How to improve your restaurant's profit margins by forecasting demand?

As the market continues to evolve, it’s crucial for restaurant owners and managers to stay ahead of the curve and adopt new technologies that can help them optimize their business. With the right tools in place, any restaurant can reach its full potential.

Forecasting is an essential tool for restaurant management, helping to balance service and quantity while keeping an eye on costs. By basing forecasts on historical data, restaurants can recognize trends and respond proactively. This information is vital for making decisions about where to allocate resources and how to best staff the operation. While forecasting won’t lead to perfectly accurate results every day, it is a necessary part of running a successful restaurant. By understanding the role forecasting plays in restaurant management, you can make the most of this important tool.

The report estimates that the restaurant industry generates about 11.4 million tons of food waste annually at a cost to manufacturers and consumers combined, $25 billion per year! 

This is because restaurants often over-order or portion items such as appetizers when they should have been enough for two people–leading them both unnecessarily purchase more than necessary then throw away money by throwing out perfectly good ingredients instead.

While making accurate predictions can be difficult, it’s important for businesses in the restaurant industry to do everything possible to minimize uncertainty and ensure that they are prepared for busy periods as well as slow times. By understanding how demand behaves in the restaurant industry, business owners can make better decisions when it comes to ordering supplies, hiring staff, and setting prices. In this blog post, we’ll take a look at some of the factors that influence demand in restaurants and explore ways to forecast demand trends.

Factors that Influence Demand in Restaurants

In order to avoid these fluctuations, forecasting demand is a vital tool for any restaurant owner or manager. But what factors should you take into account when forecasting demand? Here are three of the most important.

#1 Your Historical Sales

Historical sales forecasting is an effective method for predicting future sales, as it relies on accurate data that has been analyzed and sets a precedence for current sales. This forecasting method can also help companies determine conversion rates for customers and the potential value of each deal. 

Historical sales forecasting is an ideal method for stagnant markets; those that don’t change and remain relatively constant can use this sales forecasting method because past sales can be an accurate benchmark for future sales, thereby improving forecasting accuracy for a company.

#2 The Weather


Another important factor to consider when forecasting demand is the weather. Hot weather usually means more people will be looking for refreshing cold drinks and lighter fare, while cold weather often leads to an increased demand for comfort food and warm drinks. Paying attention to the forecast will help you make sure you’re prepared for any spikes or dips in customer traffic.

#3 Special Events 

Special events can also have a big impact on restaurant demand. Major holidays, local festivals, and sporting events can all lead to an influx of customers looking for a meal before or after the event. Planning ahead for these events will help ensure that you’re able to accommodate your customers without being overwhelmed.

To make sure that the restaurant is well-stocked, it’s important to have accurate forecasting. With new technology and analysis of purchasing data in correlation with sales insights from an operator’s perspective can help them forecast stocking needs accurately so you never run out!

Understanding the popularity of different menu items can help restaurant operators reduce their costs. For instance, they should monitor which dishes are ordered most often and plot this against how profitable it is for them in terms of revenue generated per unit time spent on cooking or serving that particular dish.

#4 The Economy

In 1929, the stock market crash signaled the beginning of the Great Depression—one of the darkest periods in American history. Unemployment rose to 25%, and soup kitchens became commonplace as people struggled just to make ends meet. Not surprisingly, restaurant sales took a nosedive during this time as people cut back on all non-essential spending. 

In contrast, the post-World War II boom led to strong economic growth and low unemployment levels—conditions that were perfect for the restaurant industry. In fact, some historians believe that this is when America fell in love with eating out, as new chains like McDonald’s and Burger King emerged and became household names.  

More recently, in March 2020, due to the spread of COVID-19 and the measures implemented in response to it, food consumption significantly shifted from restaurants to homes when stay-at-home directives came into effect. 

During an economic downturn, people may cut back on spending which can lead to a decrease in traffic for restaurant owners. However, during an economic boom, people may have more money to spend which could lead to an increase in traffic.

Ways to Forecast Demand Trends

Here are four methods of forecasting demand trends in the restaurant industry. 

1) Utilize historic sales data to predict future sales. This is probably the most common method of forecasting demand, as it uses past data to make predictions about future behavior. However, it is important to note that past data may not be a accurate predictor of future behavior, especially in an ever-changing industry like restaurants.

2) Leverage reliable reporting to monitor inventory.  Operators may use technology that monitors and analyzes purchasing data in connection to sales in order to more accurately determine a restaurant’s purchasing requirements. With the aid of these insights, restaurateurs may predict a restaurant’s stocking requirements with a minimal amount of inaccuracy to avoid food waste in the future.

3) Use market research reports to understand broader industry trends. Global demographic dynamics are responsible for changes in the demand for food and agricultural products. Without a doubt, developing and rising economies are experiencing the most significant demographic changes that are affecting food demand. provide detailed statistics that are important for industries and communities. Trade associations, chambers of commerce, and businesses rely on this information for economic development, business decisions, and strategic planning. You can browse topics with real-life examples of how businesses and organizations use these statistics.

4) Use weather and climate data to improve demand forecasting. Most notably, weather can either increase or decrease the amount of people who are out and about, looking for food. It can also have an effect on balance. 

For example, if you have a roof that leaks when it rains, you’ll have to adjust your quantities to make up for the increased waste. In the same way, if a blizzard cuts off your usual supply chain, you’ll need to find an alternative source of food so you don’t run out. As a restaurant manager, it’s important to be aware of how weather can affect your business so you can be prepared for anything. 

By keeping a close eye on the forecast and tracking sales data, you can ensure that your restaurant runs smoothly no matter what Mother Nature throws your way. If you’re curious to know which major weather providers give the most accurate forecasts for your area, try using AccuWeather.