The Real Purpose of Forecasting
Restaurant operators know an uncomfortable truth: they need to forecast sales, and those forecasts will always be wrong. Not just a little wrong. Sometimes 5 percent off. Sometimes 10 percent off. In the face of unexpected events, even 20 or 30 percent off is possible.
And they still need to forecast anyway.
Forecasting is not about predicting the future with perfect accuracy. It is about making better decisions with the information available. Those better decisions are what separate profitable restaurants from struggling ones.
When restaurant owners hear "forecasting," they often think about revenue targets, lenders, or investor decks. In practice, forecasting is one of the most practical tools available for day-to-day operations.
Every week, operators make decisions about:
- How much product to order
- How many team members to schedule
- What pars should look like across categories and locations
Those decisions can be based on gut feeling or "what we ordered last week," or they can be driven by actual data.
Without forecasting, most of these calls are educated guesses at best. That usually leads to one of two outcomes:
- Being understaffed and under-stocked, which creates poor guest experiences and missed revenue
- Being overstaffed and over-stocked, which burns cash on unnecessary labor and product that never gets sold
Both outcomes erode margins. Both are largely avoidable when operators use structured forecasting.
How Forecasting Actually Helps a Restaurant
1. Labor Management
Labor is one of the largest line items for most restaurants, but it is also one of the most controllable.
Forecasting enables operators to:
- Schedule the right number of people for the volume they expect
- Staff up for projected busy periods
- Intentionally trim schedules when slower weeks are on the horizon
This is not about cutting corners or squeezing staff. It is about aligning labor with demand. Teams prefer to work when it is busy, because that is when they see more tips, more energy, and more opportunity. No one enjoys standing around on a dead shift.
2. Ordering and Inventory
Food and beverage waste quietly crushes profitability. So does running out of best-sellers on a Saturday night.
Sales forecasting, combined with a clear understanding of menu mix, allows operators to:
- Estimate how much of each item is likely to sell
- Adjust pars to match expected volume
- Reduce spoilage and dead stock
- Protect against stock-outs on high-velocity items
This becomes especially important for perishable products. If next week is expected to be slower because of local events or weather, orders for fresh items can be trimmed. When the busy season approaches, pars can be increased intentionally instead of reactively.
3. Cash Flow Planning
Restaurants often operate on tight margins. Having a clear view of expected revenue is critical for:
- Planning upcoming expenses
- Managing cash reserves
- Preparing for payroll and vendor payments
- Making confident decisions about promotions, capital improvements, or new hires
Good forecasting allows operators to see the slow periods coming in advance and build up reserves during busy stretches. It replaces last-minute scrambling with intentional planning.
A Practical Framework for Forecasting
For an existing restaurant with historical data, a simple but powerful framework uses three key reference points:
Last year indicates seasonal patterns. Was this period historically busy or slow? What did revenue look like? This becomes the baseline.
Last month shows recent momentum. Are sales trending up or down? Did a new menu, event series, or promotion shift behavior? This refines the baseline.
Last week captures immediate reality. Were there unusual events, weather anomalies, or local factors that made last week odd? This fine-tunes the short-term view.
By combining these three time horizons with known upcoming events, holidays, and likely weather, operators can create an informed, defensible forecast. It will not be perfect, but it will be significantly better than guessing.
The Mindset Shift
The hardest part of forecasting is not the math. It is accepting that forecasts will be wrong and doing the work anyway.
Many operators avoid forecasting because they know it will not be perfect. But perfection is not the target. Improvement is. Decisions grounded in data and projections almost always outperform decisions made from habit or guesswork, even when the forecast is off.
Consider an example: if a restaurant forecasts $100,000 in sales next month and actually lands at $95,000, that operation is still in a much stronger position than if it had not forecasted at all. Labor scheduling will be close. Purchasing will be roughly aligned. Cash flow will be planned around a reasonable expectation.
Another overlooked advantage: teams get better at forecasting over time. With each iteration, operators:
- Learn how weather affects different dayparts
- Recognize which local events drive traffic and which pull guests away
- See how holidays and sports calendars shift patterns
- Understand how promotions and menu changes impact volume
The Bottom Line
Forecasting is not optional for profitable restaurant operations. It is a foundational discipline for:
- Managing labor efficiently
- Controlling inventory intelligently
- Planning cash flow with confidence
It takes time and it will never be perfect. The alternative, though, is to make blind decisions and hope the numbers work out. That is not a strategy. That is a gamble.
Most modern POS systems already collect the necessary data. The missing piece is a consistent, understandable process for turning that data into actionable forecasts.
A simple starting point:
1. Look at last year's sales for the upcoming week.
2. Adjust for obvious changes: growth, new concepts, promotions, market shifts.
3. Layer in what happened last month and last week.
4. Adjust for upcoming events and weather.
5. Make a clear projection and use it to drive labor scheduling and ordering.
6. Track the result and compare it to the forecast.
Repeated week after week, this evolves from a rough estimate into a robust system. Labor becomes tighter. Waste shrinks. Cash flow becomes more predictable. Profitability improves.
That is what forecasting really does. It will never tell operators exactly what will happen, but it will help them prepare for what is most likely. In this business, preparation is the edge.