Foolproof Sales Forecasting Methods for Existing and New Restaurants
What is Sales Forecasting?
Sales forecasting is a detailed estimate of the quantity of sales a business and its sales team and sales reps plan to achieve over a fixed period of time, such as a quarter or a year. Sales forecasts are typically based on past sales records, future plans and on the intuition of sales reps. Accurate sales forecasts play an important role in determining how your business will progress in the future.
Sales forecasting is an integral part of a business's sales process. Forecasting sales involves drawing up estimates as to how much of a restaurant's inventory will be sold, which customers will buy, how much will the restaurant earn, and so on. Sales forecasts help sales managers identify which channels to target, which marketing efforts are most effective, and which pricing strategies will yield best results.
How do Sales Forecasts Impact Profit Margins?
To run any kind of business, you need to have an eye on the profit margins. This holds true for restaurants, bars and foodservice outlets as well. In order to plan your future sales, you need to estimate the expenses you can bear and the returns you can expect from the sales process. Having a planned sales forecast will also help your marketing and sales team plan pricing and budget and accordingly plan growth.
An accurate sales prediction will rid you of the uncertainty of whether you can afford to spend on equipment, labor or decor. An exact sales forecast will alert you to the kind of revenue your restaurant will generate during a particular period of time. This will help you plan your expenses accordingly.
Moreover, having a definite sales timeline will also help you plan your inventory, maintain optimal stock levels, optimize employee schedules according to sales and demand surges, and reduce food and labor costs.
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How to Draw up a Sales Forecast for an Existing Restaurant
Established restaurants, be it small businesses or a large chains, are already aware of their sales patterns, demand and supply graphs. They are therefore better placed to make accurate sales predictions. All they have to do is apply the right Forecasting Technique to their historical sales data.
For example, if your January sales figures touched $5,000 and February numbers were at $4,800, it is safe to expect that in March, you will see sales to the tune of $4,900 at least. You can also pull out historical data from the corresponding period of the previous years and forecast sales accordingly. However, this simplistic approach may not always give you accurate sales predictions, which is why you need a robust sales forecasting method.
Forecasting software such as Zip Forecasting can help restaurants with accurate, real time sales forecasts and also assist them in implementing these predictions.
How to Draw up a Sales Forecast for a New Restaurant
New restaurants may find it difficult initially to make accurate sales forecasts with no prior experience and sales data to rely on. However, it is not impossible to do. Start with calculating your restaurant capacity with all the seating areas combined. You can do this by counting the average number of diners per table. Then estimate an average billing amount you expect each table to generate. Add up all the tables to calculate your future sales.
The other way of forecasting sales is to identify sales trends of similar restaurants and food outlets in the vicinity, particularly competitors, and find out how much revenue they generate in a month or week. You can use market trends, sales patterns and competitor analyses to gauge expected sales volumes. Sales forecasting software that offers different forecasting techniques can also help new restaurants analyze competitor sales data according to a pre-decidedsales cycle.
External Factors That Impact Sales Forecasts
Your business ideas, the efforts of your sales team, or the new products you offer may not be enough to pull up high growth rates. There are a number of external factors too that can impact your sales data. Thus, while working out Sales Forecasts you need to keep a number of external factors in mind as well.
- Holidays- Holidays often determine whether your restaurant will see a surge in sales or a dip, depending on the kind of customers you serve. If it's the Christmas/New Year season, you may have a lot of families, friends and colleagues crowding your establishment. If you are a bar or a local pub, you may see an upward tick during game seasons. So it's better to tweak your forecasting techniques keeping these external factors in mind.
- Competitors- The market can change at any time and even in between a sales cycle. So be prepared and watch market trends and competitor behavior to avoid below-average sales. The local area, demographics and other businesses around your restaurant can also affect your sales pipeline, so define your sales process accordingly.
- Weather- Since dining out involves venturing out, the weather plays an important role in determining the sales process of a restaurant, cafe or bar. Torrential downpours or extremely snowy conditions for days and weeks on end may cause your sales figures to experience a sudden dip. So forecast sales numbers keeping in mind weather predictions.
- Economic conditions- The economic conditions of your state, and even the country, determine how much disposable income people have to spend on dining experiences. This increases and decreases their spending capacity and will in turn affect your average sales.
- Marketing budget- Your sales team, sales reps and marketing budget will also impact how your sales figures turn out. So review their spending and team performance before forecasting sales.
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Advantages of Automated Sales Forecasts
- Target achievement- When you have an accurate sales forecast in view, your sales team and sales reps are better equipped to achieve their sales targets. Studies have shown that 97% of companies that work with precise sales forecasting methods, achieve their targets.
- Growth- Forecasting methods also help businesses better prepare for future market anomalies and disruptions in the sales pipeline and take corrective measures accordingly. This helps business growth and avoids sudden setbacks.
- Sales analysis- When your sales team brings in business, you'll want to know which sales cycle has performed better for your business and which sales strategy has reaped most benefits. Sales forecasting systems will also help businesses analyze and oversee your historical data to put them to better use and help with future sales predictions.
- Streamlining cash flow- When you have a definite sales forecast in view, your marketing budgets, financing, long term plans for revenue can all be planned better. Even seeking credit and investment will become easier when you present potential investors with your sales forecast data.
- Understanding customers- Sales forecasting tools offer valuable insights into the consumers' mind and their consumption patterns. Since businesses often struggle to retain customers, understanding your customers is crucial and forecasting tools help with just that.
3 Top Sales Forecasting Software Solutions
1. Zip Forecasting-
Complicated sales forecasting systems may end up increasing your workload instead of easing it. Zip Forecasting, on the other hand, eliminates all unnecessary procedures and integrates with your business software stack to pull out historical data and make intuitive sales forecasts. Easy-to-use forecasting methods even let you schedule events and plan around weather conditions that can impact sales. Zip Forecasting helps sales teams analyze sales on a daily basis and track and project sales at regular intervals throughout the day. With the right sales forecasts, you can reduce your labor costs by reducing unnecessary staff on lean days. It also minimizes food costs by anticipating demand in advance.
2. Zoho CRM-
With Zoho CRM, your sales team can take care of the customer relationship lifecycle that is essential for any retail and restaurant business to grow and enhance its brand value. Among its key offerings are sales forecasting, sales funnels, contact management, sales pipeline management, task management and customer support. You can also integrate the sales forecasting software with your inventory management, and reporting and analytics tools for better business optimization.
The Salesforce Sales Cloud is a sales forecasting and sales pipeline analysis software that works in real time to give your sales teams precise sales forecasts. Apart from sales forecasting, sales trend analysis, reporting and analytics tools, Salesforce software also takes care of goal management, project management, proposal generation, lead management, graphical data representation and a host of other functions. This cloud-based software works on both, Android and iOS platforms.
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