How do I forecast sales for a new restaurant with no sales history or comparisons?
– Jensine Ferrier, College Student, Lindenhurst, Illinois
There are restaurateurs and restaurant business people who can look at a space, estimate the square footage, envision how many seats it will have, what sort of check average and how many turns will be needed to be profitable. I don’t have that kind of head.
Even if someone can spout off what they forecast to be monthly or annual sales, good forecasting is really a conservative extrapolation of the smallest unit. First, choose a manageable amount of time such as 30 minutes. Given the traffic or foot traffic, competition, and so on, how many guests do you think will come in during that time? And what do you think would be a reasonable check average, keeping in mind some guests may come in for a drink or dessert and others will go all out. Do this for three types of time periods—slow such as between traditional meal times, steady and slammed (such as Saturday nights or holidays depending on the operation). Then fill in those chunks into weeks and months, being conscious of seasonality, and you have a good start.
There are some other tricks to help you gauge whether your numbers are realistic:
- The sales of competitors.
- Rent as a percentage of total sales.
- Observing competitors and similar operations.
In all, forecasting is an educated guess. Once you start to earn revenue, revise your forecasts based on patterns and what you’re seeing on the ground.
More on forecasting here.