Why Gut Instinct Restaurant ‘Forecasting’ Won’t Cut It Anymore
When it comes to restaurant sales forecasting, many managers trust their gut instincts. Learn why that’s a problem.
For a long time, restaurant managers have often relied on gut instinct to staff and order product rather than trust a sales forecast based on historical data. Restaurants are hectic, and managing one requires that person to be in several places at once. That’s why managers frequently staff workers “just in case,” or overorder to be safe — because they have a general idea of what the restaurant needs to keep running.
But manager inexperience and error can impact a store’s profitability and the ability to predict sales, labor and product needs. Competition in the restaurant industry is fiercer than ever and margins are slim, which means that efficiencies are where a business will succeed or fail. The restaurant industry needs a gut check. Read on to find out why…
Reason #1: Outliers Are Hard to Predict and Track
Weather and special events are two of the biggest variables that can impact sales. Weather can change often from year-to-year or week-to-week. Plus, special event days, like a local sporting event, can cause an uptick or downtick in sales. A rough idea of how your store performs when there’s a home football game is different from knowing exactly what your sales were during the last home game and knowing how many employees to staff to reach or exceed those sales. Different events might have different impacts and it’s difficult to track the impact across months or years. Managers can recognize common outliers and others more readily when they have a regular forecast in place.
Reason #2: Consumer Demands are Changing
Consumers are driving change in the world of delivery and to-go, spiking a rise in third-party companies like GrubHub and Seamless. Consumers have expectations when it comes to how fast they want their food and how much time it should take to have something delivered. That, in turn, requires a shift in thinking for managers, because they may need to adjust staffing needs to accommodate delivery and takeout orders.
Knowing where the transactions are taking place at your restaurant and how that demand affects staffing in both the front and back-of-house is a key concern for operators today. They will need additional staff to prepare the growth in different types of revenue centers, which leads us to…
Reason #3: Scheduling the Right People at the Right Times
When you don’t schedule efficiently your customers and your sales suffer. Common areas of inefficiency include:
- 10- or 15-minute overlaps that add up fast across stores
- Wrong amount of staff at high and low peak times
- Enough employees staffed, but in the wrong areas such as front-end vs. back-end and to-go vs. in-store
Managers need to be precise with their sales and labor projections in order to optimize labor costs and drive sales in a shifting environment. For example, if you have a big catering order scheduled for 11 a.m., a manager needs to be able to staff the back-of-house to meet that demand without overstaffing the front-of-house unnecessarily.
Reason #4: Institutional Knowledge Goes Out the Door
Turnover is a given in the restaurant industry, and it’s a particularly severe problem today. What happens when your manager, with all of the institutional knowledge and gut instinct, inevitably leaves? They take that instinct with them and leave you as the owner to fill the void. Unfortunately, more and more restaurant managers are inexperienced. That means that these new managers either need to be trained (which is expensive) or they’re put into your stores and could make costly mistakes.
Reason #5: Comply with Labor Laws
Mistakes simply aren’t an option when it comes to labor compliance, especially now that predictive scheduling is a growing concern for more and more restaurants across the country. Several states and cities now require a schedule to be posted at least 14 days in advance. Other compliance issues include:
- Minimum time between opening and closing (“clopenings”)
- Minor labor laws
- Meals and breaks
Failure to comply with these regulations opens a business up to financial risk, including premium pay, government fines, potential lawsuits and legal fees. Managers need some support to navigate this legal landscape in the form of alerts in case they’ve made errors in the schedule that put the restaurant in noncompliance.
As the restaurant business continues to go through significant disruption due to technology, consumer preference, and rising cost of labor, the ability to predict performance is more important than ever. That’s why owners need to arm their managers with intelligent forecasting tools that can:
- Learn from the ebb and flow of your business
- Improve the ability to predict performance over time
- Minimizes human error
- Present managers with the rationale for forecast adjustments
- Build trust in the results over time