Gearing Up and Gearing Down Part 2 – How to forecast sales and identify your seasons

By David Scott Peters

Last week, in Gearing Up and Gearing Down Part 1, we talked about the importance of planning ahead and “gearing up” for your restaurant’s season. This week we will discuss the concept of “gearing down” after your business rush is complete and planning for the next seasonal change.

Gearing down
If you have a large swing in customers – due to seasonal changes – you understand there’s a significant thing that happens every year. That’s the time when your summer or winter visitors head home and the city feels like a ghost town. Translation… sales are going to drop!

This is the time you change your staffing levels by reducing hours and let your seasonal help go. With this adjustment, you are gearing down and accommodating for the decrease in sales dollars.

What about the future?
In some areas there is an obvious seasonal change. But it isn’t that easy for every restaurant owner. Are you ready to learn how to forecast sales effectively and identify your seasons?

Let me walk you through it step-by-step. In doing so I will break it up into three distinct sections: History, Plans for the new year and Projecting sales.

History
The first thing to do is gather as much pertinent data from your records as you can, especially from your last 12 months in operation. This data should include the following five reports:

1. Sales history by day for each month by category like food, liquor, merchandise, gaming or vending sales.
2. Customer counts and average ticket.
3. Sales log with: sales by period, total daily sales, customer counts or covers sold by meal period, weather, events, comments, item-by-item sales mix reports by sales category, catering events and sales

Plans for the new year
The second thing you must do is take the time to put into writing what you are going to do differently next year that will impact your business, whether positively or negatively. Then you should ask yourself the following questions:

1. Will I be changing any menu items?
2. Will I be raising my prices for food or liquor?
3. Will I be implementing any new marketing campaigns?
4. Will I be adding or removing any seating – new patio, etc.?
5. What type of revenue do I think we will do in banquets and catering events?
6. What outside factors am I expecting that can affect my sales – construction to the road, etc.?

Projecting Sales
Now finally you get to use the data you have collected on your past history and your future plans to project sales for next year. Here are the steps to follow:

1. Edit item-by-item sales mix reports with new prices and menu items for each month.
2. See what the percentage increase is for each month.
3. Add 100 points to percentage increase and multiply each day’s sales for each category.
4. Using your past customer counts, recalculate what your average ticket is now with new prices and mix.
5. SWAG (Scientific Wild-Ass Guess) your estimated increase customer counts due to new marketing plans.
6. Multiply additional customer counts by average ticket to project additional sales.
7. Adjust numbers based on catering and events from historical date as well as projected data.
8. Finally, put into writing the assumptions you used to create next year’s sales forecast so you will be able to make any needed adjustments or wholesale changes to your forecast as the year goes on.

This process not only requires quantitative historical data and projected data, it requires you use your intuitive or qualitative skills to interpret the numbers and create your projected figures.

Putting in the time and effort required to evaluate your sales forecasts and budget puts you in position to be a proactive restaurant owner and will ultimately ensure you make money, not waste it.

David Scott Peters is a restaurant expert, speaker and founder of TheRestaurantExpert.com. He specializes in teaching independent restaurant owners how to use systems for increased sales and increased profits. He is the nationally acclaimed restaurant coach whose unique “SMART Systems” approach to boosting profits has earned him the title of, “The man who can walk into any restaurant in America and find $10,000 in undiscovered cash before he hits the back door – Guaranteed!” Learn more tips, tricks and secrets in David’s free weekly e-newsletter, “Instant Action Systems.” Simply sign up to receive the e-newsletter at TheRestaurantExpert.com.