Staff scheduling, inventory management, What is Forecasting for a Restaurant?
In a restaurant, forecasting is using data to predict how much the business can expect in sales in a given time period. On a macro level, sales forecasting helps a business set growth goals and determine its overall profit and revenue. On a micro level, forecasting helps a restaurant plan for inventory orders and operating expenses for the restaurant.reducing turnover
, impending restaurant renovations, or even expanding your business into new locations.
Inventory Management
improve the restaurant’s operations and quality of service. Knowing how much business the restaurant will do can ensure it staffs up to decrease wait times for guests and increase table turn. Conversely, it can also alert you to when you might be overstaffed, which can help control the business’s labor costs.
- Look at past data. Reference sales data from the same time in the past few years. Again, this could be for a shift, day, week, month, or even season.
- Adjust based on recent trends. Compare sales numbers from earlier this year to where they were in the previous similar time period(s). For example, say you’re forecasting for the month of September, and you’ve found 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 more accurately forecast for this upcoming September.
- Consider external forces. Take into account any extenuating circumstances, such as holidays, events, weather, or market changes that may have impacted the numbers from the previous period.
- 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.
- Get granular. Break the sales forecast down by menu items – based on historical data – to better plan for inventory ordering and opening a new restaurant, things can be a little more complicated. You’re basically starting from scratch and have no historical data from your business to base your sales projections off of. However, there are still ways for you to make an informed forecast. To start, you’ll need the following 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. Off-premise dining can be more difficult to accurately determine and will require some educated guessing based on ticket size.
- How much each guest will spend. This number should incorporate drinks, apps, entrees, and desserts. Again, this number isn’t an exact science for off-premise dining, but educated guessing is a serviceable strategy here.
From there, you can incorporate all of these numbers into the following 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
You can get your revenue numbers from your point-of-sale records, and as we’ve covered, the number of guests can be based on your number of orders while factoring in estimates for the number of off-premise diners. Let’s say your numbers break down as follows:
Average Guests Per Day = 200
Average Per-Person Spend = $20
Number of Days Open = 6
This would make the sales forecast formula break down as follows:
200 Guests X $20 X 6 Days = Restaurant Sales Forecast
200 Guests X $20 X 6 Days = $24,000
As a first time sales forecaster, you would then break that $24,000 down by menu item and factor in any circumstances that might be out of your control, but would still impact sales (such as impending weather). You can also adjust the forecast to make it work for a week, month, season, or even year.
After each sales forecast is complete, set it aside and revisit it after the period of time is over to see how accurate your sales forecasting and inventory projections are. You might find that your business is growing faster than expected, and thus you should apply a 2% growth percentage to your weekly forecasts.
Since your restaurant is still in its infancy, you’ll need to reconsider some of the restaurant metrics you base your sales projections on, such as menu prices, days/hours of operation, staff size per shift, and average ticket size – all of which could change in the coming months.
according to Pizza Marketplace, weather has more of an impact on casual dining restaurants than QSRs.
However, the most notable role of weather on a restaurant’s sales forecast are the polar opposites of summer heat and winter weather. Snowy weather calls for immediate adjustments to sales forecasts, with a snow day costing some restaurants as much as 1.42 billion wings as they watched Tom Brady get his ninth Super Bowl win – and it would be a shame if your restaurant missed out on a sale because you didn’t have enough chicken in stock.
Holidays
Restaurateurs are quick to adjust their forecasts for major holidays like Valentine’s Day and Mother’s Day – as they should – but what about other state, federal, bank, and statutory holidays? It’s worth exploring the effect that holidays like Labor Day Weekend have on sales, too – otherwise your projections might come in too over- or under-target compared to your forecast.
Market Changes
Shifts in supply and demand for various foods can cause you to bring your sales forecast back to the drawing board. For example, with as it did during 2020’s lockdowns), this would call on pizzerias to increase their forecast target if solely basing it off of previous sales metrics.
Put simply, current events, supply chains, and shifting consumer preferences are timely and important indicators of a restaurant’s sales – so keep an eye out for how some of these trends could impact your revenue.
Seasonal Success
Needless to say, a restaurant located near a summer vacation spot or in a popular skiing town knows it will have drastically different sales in the off season than the on season. But just because you’re not operating a beach bar on Nantucket Island doesn’t mean seasonality has no impact on your business.
Seasonal effects should be factored into your forecast if the business notably fluctuates during different times of the year. Restaurants in college towns, seasonally-driven vacation areas, and even those whose food is more popular one season than another should make a note of this.
Staffing
Some restaurants have had to cut down on their table service due to Tools to Help Restaurant Forecasting
- 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. Off-premise dining can be more difficult to accurately determine and will require some educated guessing based on ticket size.
- How much each guest will spend. This number should incorporate drinks, apps, entrees, and desserts. Again, this number isn’t an exact science for off-premise dining, but educated guessing is a serviceable strategy here.
From there, you can incorporate all of these numbers into the following 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
You can get your revenue numbers from your point-of-sale records, and as we’ve covered, the number of guests can be based on your number of orders while factoring in estimates for the number of off-premise diners. Let’s say your numbers break down as follows:
Average Guests Per Day = 200
Average Per-Person Spend = $20
Number of Days Open = 6
This would make the sales forecast formula break down as follows:
200 Guests X $20 X 6 Days = Restaurant Sales Forecast
200 Guests X $20 X 6 Days = $24,000
As a first time sales forecaster, you would then break that $24,000 down by menu item and factor in any circumstances that might be out of your control, but would still impact sales (such as impending weather). You can also adjust the forecast to make it work for a week, month, season, or even year.
After each sales forecast is complete, set it aside and revisit it after the period of time is over to see how accurate your sales forecasting and inventory projections are. You might find that your business is growing faster than expected, and thus you should apply a 2% growth percentage to your weekly forecasts.
Since your restaurant is still in its infancy, you’ll need to reconsider some of the restaurant metrics you base your sales projections on, such as menu prices, days/hours of operation, staff size per shift, and average ticket size – all of which could change in the coming months.
according to Pizza Marketplace, weather has more of an impact on casual dining restaurants than QSRs.
However, the most notable role of weather on a restaurant’s sales forecast are the polar opposites of summer heat and winter weather. Snowy weather calls for immediate adjustments to sales forecasts, with a snow day costing some restaurants as much as 1.42 billion wings as they watched Tom Brady get his ninth Super Bowl win – and it would be a shame if your restaurant missed out on a sale because you didn’t have enough chicken in stock.
Holidays
Restaurateurs are quick to adjust their forecasts for major holidays like Valentine’s Day and Mother’s Day – as they should – but what about other state, federal, bank, and statutory holidays? It’s worth exploring the effect that holidays like Labor Day Weekend have on sales, too – otherwise your projections might come in too over- or under-target compared to your forecast.
Market Changes
Shifts in supply and demand for various foods can cause you to bring your sales forecast back to the drawing board. For example, with as it did during 2020’s lockdowns), this would call on pizzerias to increase their forecast target if solely basing it off of previous sales metrics.
Put simply, current events, supply chains, and shifting consumer preferences are timely and important indicators of a restaurant’s sales – so keep an eye out for how some of these trends could impact your revenue.
Seasonal Success
Needless to say, a restaurant located near a summer vacation spot or in a popular skiing town knows it will have drastically different sales in the off season than the on season. But just because you’re not operating a beach bar on Nantucket Island doesn’t mean seasonality has no impact on your business.
Seasonal effects should be factored into your forecast if the business notably fluctuates during different times of the year. Restaurants in college towns, seasonally-driven vacation areas, and even those whose food is more popular one season than another should make a note of this.
Staffing
Some restaurants have had to cut down on their table service due to Tools to Help Restaurant Forecasting
Excel
Excel (or Google Sheets in a pinch) is a spreadsheet to help you break down your forecasted sales and visualize them with charts and graphs, using a Auto Scheduling software like 7shifts factors in all the considerations in scheduling based on forecasts, including overtime, weather, live POS data, employee availability, and more to align sales projections with labor needs.
7shifts will also use those Actual Sales values to populate Projected Sales, allowing you to create schedules based on those projections. Software not only controls labor costs, but its sales forecasting ability contributes to a more accurate way to manage inventory and perfect the guest experience.
Frequently Asked Questions
Who in a restaurant is responsible for production forecasting?
The restaurant’s owner is normally responsible for sales forecasting for the restaurant. However, the owner should also consult with managers when forecasting, as they can speak to any unique circumstances that might have impacted the numbers contributing to a forecast.
How much historical data do I need for restaurant forecasting?
The more historical data you have for your restaurant forecasts, the better. Data on sales by date, day of the week, month, season, and even weather conditions for as far back as it’s available can help you build a more accurate restaurant sales forecast.
AJ Beltis, Author
AJ Beltis
Author
AJ Beltis is a freelance writer with almost a decade of experience in the restaurant industry. He currently works as a content manager at HubSpot, and previously as a blogger at Toast.