Forecasting in the Restaurant Industry

With the increasing level of competition in most industries, there is need for companies to prepare for uncertainties that may adversely affect their performance. The contemporary business environment requires businesses to examine the factors that may affect their production, sales, and revenue. Some of the key factors considered are demand, production volume, and product prices.

Variables

 Claveria, Monte & Torra (2015) argue that forecasting enables restaurants to manage their work force, design their operation space, and schedule their activities. In order to carry out forecasting in the restaurant industry, the following variables will be considered;

Demand

            Customer demand for the foodstuffs, other products, and services determines the level of products and sales for the given financial period. Forecasting of the level of demand enables the management adjust their production level and inventories (Lasek, Cercone & Saunders, 2016).

Price Level

            The changes in market price for the various products and services influences the production level and revenues collected from the sales. Forecasting the changes in price help the restaurants to set their prices to a level that can enable them compete favorably within the industry.

Sales Volume

            The sales volume at any given time is of much interest to companies. Restaurants would want to know the customer traffic in a particular day, month, quarter, or season in order to lay down the necessary measures needed in maintaining high quality and reasonable production levels.

Taxes and other regulatory requirements

Restaurants would want to know the changes in taxes imposed on their products or any other requirements. Since such actions directly impact on production cost and prices, firms must closely monitor their trends.

Long-term vs. Short-term Forecasting

Some of the variables that are vital for short-term forecasting include demand and sales volume. Since customer traffic can change within a short duration of time such as one day, there is need to closely monitor changes in demand and sales volume within a short duration (Claveria, Monte & Torra, 2015). Other factors like change in government policies are long term. Moreover, depending on the price elasticity of demand, customers will take time before adjusting to the changes in price.

Conclusion

Like any other business firms, restaurants have to gather information in order get vital market insights necessary for key decision making and planning. Variables such as price changes, demand, sales volume, and tax level are essential for forecasting within the restaurant industry.

References

Claveria, O., Monte, E., & Torra, S. (2015). A new forecasting approach for the hospitality industry. International Journal of Contemporary Hospitality Management, 27(7), 1520-1538.

Lasek, A., Cercone, N., & Saunders, J. (2016). Restaurant sales and customer demand forecasting: literature survey and categorization of methods. In Smart City 360° (pp. 479-491). Springer, Cham.