Restaurants are known for having chaotic kitchens, fast-fingered cooks, quick-thinking wait staff -- and for accommodating customers who can be very hard to please. Amid the chaos and fierce competition, restaurateurs face dozens of daily decisions that will eventually determine whether cooks have enough of the right ingredients, whether staff can serve every occupied table, and whether customers will be delighted — and keep coming back. To balance exceptional customer service with reducing costs, restaurant owners must forecast how many people will come in at any given time, and the orders they’re likely to place. Getting either prediction wrong can mean understaffed shifts, wasted food, frustrated customers, bad reviews, and lost revenue.

Although it’s still a formidable challenge, forecasting restaurant sales is easier and more accessible today than ever before, thanks to advancements in forecasting strategies, data collection, and analytics technology. This article explores the nuances of restaurant forecasting, including a how-to guide for both new and existing restaurants, helpful formulas, and the benefits that accrue from accurate forecasting.

What Is Restaurant Forecasting?

Restaurant forecasting is a strategic tool that enables owners and managers to anticipate and prepare for future business demands. It’s a detailed process that involves analyzing past sales and market trends to help create predictions about what customers are likely to want to eat and drink, how much revenue they will generate, and when. For example, a seaside eatery might use inventory forecasting to stock up on popular seafood dishes and schedule extra staff in anticipation of the summer tourist season. Such steps would help make sure the restaurant can serve every customer without delay while avoiding overstaffed shifts. Smart, accurate forecasts can help restaurants create more sustainable operations by minimizing wasted resources — especially perishable food — without diminishing customer service.

When carefully applied, forecasting can improve a restaurant’s financial health and enrich the customer experience it provides. With a more accurate view of future sales, restaurants can confidently grow and adapt, creating responsive and flexible business plans that align with the specific dynamics of their customer bases and locations.

Key Takeaways

  • Restaurateurs forecast future sales to predict inventory and labor needs so that they can reduce costs and waste without negatively affecting customer service.
  • Restaurants of all types and sizes benefit from accurate forecasting and use similar formulas to predict sales.
  • New restaurants typically take a different approach than established businesses.
  • Technology plays a key role in restaurant forecasting. Data from accounting, payroll, inventory, and customer service systems can be integrated to create detailed, data-rich forecasts that help managers strategically improve operations.

Restaurant Forecasting Explained

A good forecast can have a positive impact on almost every aspect of a restaurant’s business. It can improve front-of-house decisions, such as estimating expected guest numbers and optimizing seating and floor plans. In back-of-house operations, it can optimize management of perishable inventory and staff schedules. A family-run café, for example, might analyze forecast data to determine the right number of pastries to bake for a Sunday morning, balancing efficiency and waste-minimization with the freshness and speed its customers expect.

Forecasting gives restauranteurs the wherewithal to make proactive financial decisions that result in a stronger and more agile operation. Such flexibility is needed for restaurants to weather both predictable trends and the unanticipated challenges inherent to the food service world, including competitor price changes, adverse weather events, and unexpected supply chain slowdowns. To overcome these challenges, restaurant owners and managers use software and other analytic technology to achieve the operational visibility they need to create and assess timely and accurate forecasts.

Benefits of Accurate Restaurant Forecasting

In the increasingly competitive restaurant industry, businesses need every advantage they can get. During the period from 2021 to 2024, new foodservice and accommodations businesses (the Census Bureau category lumps together lodgings and restaurants) opened at an accelerated pace — 38.3% faster than in the prior decade, according to a National Restaurant Association analysis of U.S. Census data. Accurate forecasting directly influences a restaurant’s ability to pull ahead of this competition by unlocking a wide range of direct and indirect benefits. Here are eight key benefits good forecasting can bring to restaurants:

  • Improved inventory management: Forecasting helps restaurants match stock levels with demand. Precise inventory control is especially important in food service because overstocked goods might spoil quickly, and understocking can lead to lost sales if customers are disappointed and choose to dine with a competitor. By predicting customer demand, restaurants can order the right amount of ingredients and supplies at the right time, ensuring freshness without increasing waste.
  • Enhanced labor efficiency: By predicting when customers will come in and how much they will spend, restaurants can schedule the right number of staff to meet expected customer demand. This proactive scheduling approach helps minimize understaffed shifts, prevents customers from feeling neglected, and reduces labor costs during slow periods.
  • Increased revenue: By expanding forecasting capabilities, restaurants can more effectively plan and manage table turnover, reservations, operating hours, and floor plans. These improvements can all lead to more customers being served, increasing sales.
  • Cost control: Accurate forecasts typically lead to more accurate budgets that balance revenue with the associated costs needed to meet demand. This enables restaurateurs to make informed decisions about expenses and investments so they can minimize costs as they grow without compromising quality. A restaurant in a seasonal tourist area, for example, can rely on forecasts to time its supply orders and meet the seasonal rush without incurring unnecessary costs from storing extra supplies early or replacing unsold perishable ingredients.
  • Improved customer service: Knowing when to expect peak foot traffic helps restaurants better manage customer reservations and be ready to provide prompt and attentive service when they arrive, enhancing the overall customer experience. Forecasting also helps restaurants track supply levels, adjust menus, and notify customers of changes when appropriate.
  • Strategic decision making: Accurate forecasts based on historical data and market trends contribute to better strategic choices in menu planning, pricing, and promotions. This data-driven approach helps restaurants attract new business without sacrificing unique and popular traits that appeal to established customer bases, thus maximizing retention and profits.
  • Adaptability to market conditions: By regularly updating forecasts as new data is collected, restaurants can identify trends early and quickly adapt to changes such as seasonal ingredient availability and trendy menu items. This agility provides the means for restaurants to stay competitive and relevant as customer tastes evolve.
  • Risk mitigation: Through proactive forecasting, restaurant managers and owners can anticipate potential downturns or shifts in customer preferences and mitigate the associated risks. For example, by monitoring local events, managers can predict an influx of walk-in customers during a local music festival and order supplies and schedule staff accordingly. This minimizes the risks of running out of highly desirable or specialty items, providing slow service, or experiencing delayed table turns.

How to Forecast Existing Restaurant Sales

For established restaurants, forecasting sales is an important part of keeping up with current trends and maintaining competitive advantages. Using historical data, established restaurants can uncover and analyze buying patterns to prompt a strategic change, such as rearranging tables during peak times to increase customer density or selectively raising prices for the most popular menu items. Below are six steps existing restaurants can use to forecast sales:

  1. Calculate Your Restaurant’s Daily Capacity

    Restaurant space is limited, so it’s important for restaurant owners and managers to know their full daily capacity. The factors that go into this calculation include total available seats, average dining time and operating hours. Maximum capacity, often calculated and analyzed by specialized software, will inform how restaurants manage their reservations, walk-ins, wait times and floor layouts. A typical formula to calculate maximum daily capacity is:

    Maximum daily guests = Tables x Seats/table x Turnover rate/hour x Daily operating hours

    To illustrate, consider a small bistro with 10 tables, each with four seats, that is open from 10 a.m. to p.m. every day. Customers stay for an average of one hour for each meal. The bistro’s expected maximum daily capacity is: 10 tables X 4 guests/table X 1 visit/hour X 6 hours = 240 customers.

    It’s important to note that this is the maximum number of daily guests. Restaurants experience busy and slow periods throughout the day and seat smaller groups than each table’s maximum. Forecasts should reflect that actual expectation. But, knowing the maximum tells restaurant owners and managers how much opportunity they may be leaving on the table. Similarly, every variable in this equation will be different from restaurant to restaurant. Meal duration at U.S. casual-dining restaurants, for example, averages right around an hour per table, but at fine-dining restaurants the average can range from 1.5 to 2.5 hours.

  2. Use Sales Data to Conduct Sales Forecasts

    Analyze historical sales data to identify patterns, including high-volume days/times and popular menu items, to predict busy periods and future sales with greater accuracy. Today, many more full-service restaurants also serve takeout customers. While fulfilling these orders doesn't require wait staff or table space, they still put additional pressure on front-of-house workers taking and processing orders as well as on kitchen staff, and are therefore important restaurant key performance indicators (KPIs) to track when forecasting the restaurant’s sales.

    To calculate sales forecasts, multiply the number of forecasted customers for a given period by the average spend of each customer. So, for example, if a hamburger restaurant averages 250 customers per day and each one spends $14, on average, the expected daily sales forecast would be $3,500 (250 x $14).

  3. Conduct Inventory Projections Based on Sales Forecasts

    The sales forecast is then used to estimate inventory needs. By adhering closely to forecasted sales, restaurants can minimize cluttered shelves or expired food supplies without risking running out of popular dishes or ingredients. It’s important to remain flexible and regularly check stock levels, however, as unexpected sales or a shift in customer preferences can quickly use up ingredients.

  4. Factor in Seasonality

    Seasonal trends affect both sales and costs. Holidays, local events and tourist seasons directly impact revenue through increased foot traffic and larger dining parties. But they also can indirectly affect business by blocking traffic or limiting parking. Restaurants must anticipate these variables when forecasting future sales. On the cost side of the equation, ingredient prices fluctuate throughout the year. Restaurateurs should factor these variables into their menu planning, pricing decisions and marketing strategies. By integrating these seasonal fluctuations into their forecasts, restaurants can boost forecast accuracy throughout the year.

  5. Staff Your Restaurant According to Sales Projections

    To help ensure high-quality customer service, restaurant owners and managers must align staffing levels with their detailed sales volume projections. By accurately predicting peak times, restaurants can meet guest needs while minimizing payroll costs during slower periods. Restaurants may also consider cross-training staff to create a more flexible workforce that is better suited to quickly adapt to an unexpected surge in customer traffic. This approach optimizes service quality and operational efficiency.

  6. Finalize Your Revenue and Cost Model for Profit Expectations

    Armed with detailed sales, inventory and staffing forecasts, restaurants can finalize their expected revenues and costs for the upcoming financial period. Comparing their projections with prior periods’ financial statements or restaurant industry benchmarks helps them set realistic expectations and guides managers and owners toward realistic growth strategies that align with the business’s overall goals. Many restaurants use rolling forecasts, typically spanning four weeks to a few months, to continually update expectations as actual figures come in. However, when creating rolling averages, analysts should adjust for any outliers or non-recurring events, such as holiday surges or major promotions, to maintain forecast accuracy.

How to Forecast New Restaurant Sales

Forecasting sales for a new restaurant requires estimates based on a blend of market research and competitive analysis. Without historical data to draw on, new restaurateurs typically rely on industry benchmarks and expert consultants to understand their target market and project their sales. Below are six steps to help new entrepreneurs create their first restaurant forecast, illustrated with the running example of a hypothetical small lunch café, PT Bistro.

  1. Select a Time Period

    The further into the future a restaurant forecasts, the less confidence it will have in the values of the variables it must consider. This leads to a more complex — and likely less accurate — forecast. Choose a realistic timeframe, such as the first three months, to focus expectations on the initial business phase. These early forecasts should also factor in a realistic ramp-up period based on the restaurant’s specific plans and challenges.

    PT Bistro will create its first forecast for the next 10 weeks.

  2. Determine Operating Hours and Days

    Restaurant operating hours and days can vary significantly. Is it a 24/7 diner or a morning breakfast spot? To answer these questions, consider the intended customer base’s preferences and the restaurant location. Operating hours directly impact potential sales volume, as longer hours or more open days can increase revenue opportunities — but also variable costs, such as labor and utilities. For example, a pizzeria on the main street of a town with an active nightlife is likely to stay open late.

    PT Bistro is located in an office complex, so it will primarily cater to 9-to-5 workers. Therefore, it plans to operate Monday through Friday from 8 a.m. to 6 p.m.

  3. Estimate Daily Customer Count

    Projecting the number of expected customers can be challenging without historical data. Initial forecasts typically rely on market research, including population density, foot traffic, competitors’ menu offerings and location. Restaurants should also consider the environment they aim to create. An intimate, high-end restaurant, for example, is likely to plan for fewer, higher-paying customers than a busy fast-food restaurant.

    PT Bistro expects 200 customers on an average day, primarily during the morning and afternoon rushes.

  4. Calculate Total Customers for the Chosen Period

    Once daily averages are established, extend them to estimate customers for any chosen period, such as weekly or monthly. It’s important to consider events that might skew the data, such as holiday closures, and adjust accordingly. The basic formula for calculating weekly customers is simply the average daily customers times the number of days per week that the restaurant is open.

    Because PT Bistro is closed on the weekends, its weekly customer count would be 200 customers x five days, or 1,000 customers per week.

    This formula can forecast sales for any financial period by adjusting the number of days. But remember, the longer the forecast period, the more likely it is that unexpected events will reduce accuracy of those forecasts.

  5. Estimate Average Spending Per Customer

    By analyzing direct competitors’ menu prices and market averages, owners and managers of a new restaurant can estimate a customer’s likely average spend. This figure, combined with projected customer counts, helps to estimate revenue. Of course, average spend can vary significantly between restaurants based on menu, quality, and location, so consider these differences when comparing your projections to industry averages and benchmarks.

    Based on its breakfast and lunch prices, PT Bistro expects customers to spend about $14.50 per visit. The owner plans to increase that figure by offering bundled discounts once the restaurant establishes a reliable customer base.

  6. Calculate Sales Forecast

    Combine all these factors to create a sales forecast. To calculate total expected sales, multiply the expected customers by average spend, then multiply that product by the number of days the restaurant will be open over the forecast period.

    Sales forecast = Number of days open x Total customers for day x Average spend/customer

    PT Bistro’s sales forecast for its first 10 weeks of operation looks like this: 50 days open (5 days/week for 10 weeks) x 200 customers x $14.50 per visit = $145,000. PT Bistro expects to bring in $145,000 for its first 10 weeks of operation, an estimate that should be reevaluated as real figures come in. However, this is only the sales forecast. Effective restaurant financial management requires a complete budget, including expenses such as ingredients, utilities, marketing, and labor, so that owners can get an estimate of the business’s profitability.

Restaurant Forecasting Technology

Technology advancements are making forecasting more accessible and precise, even for small- and medium-sized restaurants with limited budgets and IT resources. By integrating specialized forecasting software with inventory, point-of-sale (POS), customer relationship management, accounting and enterprise resource planning (ERP) systems, restaurateurs gain deep, real-time insights into operations, sales, and customer behavior. These interconnected systems, often bolstered by artificial intelligence and machine learning, can help restaurant decision-makers anticipate demand and adjust strategies accordingly.

Restaurant-specific solutions typically include features such as reservation and waitlist apps, offering convenience to customers while collecting, organizing, and analyzing valuable customer and operational data. By using these technologies, restaurants can optimize labor scheduling, improve seating management, enhance customer service, and drive growth.

Manage Your Restaurant Forecasting With NetSuite for Hospitality

For restaurant owners, forecasting touches nearly every aspect of their business: cost control, inventory management, staffing, and revenue tracking. With NetSuite’s cloud-based financial management software, restaurateurs gain a unified real-time view of their financial and operational data, unlocking deeper insights and more precise predictions. NetSuite’s intuitive dashboards create a centralized location for all relevant data including orders, inventory levels, and customer information, empowering business leaders to see how things are running now and to help them create data-driven strategies to make improvements for the future.

NetSuite’s ERP modules cater to the specific needs of hospitality businesses, including restaurants. The planning and budgeting module, for example, allows restaurants to create detailed forecasts by integrating data from across accounting, inventory, payroll, and POS systems. Decision-makers can also leverage NetSuite’s cloud technology and sophisticated modeling tools to run what-if scenarios, collaborate on forecasts with other authorized users, and automate approval workflows. And with preconfigured and customizable reports, NetSuite helps managers track and identify trends in key forecasting metrics such as projected sales, labor costs, and inventory turnover rates. With NetSuite, restaurants gain a powerful forecasting solution tailored for the food service industry’s specific challenges, helping owners to increase profits while maintaining high-quality service.

infographic bsa financial management restaurant forecasting
With NetSuite, businesses can track all their financial and operational information in one centralized location, giving decision-makers a comprehensive view of operations, including inventory, sales, expenses, and more.

Restaurant forecasting is an essential tool for predicting, navigating, and managing the complexities of the food service industry. By leveraging historical data, market analysis and modern technology, restaurateurs can create accurate and detailed forecasts, informing decisions about lowering costs, enhancing customer satisfaction, and driving profitability. Whether for an established restaurant or a fresh face on the scene, accurate forecasting is a crucial step in achieving sustainable growth in this highly competitive, customer-driven business.

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Restaurant Forecasting FAQs

What is forecasting in a restaurant?

Forecasting in a restaurant is a technique that uses historical data and analytic tools to predict future sales. Restaurateurs can use forecasts to anticipate customer demand and align business strategies and operating decisions accordingly, including for inventory needs, marketing campaigns, and staffing schedules.

How do you make projections for a restaurant?

To make accurate restaurant projections, managers first analyze past sales trends, consider seasonal fluctuations, and factor in any upcoming events, promotions, or market trends. Then, they can use this data to create a model that estimates future sales or other relevant business metrics. Many businesses rely on financial software or an enterprise resource management system to improve the speed and accuracy of their forecasts.

What are the two components of restaurant forecasting?

The two primary components of restaurant forecasting are sales forecasting and labor forecasting. Sales forecasting aims to predict the revenue from future business, while labor forecasting determines the staffing needed to service that future demand. Remember that these two components are interrelated and can directly influence each other, as staffing shortages can lead to a decrease in table turnover and potentially lost sales.

What are the six steps of forecasting?

The six steps of restaurant forecasting are:

  1. Calculate your restaurant’s daily capacity.
  2. Use historical sales data to produce sales forecasts.
  3. Project inventory needs based on sales forecasts.
  4. Factor in seasonality.
  5. Staff your restaurant according to sales projections.
  6. Finalize your revenue and cost model for profit expectations.