Restaurant demand forecasting

Restaurant demand forecasting is all about looking at the numbers, spotting patterns, and making smart decisions. For both new and existing small businesses and enterprises, this process can help you avoid waste, keep things running smoothly, and future-proof your business.

With the right demand forecasting for restaurants, everything from inventory management to staffing becomes more efficient and easier to handle. Plus, forecasting hospitality helps you get ready for major events and seasonal spikes.

In this guide we’ll cover:

• What is demand forecasting?
• Why demand forecasting is important
• Improving inventory forecasting
• Key steps in restaurant demand forecasting
• Defining your forecasting period
• Considering seasonality, events, and holidays
• Analysing historical data
• Adjusting for external factors
• Selecting forecasting tools
• How Dojo can help
• FAQs

The breakdown: What is demand forecasting?

Demand forecasting is the practice of predicting how much of a product or service customers will want at a future time. By using past data, trends, and market conditions, businesses can estimate demand and make informed decisions about stock, staffing, and resources. It’s a key process that helps restaurants plan ahead, avoid waste, and meet customer expectations – especially during busy periods like holidays or seasonal spikes.

Think of it like knowing exactly how many pizzas to prep before a game day rush – it’s all about balancing supply with expected demand.

Future-proofing: Why restaurant demand forecasting is important

Restaurant demand forecasting helps you prepare for what’s ahead by:

• ensuring you have the right stock and staff in place
• reducing waste and cutting unnecessary costs
• keeping your operations running smoothly, even during busy periods
• helping you manage finances with clearer, more accurate projections.

Benefits for both new and existing restaurants

For new restaurants, forecasting hospitality helps establish financial projections for restaurant businesses to help you start with a solid plan. Existing restaurants benefit from essentially refining their restaurant industry forecast by using past data to adjust for changing market conditions.

Smarter strategies: Improving inventory forecasting

Effective restaurant demand forecasting simplifies inventory management, helping you avoid over-ordering and running low on key items. No more guessing how much stock you'll need – everything’s planned with precision, while keeping your costs in check.

Demand planning and forecasting help you match stock levels to real customer demand, keeping you ready for both busy and slow periods. By factoring in the 2024 restaurant industry forecast, you can make smarter decisions about inventory and staffing, cutting waste and boosting your cash flow forecast.

The blueprint: Key steps in restaurant demand forecasting

Defining your forecasting period

Start by choosing the timeframe you want to forecast using demand planning tools. Every restaurant is different, so your forecasting period should fit your unique needs. Will you plan day by day, week by week, or even month by month? Each timeframe serves a different purpose, so it’s important to consider what your restaurant needs most.

• Daily forecasting helps with immediate decisions like staffing and inventory management for that specific day. It’s useful for quick adjustments based on last-minute changes, such as weather or events.
• Weekly forecasting allows you to plan for the upcoming days, helping you manage stock levels and shifts more efficiently. Using a restaurant forecast template or restaurant budgeting and forecasting Excel spreadsheet can simplify this process.
• Monthly forecasting gives you a big-picture view, helping with long-term restaurant sales forecasting, budgeting, and overall strategy. This is especially useful for financial projections for restaurants – particularly those that experience seasonal fluctuations or major events.

Considering seasonality, events, and holidays

Account for seasonality, local events and holidays – this will also impact your cash flow forecast for a restaurant, as it affects your income and expenses. If your full-service restaurant gets busier in the summer or during Christmas, factor that into your restaurant sales forecasting. 

For example, restaurants near tourist attractions may see a 40% sales increase during summer, while a full-service restaurant with outdoor seating might experience a spike in warmer months.

Tailoring your forecasts to these peak times helps you stay prepared – whether that means adjusting your inventory forecasting, increasing staff, or boosting stock for seasonal menu items. Incorporating these factors into your demand planning and forecasting also helps with restaurant projections and improves cash flow forecasts for busy periods.

Analysing historical data

Looking at past sales data is a key part of accurate restaurant demand forecasting. By identifying patterns and trends from previous periods, you can improve your restaurant sales forecasting and make better decisions about inventory management and staffing – finding the right demand planning tools is a must (more on this later).

Look at weekly sales figures, customer foot traffic trends, and past seasonal spikes. For instance, if you noticed a 25% increase in sales during last year’s holiday season, it’s a good indicator of what you might expect again.

Historical data also helps you spot seasonal shifts, busy periods, and recurring trends. This information is important for creating financial projections for restaurants. With these insights, you can adjust your restaurant projections and ensure your business is ready for what’s ahead.

Adjusting for external factors

External factors like market shifts, changing customer behaviour, and local trends impact demand planning and forecasting. Taking account of weather, holidays, and events in your demand planning and forecasting helps you stay flexible and prepared for fluctuations.

External factors like rising food costs, supply chain delays, and even social media trends can affect demand unpredictably. For example, a viral TikTok food trend might suddenly drive up orders for specific dishes.

Your restaurant projections will become more accurate and reliable, allowing you to better manage resources.

Selecting forecasting tools

Using the right tools can make restaurant demand forecasting much easier. For a straightforward approach, restaurant budgeting and forecasting spreadsheet templates can help you build forecasts based on historical data. For more advanced accuracy, consider restaurant forecasting software that uses AI to factor in external variables like weather and events.

Popular options include MarketMan for inventory management and Planday for staffing forecasts. For more advanced predictions, tools like Forecast Pro and CrunchTime use AI to factor in variables like weather and local events.

These tools streamline your cash flow forecast for restaurants, making it easier to adjust your restaurant sales forecast as conditions change.

When choosing demand planning tools, keep in mind:

• how well they fit with your current setup
• whether they handle external factors like weather
• how easy they are to use update for regular demand planning.

The right tool can take the guesswork out of your forecasting, letting you focus on running your restaurant smoothly.