Restaurant Forecasting and Food Cost Control Process

Restaurant Forecasting

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Forecasting is of utmost importance to restaurants. It is good practice for restaurants to analyze their current situations, in order to figure out how the restaurants will behave in the future. Usually, restaurants will formula a budget which projects sales figures and costs for a year on a weekly and monthly basis. Restaurant forecasting can also be used to estimate the number of employees required.

In terms of forecasting restaurant sales, there are two useful indicators helping restaurants estimate sales more accurately. They are guests counts and average guests guest check.

1. Guest Counts

Guest counts (or covers) refers to the number of guests a restaurant serve over a given period of time, which can be a week, a month or a year. If we want to estimate the number of guests in a year, there is practice which divides a year into 13 accounting periods, including 12 28-day and 1 29-day periods. As some months have fewer days than others (e.g. there are only 28 or 29 days in February), it is more suitable to adopt this practice for fair comparison between different periods of time. When we do restaurant forecasting, we need to take meal periods, day of work and special holidays into consideration. For meal periods, it can be divided into breakfast, lunch, tea, happy hour, dinner and supper. Different restaurants may have different peak hours. For day of work, most revenues are earned from Friday to Sunday. For special holidays like Christmas, the revenue is likely to be higher too! But the situation can vary in different restaurant types.

[Source: http://servicethatsells.com/blog/restaurant-management-guest-loyalty/]

2. Average Guest Check (= Food and Beverage Sales / Number of Covers)

Average guest check is equal to total sales divided by number of guests. In terms of forecasting, restaurants will keep record of average guest check for each meal. And then, the number of guests forecast will be multiplied by the average guest check to find out the total forecast sales. As a result, restaurants can compare the actual sales with the forecast one.

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Food Cost Control Process

[Source: Introduction to Hospitality Management by John R. Walker]

Food cost control is a continuous process. As food cost is one of the major costs incurred in restaurants, we should have a systematic approach to monitor the food cost closely to maintain the profit margin.

1. Menu Planning

Restaurants have to design a menu to attract customers. It is noteworthy that restaurants should pay attention to what ingredients have to be bought for preparing the dishes. They should also consider will the ingredients be too expensive which makes the price high.

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2. Forecasting

After planning the menu, restaurants have to consider the quality and quantity of ingredients required to serve the diners. For predicted more popular items, they may need to buy more corresponding ingredients, vice versa. Restaurants also need to determine the inventory level, so the amount of purchase will be more than just enough.

[Source: http://supplychains.ru/2017/09/21/forecasting-soft/]

3. Purchasing

After determining product specifications, restaurants may send a purchase order to order a specific quantity of a good at a specific price. They may compare the quoted prices from different vendors, and choose the one which suits the restaurants’ needs.

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4. Receiving

Usually, restaurants will specify the day and time for delivery when making purchase order. When the restaurants receive the ingredients or product, they have to check the details like price, quantity and quality. They may check whether the ingredients are fresh or not to ensure the cooked food is safe to eat.

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5. Storing and Issuing

Perishable items can be directly sent to the kitchen while non-perishable items can be sent to storage. No inventory should be stored in the production area. Also, the items should be used according to the first in first out (FIFO) method to avoid wastage.

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6. Production, Service and Sales

The kitchen will use the purchased items to prepare the food. As a result, the inventory keeps decreasing. And then the food will be served to the diners and restaurants will charge them.

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7. Food Cost Analysis

Restaurants will figure out the food cost percentage on a timely basis, to see if it is too high or not. Afterwards they may think of redesigning the menu which incurs lower food cost.

[Source: http://tis-gmbh.de/en/telematics-products-and-services/software-for-logistics/tislog-logistics-software-overview/]

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Learning Reflection

I learnt that restaurants have to do much preparation work and forecasting before actually serving their diners. For forecasting, it is so important to restaurants because they can estimate how many ingredients they have to order and how many employees they should have in a specific period of time. Good forecasting can also lead to good cost control. If restaurants order too much, it will lead to wastage. If the restaurants order too little, it may lose the opportunity to make profit. So having accurate forecasting can help restaurants a lot in terms of cost control and profit making.

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Reference

[1] Walker, J. (2017). Introduction to hospitality management (Fifth ed.). Boston: Pearson.

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