How to Determine the Projected Sales for Your Restaurant
Forecasting the projected sales of your restaurant will be an important step in getting your business off the ground. Even though you haven't yet opened the doors to your new food establishment, it will be up to you to figure out your projected first year sales. This will be helpful in several ways. It will help you get funding from your investors or the bank; it will help you determine how much staff you will need to hire; and it will help you determine how much inventory you should invest in.
But how can you create a sales forecast for something that doesn't exist yet? There are several ways of doing so, and in this article we'll review how you can make informed assumptions about projected sales for your restaurant.
How many customers can you seat?
First, you will need to know the number of tables and seats your restaurant will have and the number of customers that can be comfortably seated at any given time. Once you have this number, then you can work your way to a realistic assumption of how many of those seats will be filled at any particular meal.
You will also need to take into consideration how many times those tables can be turned over during a shift, and then calculate your totals accordingly. Whereas a casual dining establishment may see a turnover of three to four tables per shift, a fine dining establishment will probably only see one or two turnovers per shift. This can be further broken down into the types of meals: breakfast may have a higher turnover rate than lunch or dinner, and so on. You will then need to multiply the number of seats, times the turnover rate for each meal, to reach a grand total of how many customers can be seated at your establishment.
How many customers will you serve?
Estimating the amount of traffic you can expect will translate into how many customers you can expect to serve at each meal. This can be tricky, as with any new venture, how can you estimate the number of customers to expect even before you open your doors? This is where researching your location, your competition your target audience and market trends, will come into play. The number of hours your restaurant will be open each day, the number of days per week, and the number of weeks per year will also play a part of your information gathering.
This combination of information, taken in conjunction with your own seating accommodations - averaging the number of seats you have, multiplied by the table turnover rate per meal - can help you devise an estimate for the average number of customers you can expect.
How much will your customers spend?
As part of your formula for projected sales, you will need to estimate the average amount that a customer will spend on any given meal in your restaurant. This value can best be determined by looking at your menu prices and finding an average priced meal. This estimate will also need to take into account any price differences in your breakfast menu, lunch menu and dinner menu. Since the amount that customers spend on each of these meals may differ, you should try to determine an estimated average price for each meal, and then apply that to the amount of customers you project to be seated at each meal.
How should you make the first year estimation?
From the data you have gathered, the simplest way to make the estimation for your first year of sales would be to multiply the numbers you estimated in the above sections, by the 52 weeks of the year. You will need to take into account the projected slower weeks and busier weeks, seasonal changes, and other extraneous factors that will likely affect sales. Then, from this total, you will need to subtract your estimated restaurant overhead costs such as rent, utilities, salaries, etc. This amount will become your restaurant sales forecast estimate. This amount will be what you will show your investors or the bank when seeking financing.
Once you have opened your doors, you will need to play around with these numbers and reevaluate your original estimates. Once you have actual sales, revenues, food costs and overhead expenses, you can continue to perform sales forecasts for future growth. Performing these types of sales forecasts for your restaurant will work well in your favor, especially if you are realistic about what sales and expenses you can expect, so you can make important adjustments along the road to restaurant success.