Without a restaurant sales forecast, how could you possibly know when to open another location?
Or what inventory to order?
Or how many employees should be staffed for a shift?
Restaurant sales forecasting has the potential to influence every major decision in your restaurant. In this post, we'll explain why a restaurant forecast is important and how to go about making one.
Why Conduct a Restaurant Sales Forecast?
Restaurant analysis is the critical evaluation and the consideration that puts your data to work. It’s an essential step to decision-making and it’s your best friend as a restaurateur.
By looking at analytics for restaurants collected from your previous sales reports, you can make data-driven decisions about staffing and performance.
Here’s where analyzing sales forecasts comes in handy.
1) Inventory Projections
How much hamburger meat should you order for next month?
A restaurant sales forecast can help you predict your sales in a given year, month, week, day, or even hour with a certain level of accuracy.
Sales forecasting is based on historical sales numbers of similar time periods. Looking back at the past ten Fridays – assuming there are no holidays or special events in the mix – can give you an average number of hamburgers you can expect to sell on a given Friday so you won't run short or waste any food.
Naturally in a restaurant, there's always some give and take. You may have a huge, unexpected surge of orders or an unusually slow night. Still, sales forecasting works to give you an expectation of how much of what food will sell.
2) Seasonal Success
With a backlog of data and a solid sales forecast, you’ll be able to introduce certain scenarios – like holidays, seasons, events, hot or cold weather, etc. – into your restaurant and watch the entire operation respond with minimal friction.
When you review data, you may spot that a stretch of cold weather is the catalyst for an increase in business at your homey, snugly 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.
3) Smart Staffing
With a restaurant sales forecast as your road map, you’ll be navigating employee scheduling with ease.
Labor costs are one of the biggest cost drivers in restaurants, so when you add labor into your sales forecast, you’ll be poised to make the smartest possible staffing decisions, and all those decisions will be backed by data.
For example, you’ll know when it’s budget-friendly to staff up for historically busy Fridays, and when to run lean on more mellow Tuesdays. Low volume means you'll need less hands on deck, right?
4) 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. In that realm, conducting a sales forecast is essential.
How to Conduct a Restaurant Sales Forecast
1) Baseline Sales From Scratch
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 – at minimum – 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).
So, the calculation would go like this: in the most ideal sense, an entire evening’s dinner service would attract 80 patrons, and you know from your data that the per-person ticket size is $20. Let's break this down.
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 the evening is $1,600.
To gather a useful data set, you must also apply the same process to quieter evenings. Determine your sales – per patron and per check – 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 an evening shift to a year (although the latter will involve a lot more numbers).
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 miles off, and on other occasions, you’ll outdo yourself beyond belief.
2) Use Sales Data to Conduct Sales Forecasts
Rather than taking out a calculator shift after shift, it's miles easier to have pre-calculated metrics to conduct sales forecasts.
Using restaurant analytics collected from a restaurant POS system, you can review detailed sales reports from you restaurant's history to make forecasting easier. Some systems allow you to compare dates and look at peak sales by hour and menu item, meaning you can make your sales projections without flipping through a four inch-thick log book.