Accurate Forecasting Critical to Success
We were all looking forward to our meal at an upscale restaurant. We ordered a bottle of Cabernet Sauvignon. “I am sorry, ” the waitress frowned, “we are out of stock of Cabernet Sauvignon. ” “All six varieties of Cabernet Sauvignon, ” I asked incredulously. “Yes, I am so very sorry.”
When the waitress returned and was ready to take our order, I said confidently, “I’ll start with the foix gras, and then… ” She said sorrowfully, “I’m so sorry, but we’re all out of foix gras. ” None of us will probably return to that restaurant.
Planning is a critical part of managing any business, particularly a restaurant. In order to meet the expectations of customers, restaurants must plan carefully their dishes and portion sizes, including wine and other beverages. Failure to have an adequate supply of food and beverages will result in customer dissatisfaction. Excess inventory results in spoilage, extra storage space, and poor cash flow. At the same time, failure to provide adequate staff levels will result in poor service, delays, and ultimately dissatisfied customers. This can be avoided by proper forecasting.
What is Forecasting?
Forecasting deals with the future, which inherently is uncertain. A forecast made today is for a future period, such as tomorrow’s lunch sales. Because forecasting involves uncertainty, judgments must be made and information gathered upon which to base your forecast.
Although the past often has very little relevance to the future, forecasting generally relies on information contained in historical data. While historical sales in your restaurant may not be a strong indicator of future activity, it is a reasonable starting point. From there, however, it is important to look to the future and consider other variables such as current promotions, trends, weather, activities in your community, and other variables which could affect customer traffic. If anything has proved true in recent business history, it is that what worked yesterday may not work tomorrow. Do not assume that your customers will buy today the same dish they purchased yesterday.
Forecasting Methods
Informal methods are based on intuition and lack systematic procedures. Formal forecasting techniques involve several steps that need to be followed repeatedly. These methods can involve qualitative and/or quantitative measures for accurate forecasting.
There is no right or wrong method of forecasting the number of tables you will turn tomorrow evening, or the number of New York sirloin steaks will be consumed. The most common method is using quantitative means adjusted subjectively, that is, a combination of historical sales and “gut feeling. ”
Forecasting is a challenging part of every restaurateur’s job. The best technique is the one that results in the forecast closest to the actual outcome.
–Peter M. Guyer
Peter M. Guyer is the Founder and President of ATHENA MARKETING INTERNATIONAL (athenaintl.com), an international marketing, consulting and business development firm serving food and beverage manufacturers. Tel. (206) 749-9255.