Staff scheduling, inventory management, menu analysis, guest satisfaction, profitability, and more depend on accurate restaurant forecasts. However, flawless forecasts for restaurants depend on addressing predictable trends, such as holidays and seasonality, along with unpredictable trends, such as weather and major global events. When successful, they keep a restaurant in the dark, but it takes time, dedication, and a little math to do it right. Like all businesses, restaurants need to earn money to survive.
In a restaurant, profitability can be low: the average profit margin tends to fall between 3 and 5%. Since a restaurant's forecast predicts the amount of revenue the company will earn over a given period of time, you can deduct fixed costs from that figure, as well as variable costs based on demand, such as inventory and labor, which will allow you to calculate the restaurant's profits. In turn, the benefit estimate can help you plan the next initiatives for your restaurant once all your expenses have been covered, such as hiring and promoting employees, reducing turnover, upcoming restaurant renovations, or even expanding your business to new locations. Effective inventory management largely depends on sales forecasting.
Wasted inventory is one of the most unnecessary, yet avoidable, expenses a restaurant can incur. By forecasting sales, you can use historical sales data to predict how many chicken wraps you'll sell during the dinner shift, during dinner on a Tuesday, and even during dinner on a Tuesday in October. A key component in effective kitchen management is inventory control. By knowing what supplies are available at any given time, the manager will be able to plan food orders, calculate food costs from previous inventory, and make changes to menu items if necessary.
By monitoring the inventory, you can see potential problems with theft and waste. In this post, we'll show you everything you need to know about forecasting sales in restaurants, from the reasons to make forecasts to the steps to create accurate forecasts and what you should consider when making forecasts for your restaurant. The basic management of kitchens and food services carried out by the British Columbia Articulation Committee is authorized under an international Creative Commons Attribution 4.0 license, except where otherwise stated. A common method used to determine inventory turnover is to find the average food inventory for a month and divide it by the total cost of food for the same month.
At the microeconomic level, forecasting helps a restaurant plan inventory orders and how many employees need to work each shift to prepare and sell food. Understandably, the food and beverage industry is heavily regulated, which means that food must comply with health regulations and, of course, must be removed before it ages enough to cause harm to consumers. After you complete each sales forecast, set it aside and review it again once you've finished the time period to see how accurate your sales forecasts and inventory projections are. Changes in supply and demand for various foods can cause you to put your sales forecast back on the drawing board.
Another is that the simple cost of food used in the calculation does not really reflect the real cost of food. The total cost of food is calculated by adding daily food purchases (found in daily receipt reports) to the value of the food inventory at the beginning of the month and subtracting the value of the food inventory at the end of the month. Proper inventory management helps you reduce food waste and loss, work with suppliers, reduce the total cost of products, increase profits, and keep customers satisfied. Forecasting based on historical data can provide information about your two most important costs, food and labor, and help you make essential decisions about where to allocate your resources and when.
For example, a restaurant owner records food loss for two days and determines that the food container has 50 pounds of waste. The software eliminates most of the time-consuming manual work of forecasting sales, and can even create a perfect schedule based on projected sales based on forecasts. Receiving deliveries can take a long time for both the food establishment and the delivery service. Forecasting won't generate perfectly accurate results every day, but forecasting for restaurants is vital to recognizing trends and responding proactively.
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