Table of Contents
- 0.1 What is F&B forecasting?
- 0.2 Why is F&B forecasting important?
- 0.3 Optimizing inventory management
- 0.4 Getting staff scheduling just right
- 0.5 Finding the right revenue strategy
- 0.6 What are the challenges of F&B forecasting?
- 0.7 People rarely book restaurant reservations in advance
- 0.8 There are always variables you can’t predict
- 1 How to conduct F&B forecasting
NB: This is an article written By : The InTouch Team
F&B forecasting can be an indispensable tool for heads of F&B and F&B managers. It keeps you looking to the future and focused on results.
Most hotels don’t do a detailed F&B forecasting budget simply because it can appear daunting and they may believe they don’t have the experience to properly execute it. Many heads of F&B and F&B managers who do opt for F&B forecasting often settle for less detailed forecasting, creating budgets for a month or a season instead of predicting revenue down to the day or meal period.
However, when it’s done right, F&B forecasting can be a fantastic tool for streamlining revenue, reducing costs, and maximizing profitability.
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Let’s dive a bit deeper.
What is F&B forecasting?
Food & Beverage forecasting in the hotel industry is the process of predicting the revenue of a restaurant or bar for a specific future period such as for a day, a week, or a month. |
Why is F&B forecasting important?
F&B forecasting can be an indispensable tool for heads of F&B and F&B managers. It keeps you looking to the future and focused on results. You can plan ahead and adjust accordingly. At the end of the day, it allows your restaurants and bars to grow their revenue and stay agile.
Here are just three benefits of F&B forecasting:
- Optimizing inventory management
- Getting staff scheduling just right
- Finding the right revenue strategy
Optimizing inventory management
Inventory management is the process of ordering ingredients and tracking them as they come in and out of your restaurant. Miscalculating product orders for your restaurant will ultimately eat into your bottom line. Ordering too much of a perishable item can lead to wasted produce and meat. If you order too little, shortages can cause unsatisfied customers and lost revenue.
With accurate forecasting, you can determine how much of a product you need, before you put the order in. While there will always be some level of unpredictability in the F&B sphere, keeping more accurate inventory will help streamline your budget, waste less, and earn more.
Getting staff scheduling just right
Predicting the staff you’ll need weeks in advance is always a challenge — especially when you’re just starting out. But understanding weekly, monthly, and seasonal trends can help you avoid over or understaffing. Keeping an accurate staff count will increase sales and reduce lost revenue.
For example, if your historical data shows that, for the past five Friday’s, your main restaurant’s patronage has increased 10% over the previous Friday, you can schedule an additional server this coming Friday — assuming this trend will continue.
Finding the right revenue strategy
Revenue strategy is the process of creating a plan to maximize hotel income and sales potential. F&B forecasting can help you allocate resources effectively and plan for potential growth. Nailing down accurate predictions of the inventory and staff you’ll need on specific dates can help you streamline your F&B revenue pipelines.
By looking ahead you can build flexibility into your supply chains, set optimal pricing, and build a strategy with the agility you need to grow and keep growing.
What are the challenges of F&B forecasting?
While F&B forecasting can do wonders for cutting costs and building a strategy, it doesn’t come without its challenges. But if you utilize your resources effectively, you can overcome them rather easily.
Here are two common challenges that F&B departments face in forecasting:
- People rarely book restaurant reservations in advance
- There are always variables you can’t predict
Let’s go into each one a bit more.
People rarely book restaurant reservations in advance
One thing to keep in mind is that for room forecasting, people tend to book in advance and say they’re coming to stay at the hotel before they get there. They generally book days, weeks, or even months in advance — making predicting room occupancy much easier.
For hotel restaurants, advanced booking is generally rare. Because people are less likely to call ahead and make a reservation, it’s harder to know what the demand is and hard to forecast what the ongoing demand is. So you have to look deeper into your data and use historical information to set a foundation for your predictions.
There are always variables you can’t predict
While hospitality forecasting can be incredibly useful, there will always be unforeseen events and last-minute changes that affect demand. This challenge is especially true for F&B forecasting.
From weather influencing the level of foot traffic near your property to local events luring guests away from your hotel, there will always be factors that are hard to predict and easy to overlook.
This challenge is especially compounded by the simple fact that customers have especially low investments in choosing a place to eat or drink. There are no major downsides to canceling reservations or changing plans last minute.
Luckily, F&B forecasting technology has advanced by leaps and bounds in recent years. Hotel BI software can help you centralize your siloed data and provide you with the most accurate and relevant information for forecasting.
How to conduct F&B forecasting
F&B forecasting may seem challenging at first approach, but once you know where to look for your data and how to take a balanced perspective to your forecasting it will quickly become a valuable tool in your F&B toolkit. There are four key sources of information you should use when F&B forecasting.
- Historical Trends
- Room Forecasting
- Segmentation Analysis
- F&B Managers
We’ll dive into each one and explore how to take advantage of the different benefits of each.
Historical Trends
Your first step in F&B forecasting should be to review the historical performance data of your bar or restaurant. As a starting point, look at historical data for one week, one month, and one year prior to the date you’re forecasting.
There are four KPIs you can use when looking at historical data:
- REVPASH: Revenue per Available Seat Hour
- Seat Occupancy: The total number of seats/number of seats filled
- Average Check: The total revenue/number of covers in the restaurant
- Revenue by Area: Total revenue/square meter or square foot of the restaurant
Breaking your analysis down by hour and meal period will help you gain a comprehensive view of your restaurant’s historical performance. You can determine which restaurants and bars perform best in which meal periods and allocate your resources most accordingly to optimize your revenue.
Room Forecasting
If you’ve decided to expand your revenue forecasting to F&B, you’ve most likely already established a tried and true system for room forecasting. Take a look at your room projections for a given day or month.
Some good questions to ask when referencing room data for F&B forecasting are: How many rooms have been booked over the time period you’re forecasting? How many people will be staying in your hotel? How many families with children do you expect to be staying?
The occupancy of your hotel will ultimately influence the occupancy of your bar or restaurant. By answering these questions, you can determine the base level.
Segmentation Analysis
Just like in Room forecasting, there are three main guest segments that can help you predict F&B spending based on occupancy.
- Business Guests tend to spend the most money at hotel bars and restaurants.
- Leisure Guests spend some money but not as much as business.
- Groups rarely spend any money at the hotel. They most often have catering organized or will eat elsewhere so you can’t count on them spending any money.
Nationality
To take your segmentation analysis a step further and forecast F&B sales more accurately, you can break down guests by national origin.
In some areas of the world, the market mix, or the type of traveler, is important. However, in other areas of the world, their nationality is important. For example, in the Middle East, most guests are international as opposed to local.
Country of origin is important here because nationalities may eat different food, drink more on average than others, or simply not drink at all. Hotels can create different projections based on how different nationalities spend and where their guests are coming from.
Tip: To ensure accurate nationality data, work with your staff to prioritize marking guest nationalities in the POS at booking.
F&B Managers
F&B managers are perhaps your most valuable asset in forecasting. Not only are they most in tune with your monthly and seasonal trends, but they can help you identify local events that may affect your revenue.
For example, they’ll know if there’s a seasonal market or event happening near the property that will increase local foot traffic and boost F&B sales. Also, your F&B managers will know local weather predictions and understand how different weather conditions affect their bars and restaurants. This can be a valuable perspective when creating accurate F&B forecasts.
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