Many businesses will under-forecast in order to keep labour costs low, and whilst coming in under your wage budget may seem like a positive, this ultimately leads to poor customer service and missed sales opportunities. With a large amount of business being driven by word of mouth and repeat custom, providing poor customer service is not sustainable. In contrast, over-forecasting in order to protect service levels will result in too many staff members being scheduled and excess spend on labour. The aim therefore, should not be for operators to beat their forecast, but rather get as close to it as possible.
The most evident benefit arising from an accurate sales forecast is more efficient deployment of labour. Mapping labour deployment against sales forecasts will ensure operators always have enough staff on shift to deal with demand, but not too many to lead to staff standing idle. This will maintain a high standard of customer service, as staff will have time to provide every customer with the attention they deserve, while still working briskly.
Another benefit of producing a precise sales forecast is the positive impact on product ordering and supply. Having a detailed forecast of sales throughout the day and week will help managers avoid over or under ordering stock. Over ordering can have a significant negative impact on profit margins, with excess stock going to wastage. Similarly, under ordering can have a negative impact – if a venue runs out of stock and cannot provide everything offered on the menu, customer experience will be impacted. Forecasting sales accurately will provide operators with a good guide on the required level of products for the week.
When it comes to forecasting, the devil is in the details. Accuracy can be increased by forecasting on a daily and hourly basis, as well as splitting your forecast into different revenue streams. For example, you may predict the same amount of overall sales on a Saturday and Sunday, however sales on a Saturday will typically be predominantly wet, meaning more bar staff are required in the evening. Contrastingly, for many operators, Sunday lunch service sees Sunday’s food sales the week’s highest, increasing daytime demand for kitchen staff. Operators who split their forecast by revenue stream will see the accuracy of their labour deployment increase.
Annual and one-off events can have a huge impact upon sales. The Christmas period is a prime example of this, with operators experiencing a large spike in sales caused by Christmas dinners, parties, and other bookings. However, during the months following Christmas, we would expect to see a drop in sales, particularly with the increasingly popular ‘Dry January’ trend making customers less likely to buy alcohol, highlighting the importance of forecasting by revenue stream.
One-off events should also be considered. With a suitable promotion strategy in place, venues can dramatically boost sales by showing sporting events such as the Autumn International rugby matches or Pay-Per-View boxing bouts. Research carried out by MatchPint and Vianet found that on average an additional 22 pints of beer were sold per hour during the Mayweather vs McGregor boxing match in August. Shrewd operators will react to this increase in sales by ensuring they have ample staff on shift at these times to keep up with the increased demand. Ordering may also need to be adjusted. With beer sales likely to increase during sporting events, operators will need to review their drinks forecasts and ensure they are suitably stocked up.
Hospitality businesses now face more competition from the home than ever, as a continually increasing level of entertainment is available to the public from the comfort of their living rooms. Use of delivery services is also on the rise, and with Deliveroo reporting a 611% revenue increase in 2016, there is an increasing tendency for customers to stay in on Saturday, and other, nights. In forecasting terms, it is important to factor in specific television events such as ‘Strictly Come Dancing’ and ‘The X Factor’. With roughly nine million people tuning in to Strictly and around five million watching The X Factor, Saturday night sales may take a hit during the running periods of these shows.
Sometimes we need to look back before we can move forward, and while reviewing historical data may seem like a time-consuming exercise for management staff, it is a vital stage of forecasting and should not be overlooked. Fortunately, technological advances over recent years have led to analysis of data at the click of a button.
Assessing last year’s sales figures will provide information on how a business fared during the same week last year. This data is particularly useful when used in conjunction with your events calendar as you will be able to quantify the impact of an annual occurrence such as Freshers’ week in university towns.
Another key factor to consider is forecasts from previous weeks. By comparing previous forecasts to actual sales, managers will be able to see how accurately they have been forecasting, and make adjustments to their future forecasts accordingly.
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It is usually important for operators to factor in the weather, as this will have a direct impact upon levels of sales for many sites. This can be considered on a seasonal and daily level – shorter winter evenings will cause a drop in sales, whereas an unexpected hot weekend could cause a sudden spike. S4Labour has a direct link to Met Office weather forecasts geo-located by site, offering users accurate and up-to-date information on which to base forecasts.
S4Labour’s intelligent system recommends the optimum staffing levels based on users’ sales forecasts. This takes the guesswork out of labour allocation and ensures accurate forecasting is translated into success. Click here to find out more about the impact S4Labour could have on your business.