Four Major Differences in Restaurant Forecasting Systems
Sep 19, 2019 data analytics and reporting
The best restaurant forecasting systems not only save time and resources, but also curtails bad customer experiences resulting from food and labor shortages. There are a variety of systems available from simple spreadsheets all the way to seamlessly integrated supply chain solutions, like CrunchTime.
The following lists four areas where forecasting systems often greatly differ, and which greatly influence their ability to be effective.
1. Choice of Metrics
Typically, forecasts are created starting with historical sales or guest-count data, and then adjusted as needed for current variables. For example, one might follow this process to create a forecast:
- Review sales data for the 4 weeks prior
- Reflect on whether business is growing, falling, and by how much in either direction
- Using the past week’s sales as the base, modify your forecast to reflect the trend
- Utilizing the resulting data as next week’s forecast, making sure to distribute it across the various days, day-parts and hours according to the average distribution for the past 4 weeks.
While it's helpful for some to use the prior four weeks’ sales data for some operators, others may wish to use the prior year’s sales instead as a way to help account for yearly events such as holidays and school vacations. In addition to, or instead of, using sales data, some may wish to utilize guest or transaction counts for forecasting purposes. Guest and transaction counts will help to mitigate any revenue fluctuations resulting from price changes. Others may wish to contrast year-over-year trends (adjusting revenue projections based on current trends). Ultimately, the ideal forecasting system will offer restaurant teams the ability to choose the KPIs that best apply to their operation.
The ideal forecasting system will offer restaurant teams the ability to choose KPIs that best apply to their operation.
2. Integrating Forecasts Across Systems
One pitfall to using spreadsheets are user error or lack of consultation altogether. You may have experienced when one manager creates a spreadsheet with forecasts, and another manager neglects to consult the spreadsheet before placing vendor orders. This leads to wasteful spending or under stocking. Ideally, food and labor coordination for the restaurant must always be based on one forecast. The most effective, seamless way to do this is integrate the forecasting system with the inventory and ordering, scheduling labor, and preparation and production systems.
After entering your forecast:
- Use a fully integrated ordering system with access to the menu data. It will then automatically suggest a purchasing order that accounts for the forecast and quantities currently available.
- Use an integrated labor scheduling tool that breaks down expected sales and guest-counts by day-part, hour, and even fractions of an hour. This will make it easier to coordinate team schedules more precisely in order to meet expected demand.
- Map out preparation and production schedules in order to reduce the potential for food shortages or waste.
Additionally, an integrated system will easily adapt to any shifts in the forecasts. It will automatically automatically flow through to the other modules, making on-the-fly adjustments (and the savings they represent) possible. In short, it’s integration with associated systems that makes extraordinary cost reductions possible with a forecasting system. Advanced systems integrated with production modules may accommodate information as granular as hold times, thaw times, and shelf life of products.
Advanced systems integrated with production modules may accommodate information as granular as hold times, thaw times, and shelf life of products.
3. Ease of Use
Nobody knows a restaurant like the person running it, so she should be able to create the forecasts in the field, instead of having to rely on someone at the corporate office to do so. That means the forecasting tool’s ease of use is key.
There are actually two benefits to ease of use:
- The forecast is more likely to be done using the forecasting tool, increasing accuracy and reducing waste and/or customer dissatisfaction.
- If the manager isn’t present due to illness, vacation, etc. then it’s a simple matter to have someone else make the forecast using the tool.
An easy-to-use forecasting tool gives the restaurant a planning expert that’s always on the job– a highly desirable situation.
4. Detailed Specs
Systems vary in how detailed a forecast the user can generate. For example, some systems will generate not just weekly, daily, and hourly sales forecasts, but may allow the user to specify 30- or even 15-minute increments. That is enormously helpful in settings where traffic tends to come in concentrated bunches, for example in a restaurant with a heavy lunch rush.
In addition, systems that are integrated with production modules may accommodate information as granular as hold times, thaw times, and shelf life of products. The result is just-in-time production that reduces waste to an absolute minimum and still meets expected demand.
While forecasting is not always easy, your approach can be straightforward. Forecasting requires the most relevant data to produce an accurate model for future sales. However, number-crunching isn’t enough. To plan for an optimal guest experience and minimize the costs for the operation, a forecasting system has to be simple to use and coordinated with other supply- and work-planning applications. Your forecasting system must accommodate the key metrics that are important to the operator.