As an uneven economic recovery continues, there are huge opportunities for profits and efficiencies that restaurants can tap into to optimize their planning decisions. With the restaurant sector already facing ongoing challenges like staffing shortages and supply chain issues, it is absolutely vital that each part of the forecasting process is meticulous and accurate to ensure that the business is running as smoothly as possible.
Yet the reality, specifically for larger businesses managing stores across multiple cities, is that there is no universal forecasting roadmap for the restaurant industry. Corporations with hundreds and perhaps thousands of franchises and dine-in locations will need to take into account the certain differentiators per location that will impact demand. Since restaurants cannot rely on historical data alone to predict demand accurately, it’s critical that businesses use smart, constantly verified data to ensure that their forecasts are as accurate as possible.
Restaurant forecasting must be treated uniquely for each location, and there are a number factors a business must consider when making those decisions. Here are a couple of tips and tactics restaurants can implement for more granular and accurate forecasting.
- Understand that each restaurant will have different demand drivers
There is a certain amount of accountability and intention that accompanies restaurant forecasting, specifically for larger corporations that have locations nationwide. It’s less about looking at the business as a whole, but rather thinking about it as an ecosystem made of different parts that require different care.
For example, we all know a restaurant that is located in a densely populated, high traffic community will not need the same amount of food or staff as one that is located in a smaller community that generates less business. But a frequently underestimated demand factor is stores that are near event venues or attractions, such as music festivals, expos and sporting events; they need to factor in the increase in the amount of customers in that area at a certain time. Having access to verified event tracking data will allow you to anticipate that spike in demand and prepare for it ahead of time. This means that not only will you be able to effectively capitalize on the increased foot traffic, but also ensure you’re delivering the dining experience customers have come to expect from your restaurant by having a fully stocked and well-staffed kitchen. Similarly, understanding longer-lasting events such as school holidays, college sessions and even severe weather’s impact enables you to scale your staffing requirements up or down based on their impact.
Understanding what drives demand up or down in each unique location is the key to unlocking the most concrete predictions and providing your restaurant with the resources it needs to thrive. Once you understand demand beyond the state and city level to location level, you unlock new doors for each location to increase profits and avoid revenue loss business-wide. Whether it be surrounding businesses, events or other relevant demand indicators, being able to identify those drivers will lead to better demand forecasting and planning capabilities.
- Do not underestimate the power of consistency
It’s quite simple: Consumers expect to have an exceptional dining experience each time they visit their favorite restaurant, bar none. One of the greatest powers a restaurant brand has is its ability to be consistent and reliable regardless of location. And while there are a number of uncontrollable factors that could negatively affect someone's dining experience, restaurants can fine-tune their planning processes to minimize any hiccups or mishaps that could occur as a result of poor forecasting. If a customer is dissatisfied due to poor service, slow fulfilment of their order, a shortage of their favorite food item or longer-than-normal service times due to staffing issues, your business runs the risk of losing loyal customers. In other words, consistency is key. It takes several good experiences to create a repeat customer, but only one bad experience to lose them forever.
Although staffing and food shortage issues are just two challenges that a restaurant could face as a result of inaccurate forecasting, the entire business can suffer tremendously if planning decisions are not informed by forecast-grade data and robust analytics. Every day is different in the restaurant industry, so equipping your business with better forecasts and plans to help you understand what drives demand at your restaurant is key for delivering a consistently great dining experience and keeping the trust of your customers.
- Create a strategy
It’s clear that equipping your restaurant with data and analytics enables more profitable planning, so creating a data-driven strategy is the next step to improving your forecasting processes. External data solutions can increase forecasting and planning capabilities business-wide, by understanding what drives demand so you can be prepared with updated staffing, inventory and marketing strategies. When considering what kind of data to plug into your systems, it’s important to think comprehensively. You might not think of a school closure as an event that would impact restaurant demand, but if you’re a coffee shop that experiences a morning rush of parents after they drop their kids off at school on weekdays, that school closure absolutely impacts demand, and you have to factor it into your forecasting.
Once you have access to these kinds of data-driven insights, they will feed into every element of your demand forecasting and planning. Incorporating an external data solution should seamlessly integrate across existing business infrastructures, so the initial technical lift remains minimal while the reward is extensive.
The bottom line is this: as the nature of our world continues to change day to day, having the ability to predict certain spikes in demand and measure what drives demand is no longer something restaurants can get by without. These kinds of data-driven solutions will only continue to increase industry wide, so empower your business with the technologies it needs to profit today and remain competitive for years to come.
AUTHOR BIO
Campbell Brown is founder and CEO of PredictHQ, the demand intelligence company that empowers global organizations to anticipate changes in demand for their products and services. PredictHQ's demand intelligence API aggregates events from hundreds of sources and verifies, enriches, and ranks them by predicted impact so companies can proactively discover catalysts that will impact demand. With PredictHQ, businesses gain a leg up on the competition and remain confident in their ability to meet customers' ever-changing needs.