 

2. Use Sales Data to Conduct Sales Forecasts

Rather than taking out a calculator shift after shift, you can utilize pre-calculated metrics from your POS to conduct sales forecasts.

By using restaurant analytics collected from your POS system, you can review detailed sales reports from your restaurant's history to make forecasting easier. Some systems allow you to compare dates and look at peak sales by hour and menu item. With the support of a POS system, especially one that has inventory management software, you’re able to do a much deeper dive on your sales — past, present, and future — and you can make projections without flipping through a four inch-thick log book. 

7 Restaurant Performance Metrics and How to Calculate Them

Why Conduct a Restaurant Sales Forecast?

Restaurant data analysis is an essential step in smart decision-making for your business.

By looking at analytics collected from your previous sales reports, you can make data-driven decisions about staffing, inventory, expansion, and more. Here are a few places where analyzing your sales forecast comes in especially handy.

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Inventory Projections

How do you decide how much hamburger meat you should order for next month?

Because sales forecasting is based on historical sales numbers during similar time periods, your forecast can help you predict your sales in a given year, month, week, day, or even hour, with a certain degree of accuracy. This includes how much inventory to purchase to cover all shifts without running out or having tons of spoiled food. 

For instance, looking back at the past ten Fridays – assuming there are no holidays or special events in the mix – can give you an estimate of the number of hamburgers you can expect to sell on each Friday of the upcoming month.

Naturally, in a restaurant, there's always some unpredictability. You may have an unexpected surge of orders or an unusually slow night. Still, sales forecasting works to give you an estimate of how much of what food will sell. 

Seasonal Success

With a backlog of data and a solid sales forecast, you’ll be able to predict your sales for certain scenarios – like holidays, seasons, events, hot or cold weather, etc.

When you review data, you may spot that a stretch of cold weather is the catalyst for an increase in business at your cozy restaurant. By referring to last winter’s sales data, you’ll see how costs fluctuate when the temperature does, and you’ll be prepared to capitalize on opportunity with ample staffing and supply levels.

Smart Staffing

With a restaurant sales forecast as your roadmap, you’ll be navigating employee scheduling with ease.

Labor costs are one of the biggest expenses for restaurants, so when you add labor into your sales forecast, you’ll be confident you’re making the smartest possible staffing decisions, because you’ll have the data to back you up.

For example, if you typically have lower sales volume on Tuesdays, you’ll require fewer hands on deck, so you’ll know that it’s budget-friendly to operate with a smaller team, in contrast to your generally busy Friday nights where you’ll want to staff up.

Profit Expectations

At the end of the day, a restaurant is a business. To stay successful, you need to know how much money you can expect to make in a given period of time.

Knowing your projected sales volume helps you set price points and make plans for your business growth. Would you feel comfortable making a big equipment purchase or renovating your restaurant if you knew your business was entering a slow season? Should you really hire that new assistant manager right now if you won't be able to break even until April?

Being a restaurateur is the same thing as being a businesswoman or businessman, so frequent sales forecasting is essential.

Considering all the things that constantly affect your restaurant’s revenue, it’s nice to know that you can rely on data to predict each and every shift. Sales forecasting gives you the ability to insightfully schedule your staff, purchase your inventory, and manage profit expectations.

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