Food and beverage cost control (5th Edition) - Chapter 2: Creating sales forecasts. This chapter presents the following content: Importance of forecasting sales, sales histories, maintaining sales histories, sales variances, predicting future sales, technology tools.
Chapter 2 Determining Sales Forecasts © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Main Ideas Importance of Forecasting Sales Sales History Maintaining Sales Histories Sales Variances Predicting Future Sales Technology Tools © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Importance of Forecasting Sales “How many guests will I serve today?” – “This week?” – “This year?” Guests will provide the revenue from which the operator will pay basic operating expenses and create a profit Forecasts of future sales are normally based on your sales history A Sales Forecast predicts the number of guests you will serve and the revenues they will generate in a given future time period © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Importance of Forecasting Sales Determine your actual sales for a current time period by using a point of sales (POS) system Distinction between sales (revenue) and sales volume (covers) Sales may be a blend of cash and non cash With accurate sales records, a sales history can be developed © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 2.1 Advantages of Precise Sales Forecasts Accurate revenue estimates Improved ability to predict expenses Greater efficiency in scheduling needed workers Greater efficiency in scheduling menu item production schedules Better accuracy in purchasing the correct amount of food for immediate use Improved ability to maintain proper levels of nonperishable food inventories Improved budgeting ability Lower selling prices for guests because of increased operational efficiencies Increased dollars available for current facility maintenance and future growth 10 Increased profit levels and stockholder value © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Sales History Sales history is the systematic recording of all sales achieved during a pre determined time period. Sales histories can be created to record revenue, guests served, or both Sales to date is the cumulative total of sales reported in the unit © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 2.2 Sales History Sales Period Monday Tuesday Wednesday Thursday Friday Saturday Sunday Week’s Total © 2011 John Wiley & Sons Rae’s Restaurant Date Daily Sales 1/1 $ 851.90 1/2 974.37 1/3 1,004.22 1/4 976.01 1/5 856.54 1/6 1,428.22 1/7 1,241.70 Sales to Date $ 851.90 1,826.27 2,830.49 3,806.50 4,663.04 6,091.26 7,332.96 7,332.96 Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 2.3 Sales History Eureka Summer Camp Serving Period 7:00-9:00 A.M 9:00-11:00 A.M 11:00-1:00 P.M 1:00-3:00 P.M 3:00-5:00 P.M 5:00-7:00 P.M Total Served © 2011 John Wiley & Sons Mon 121 40 131 11 42 161 506 Guests Served Tues Wed Thurs Fri Sat Sun Total Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Sales History An average or mean is defined as the value arrived at by adding the quantities in a series and dividing the sum of the quantities by the number of items in the series Fixed average is an average in which you determine a specific time period Rolling average is the average amount of sales or volume over a changing time period © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Fixed average Figure 2.4 14-Day Fixed Average Dan’s Take-Out Coffee Day Daily Sales $ 350.00 320.00 390.00 440.00 420.00 458.00 450.00 460.00 410.00 10 440.00 11 470.00 12 460.00 13 418.00 14 494.00 14-day total $5,980.00 $5,980 14 = $427.14 per day © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Predicting Future Sales Revenue forecast is calculated using the following formula: Sales Last Year + (Sales Last Year x % Increase Estimate)=Revenue Forecast Or Sales Last Year x (1+% Increase Estimate)=Revenue Forecast © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 2.12 First-Quarter Revenue Forecast Month January February March First-Quarter Total © 2011 John Wiley & Sons Rock’s Pizza Pub Sales Last % Increase Year Estimate $ 68,500 7.5% 72,000 7.5 77,000 7.5 217,500 7.5 Increase Amount $ 5,137.50 5,400.00 5,775.00 16,312.50 Revenue Forecast $ 73,637.50 77,400.00 82,775.00 233,812.50 Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Predicting Future Sales Using the same techniques employed in estimating increases in sales, you can estimate increases or decreases in the number of guests served © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 2.13 Guest Count History Month October November December Fourth-Quarter Total © 2011 John Wiley & Sons Rock’s Pizza Pub Guests Guests This Year Last Year Variance 14,200 13,700 + 500 15,250 14,500 + 750 16,900 15,500 +1,400 46,350 43,700 +2,650 Percentage Variance 3.6% 5.2 9.0 6.1 Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Predicting Future Sales The guest count forecast is determined as follows: Guest Count Last Year + (Guest Count Last Year x % Increase Estimate) = Guest Count Forecast Or Guests Count Last Year x (1.00 + % Increase Estimate) = Guest Count Forecast © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 2.14 First-Quarter Guest Count Forecast Rock’s Pizza Pub Guests Last % Increase Guest Increase Guest Count Month Year Estimate Estimate Forecast January 12,620 6.1% 770 13,390 February 13,120 6.1 800 13,920 March 13,241 6.1 808 14,049 First-Quarter Total 38,981 6.1 2,378 41,359 © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Predicting Future Sales Average sales per guest (check average) is simply the average amount of money a guest spends during a visit Using data taken from the sales history, the following formula is employed: Last Year's Average Sales per Guest + Estimated Increase in Sales per Guest = Sales per Guest Forecast © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Predicting Future Sales An average sales per guest forecast can also be obtained by dividing the revenue forecast by the guest count forecast Revenue Forecast Guest Count Forecast = Average Sales per Guest Forecast © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Figure 2.15 First-Quarter Average Sales per Guest Forecast Month January February March First-Quarter Total © 2011 John Wiley & Sons Rock’s Pizza Pub Revenue Guest Count Forecast Forecast $ 73,637.50 13,390 77,400.00 13,920 82,775.00 14,049 233,812.50 41,359 Average Sales per Guest Forecast $ 5.50 5.56 5.89 5.65 Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Predicting Future Sales Sales histories are not sufficient, used alone, to accurately predict future sales You also must consider potential price changes, new competitors, facility renovations, improved selling programs, and other factors Undertaking green initiatives can increase guest count © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Technology Tools The importance of accurate sales histories for use in forecasting future sales is unquestionable. Your POS system can be invaluable in this effort. © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Technology Tools Many systems today can be utilized to do the following: © 2011 John Wiley & Sons Track sales by guest count or by date Monitor cash vs. credit sales Maintain products sold histories and check average data Compare actual sales to priorperiod sales Maintain rolling sales averages Forecast future sales in increments Maintain actual sales to forecasted sales variance reports Maintain reservations systems Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Technology Tools Reservations software makes it possible for operators to reward repeat guests by developing their own “frequent dining” programs, similar to a hotel or airlines’ frequenttraveler programs Customer complaints can be tracked and, if desired, coupons to compensate guests for difficulties can be printed and distributed © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Technology Tools For those operations that rely on reservations to control bookings, software of this type is available to instantly identify repeat guests, giving the operator a display screen that can include such information as frequency of visit, purchase preferences, and total dollars spent in the operation © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller Summary Importance of Forecasting Sales Sales History Maintaining Sales Histories Sales Variances Predicting Future Sales Technology Tools © 2011 John Wiley & Sons Food and Beverage Cost Control, 5th Edition Dopson, Hayes, & Miller ... Seven-Day Rolling Average Ubalda’s Sports Bar Seven-Day Period 3-9 4-1 0 5-1 1 1-7 $3,500 3 ,20 0 3,900 4,400 4 ,20 0 4,580 4,500 2- 8 -$ 3 ,20 0 3,900 4,400 4 ,20 0 4,580 4,500 4,600 28 ,28 0 29 ,380 30 ,28 0... 6,091 .26 7,3 32. 96 7,3 32. 96 Food? ?and? ?Beverage? ?Cost? ?Control, 5th Edition Dopson, Hayes,? ?& Miller Figure 2. 3 Sales History Eureka Summer Camp Serving Period 7:0 0-9 :00 A.M 9:0 0-1 1:00 A.M 11:0 0-1 :00... 4,100 4,400 -$ 4 ,20 0 4,580 4,500 4,600 4,100 4,400 4,700 6- 12 -$ 4,580 4,500 4,600 4,100 4,400 4,700 4,600 7-1 3 -$ 4,500 4,600 4,100 4,400 4,700 4,600 4,180 8-1 4 Food? ?and? ?Beverage? ?Cost? ?Control, 5th