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What is AI Forecasting and How Can it Improve Restaurant Operations?

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Understanding customer demand is critical for success in the restaurant industry. For that reason, many restaurants are turning to AI forecasting to improve their preparation for demand and execution of operations. But what exactly is AI forecasting, and why is it becoming an essential tool for restaurants?

What is AI Forecasting?

AI forecasting refers to the use of artificial intelligence and machine learning algorithms to predict future trends based on historical data. Unlike traditional forecasting methods, which often rely on simple statistical techniques, AI forecasting can analyze vast amounts of data from various sources, including historical sales, customer behavior, seasonal trends, and even external factors like weather conditions and local events. 

By processing this data, AI can identify patterns and generate more accurate predictions about future demand. For example, AI could help a restaurant determine how many meals to prepare on a given day, predict peak hours, and even recommend menu adjustments based on expected customer preferences. Incorporating AI into forecasting is a top use case for businesses across a variety of industries that need accurate predictions of their future sales to make decisions. Because restaurants can experience such unpredictable fluctuations in customer demand, they are well-suited to leverage tools like AI forecasting to help them predict their future sales.Crunchtime-inventory-ai-forecasting-2

But how can restaurants benefit from a technology like AI forecasting? Let's take a closer look.

How Can AI Forecasting Improve Restaurant Operations?

1. Improve Forecast Accuracy in an Unpredictable Industry
Predicting demand is a well-known struggle in the restaurant industry, as customer traffic can easily fluctuate from day to day. In some cases, these fluctuations in demand can clearly be traced back to a specific factor like a local sporting event or concert that draws in a large crowd, or even weather events like a big snowstorm that keeps your regular patrons from leaving their homes. But in other cases, there may not be an obvious reason behind an influx in traffic or a lull in demand. This can make it extremely challenging

An AI algorithm can analyze a restaurant’s historical sales data from major sporting events to better predict the spikes in demand and plan accordingly.

For your restaurant operation, this increase in traffic might require stocking up on popular appetizers or adjusting staffing levels, but this preparation requires prior knowledge. Similarly, AI algorithms can also examine historical sales data alongside weather forecasts, helping restaurants predict how conditions like rain or sunshine might influence foot traffic and menu choices. By integrating these external factors into their forecasting models, restaurants can make more informed decisions around demand.

2. Eliminate Human Bias and Errors from Your Forecast
AI relies on data-driven algorithms that analyze vast amounts of historical data to create more objective predictions, rather than a manager’s subjective opinions or guesswork. While a seasoned manager may be able to predict future sales with some degree of accuracy, it's not a sustainable method, especially if a restaurant experiences frequent turnover or changes in management. Using AI to drive forecasting can reduce the influence of individual biases, which can stem from personal experiences or assumptions.

Additionally, AI can incorporate a wide range of variables—such as weather patterns, local events, and changing consumer behavior—into its models, ensuring that decisions are based on comprehensive insights rather than selective information. By consistently applying the same analytical methods across different scenarios, AI can also help standardize forecasting practices, leading to more reliable and accurate outcomes. This allows restaurant operators to make decisions grounded in data, ultimately improving their operations and enhancing profitability.

3. Take Greater Control Over Your Food Costs
One of the biggest challenges restaurants face is managing food costs efficiently. Overordering can lead to unnecessary waste and increased costs, while underordering can result in stockouts and dissatisfied customers. AI forecasting can help restaurants find the right balance by providing precise predictions about what ingredients will be needed throughout the week, helping to reduce food waste and improve cost management.

In practice, this could look like an inventory system recommending exactly how much food to order, with a suggested order amount clearly displayed when your manager places an order. This way, the manager has little room for guesswork or speculation, and every store can use a data-driven approach.Suggested Purchase Orders

4. Schedule Shifts with Certainty
Labor costs are a significant expense for restaurants. AI forecasting can predict busy periods, enabling managers to schedule staff more effectively. By understanding when peak times occur, restaurants can ensure they have the right number of employees on hand, minimizing labor costs during slow periods while maintaining excellent service during rush times. When your forecast is incorporated directly into your scheduling platform, it can eliminate guesswork and tell you exactly who to schedule for each shift. This means you can plan your shifts with certainty using AI-powered recommendations.

5. Enhance Customer Satisfaction with Better Food Prep
Just as a cold burger or stale fries can ruin a meal, excessive wait times can frustrate customers in the same way. This is why strategic food prep is essential to keeping your customers happy and returning. Forecasting can play a vital role in helping your kitchen prepare critical food items in anticipation of customer rushes throughout the day. By analyzing historical sales data and patterns in the most popular menu items throughout the day, AI can help predict peak traffic times and expected customer orders.

An advanced inventory management system can use your forecast data to tell the kitchen staff the exact quantities of popular menu items they should prepare ahead of time, with the goal of reducing wait times and ensuring that customers receive their orders promptly. This means the system can tell your kitchen staff what they need to have prepared, whether it's 2 pounds of fresh hot fries every 15 minutes, or 1 gallon of your famous chili prepped by 10 am on Friday morning.

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When used correctly, AI can guide food prep, helping your kitchen align with actual demand rather than relying on guesswork or gut feeling. With this data-driven approach, restaurants can transform their back-of-house into an efficient, well-oiled machine ready to serve fresh food in a timely manner throughout the day. No more guesswork or gut feelings, just a smooth-running and proactive operation.

The End Goal? Using AI to Improve Restaurant Operations and Drive Profitability

Ultimately, the goal of any business is to be profitable. By leveraging AI forecasting, restaurants can make informed decisions that lead to better resource allocation, reduced waste, and improved customer satisfaction. All of these factors contribute to a healthier bottom line.

AI forecasting is transforming the way restaurants operate, providing valuable insights that lead to improved efficiency, enhanced customer experiences, and increased profitability. As the industry continues to embrace advanced technology, AI forecasting will likely become an indispensable tool for restaurants aiming to thrive in a competitive market. By investing in AI-driven solutions, restaurants can not only forecast demand more accurately but also prepare for the future with confidence. In a world where customer preferences are constantly changing, being one step ahead can make all the difference.

Ready to learn more?
Embracing AI forecasting may be the key to unlocking your restaurant’s full potential. Learn more about Crunchtime’s AI Forecasting solution here.

For prospective customers, request a demo today to see how it works. Request Demo