Why Forecasting Is Important for Clubs And How To Do It?

Staff scheduling, inventory management, item analysis, member satisfaction, profitability, and so much more rest on the shoulders of accurate restaurant and shop forecasting. Faultless forecasts, however, are dependent on navigating predictable trends like holidays and seasonality alongside unpredictable ones such as weather and major world events. When successful, forecasts keep a club’s restaurants and shops in the black – but they require time, dedication, and a good bit of math to get right.

How Forecasting Helps Inventory Management, Member Service, Staffing, and Financial Planning

In a private club, forecasting is using data to predict how much the business can expect in F&B and shop sales in a specific time period (e.g., next three months). At a minimum, the following measures should be included in forecasts:

• Daily sales dollars and profits for each restaurants or shops
• Covers by restaurants, day, and hour
• Each item’s sales units and dollars by restaurants or shops, day, and hour

On a macro level, sales forecasting helps the club to set goals and determine its overall profit and revenue. On a micro level, forecasting helps a club plan for inventory orders and how many employees need to work each shift to service customers. Inaccurate sales forecasting can result in wasted funds on labor, inventory, and even operating expenses for the club.

From this point forward, we will use restaurants as an example to further discuss forecasting. For shops, the process is very similar and everything we cover with restaurants also applies to shops.

Inventory Management

Effective inventory management is largely dependent on sales forecasting. Wasted inventory is one of the most needless – yet avoidable – expenses that a club can make. Through sales forecasting, you can use historical sales data to predict how many chicken wraps you’ll sell during the dinner shift, during dinner on a Tuesday, and even during dinner on a Tuesday in October.

A restaurant forecast helps you make more accurate inventory projections each time you call your supplier to stock up your kitchen with just the right amount of fresh ingredients. Each time you forecast your sales, you’re referencing actual sales numbers from your past to accurately predict how much of what you’ll sell and when.

Member Service

No customer wants to hear that you’re out of their favorite dish. It’s a disruptive experience for guests who need to take time to review the menu all over again and decide on a dish they might not enjoy as much. Proper forecasting can alleviate the chances of this happening and ensure a quality dining experience.

Staffing

Sales forecasting can also improve the club’s operations and quality of service. Knowing how much business the club will do can ensure it staffs up to decrease wait times for guests and increase table turn. Conversely, it can also alert you to when you might be overstaffed, which can help control the business’s labor costs.

Financial Planning

Like all businesses, clubs need to make money to survive. Although most clubs are not for profit, we still want to make sure the restaurant losses are sustainable. Since a club forecast predicts how much revenue the business will pull in, you can deduct fixed costs from that number, as well as demand-based variable costs like inventory and labor, leaving you with a profit estimation.

In turn, the profit estimation can help you plan for upcoming initiatives for your club once all of your expenses are covered, such as hiring and promoting employees, reducing turnover, impending club renovations.

Club Sales Forecasting Method & Techniques

Once again here we will use F&B forecasting as an example. Forecasting for shops is very similar. Here’s how to arrive at a good number for your projection:

• Look at historical data. Reference sales data from the same time in the past few years
• Adjust based on recent trends. Compare sales numbers from earlier this year to where they were in the previous similar time period(s). For example, say you’re forecasting for the month of September, and you’ve found that sales from June-August were up 5% compared to those same months last year. By that logic, you would apply a 5% increase from last year’s September sales to more accurately forecast for this upcoming September
• Consider external forces. Take into account any extenuating circumstances, such as holidays, events, weather, or market changes that may have impacted the numbers from the previous period. These will be explained in more detail in the next section
• Factor in trends. Adjust the forecast with any current factors that may increase or decrease your sales forecasts, such as shifts in demand or supply
• Get granular. Break the sales forecast down by menu items and hour – based on historical data – to better plan for inventory ordering and employee staff scheduling.

By following the process outlined above, you’ll be able to forecast in a way that acknowledges both your restaurant’s future and its past – both of which are key attributes to successful sales projections.

External Forces To Incorporate In Forecasting

Weather

Weather is a surprisingly strong indicator of restaurant success, and interestingly enough, the effect of weather varies by concept. For example, according to Pizza Marketplace, weather has more of an impact on casual dining restaurants than QSRs.

However, the most notable role of weather on a restaurant’s sales forecast are the polar opposites of summer heat and winter weather. Snowy weather calls for immediate adjustments to sales forecasts, with a snow day costing some restaurants as much as 20% of bottom-line monthly profits. As for summer, some restaurants see a surge of sales due to outdoor dining, while others find July to be the slowest month of the year.

The effects of weather are among the most predictable when it comes to restaurant sales forecasting, so analyze the trends of how well your restaurant does when certain temperatures hit to see how you should be adjusting your forecasts.

Events and Holidays

Events can drastically drive up demand for a restaurant. For example, if you’re close to a performance venue or a baseball field, you should familiarize yourself with their schedule to see if concerts or baseball games draw in crowds that want to come to your restaurant before or after attending.

Restaurateurs are quick to adjust their forecasts for major holidays like Valentine’s Day and Mother’s Day – as they should – but what about other state, federal, bank, and statutory holidays? It’s worth exploring the effect that holidays like Labor Day Weekend have on sales, too – otherwise your projections might come in too over- or under-target compared to your forecast.

Market Changes

Shifts in supply and demand for various foods can cause you to bring your sales forecast back to the drawing board. For example, with beef prices on the rise, it might mean you must begrudgingly raise the prices of your steak dishes. This price hike might discourage customers from ordering steak, which could lower your overall sales and require consideration when forecasting.

Put simply, current events, supply chains, and shifting consumer preferences are timely and important indicators of a restaurant’s sales – so keep an eye out for how some of these trends could impact your revenue.

Staffing

If you’re intentionally lowering output due to a limited-size staff, you should keep that in mind when forecasting sales. For example, if you’ve estimated your smaller staff has cut normal productivity by 10%, be sure to factor that number into your forecast for a more accurate prediction.

Tools to Help Restaurant Forecasting

Excel

Excel (or Google Sheets in a pinch) is a spreadsheet to help you break down your forecasted sales and visualize them with charts and graphs, using a restaurant sales dashboard template. You can also use the spreadsheet to break down your menu by item and run individual forecasts for popular menu items. Plus, you can keep the same workbook to easily store and reference your data for future forecasts. The downside is that it’s a manual process to update this spreadsheet each morning, taking your time and attention away from what matters, your members.

Software

Software takes out the brunt and time-consuming manual work of sales forecasting. Data analytics software like ClubPulse Dashboard extracts data from your POS systems, and factors in all the considerations we mentioned above to create much more accurate forecasts than Excel. The other benefit of using software is, that it keeps updating forecasts using the latest information so that club directors can always get the latest and greatest forecasts and take actions based on them.