The Problem with Gut Instinct Sales Forecasting

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By HotSchedules - 04/01/2018

Restaurant managers frequently trust their guts to staff and order product. Restaurants are hectic and managing one requires a person to juggle several tasks at once. Thats often why managers staff workers just in case or overorder to be safe to ensure the restaurant has what it needs to operate.


Ten years ago, when manager turnover was lower and digital ordering was just starting to trend, gut instinct may have been enough.  Unfortunately, the complex operating environment and rise in manager turnover makes it difficult to accurately generate forecasts from gut instincts alone.

Gut instinct forecasting doesnt consider factors that can impact sales - making it difficult to schedule, order or predict a stores overall performance and profitability.

Intelligent forecasting is the most important change you can make in your restaurant right now, and heres why:

Outliers Are Hard to Predict

Weather and events are two variables than can greatly impact restaurant sales. Weather changes from week-to-week and year-to-year, and factors like local sporting events can affect one-off traffic in your stores.


Having an idea of how your restaurant performs when theres a home game is much different than knowing exactly what your sales were during the last home game, said Dylan Wattecamps, implementation specialist at HotSchedules. Managers can recognize common outliers more readily when they have a regular forecast in place. Different events might have different impacts and they are difficult to track across months or years.

Customers Want Delivery Options

The on-demand economy has resulted in a larger of consumers wanting delivery and to-go options for their meals. And that requires a shift in thinking for restaurant managers, because they may need to adjust their staffing levels to accommodate delivery and takeout orders.


Consumers have expectations when it comes to how much time it should take to have something delivered, Wattecamps said. Knowing how demand from each revenue center within a restaurant is a key concern for operators today. They need additional staff in the front and back-of-house to scale for the growth in different revenue centers. Therefore, forecasting sales by revenue center is a best practice for every segment. Forecasting by revenue center is not just for quick service brands, said Wattecamps. Full-service, casual dining, and even fine-dining are all adapting their businesses with advanced forecasting and labor modeling to meet the demands of off-premise ordering.

Scheduling the Right People, in the Right Place, at the Right Time

Inefficient restaurant scheduling affect both customer experience and overall sales. A poor customer experience can cost you big bucks. According to Moz, four or more negative articles about your company in Google can cause you to lose upwards of 70% of potential new customers. Precise sales and labor projections are necessary to optimize labor costs and drive sales.


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, Wattecamps said.

Losing Institutional Knowledge

According to TDn2Ks 2017 Turnover Report, restaurant managers turnover at a rate of 38%. And when managers leave, operators need to find replacements and get them up to speed. But when the cost of inexperience and training are both too high, restaurants need intelligent forecasting solutions to help new managers achieve operational excellence.


Forecasting solutions that present managers with rationale for adjustments will help managers build trust in the forecast and decrease the learning curve, said Wattecamps

Comply with Labor Laws

Recent scheduling legislation has made predictability a necessity for many restaurant owners because in most cases, these laws require businesses to post employee schedules 14 days in advance - and any mistake can cost a business big time.


A lot can change in 14 days, said Wattecamps. An intelligent forecast automatically generates an optimal schedule by forecasting based off factors such as demand, events and weather patterns. Were using advanced algorithms in the background, so managers dont have to play data analyst. At the same time, above-store leaders confidence in the forecast and the accuracy of the schedule.


As the industry 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.
 

Owners need to arm managers with intelligent forecasting tools that learn from the ebb and flow of business while minimizing human error, added Wattecamps. Machine learning may seem like a far-fetched concept, but the advanced forecasting weve delivered through the Clarifi intelligent operating platform is showing how the restaurant industry can take an abstract concept like machine learning and turn it into better decisions that drive predictable schedules and predictable revenue.

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