Often overlooked, a restaurant budget is essential for restaurateurs to achieve continuous profitability. It provides a solid guide on how restaurateurs can make informed decisions, therefore encouraging the right actions to be made and creating accountability.
Combined with the constantly evolving nature of the restaurant industry and the fluctuating economic climate caused by the pandemic, optimising a restaurant’s budget has become more crucial than ever. Read on below to find out how restaurateurs can utilise several restaurant softwares in order to maximise their budgeting and sales forecasting.
How to plan an accurate restaurant budget
1. Keep a tab on past sales
Utilising a point of sale (POS) system and integrating it with the restaurant’s accounting software automates this process, as it provides accurate historical sales data to estimate future sales. Gaining full access to past sales allows restaurateurs to check averages and customer counts, enabling them to compare sales in different time periods.
When it comes to synchronising current sales with the restaurant’s stock balance, restaurateurs can consider utilising inventory management platforms. Platform such as Food Market Hub can assist restaurateurs by integrating with their POS system, allowing more transparency in their menu orders, sales and inventory.
2. Define the restaurant’s prime cost
Prime cost consists of certain expenses that restaurateurs have some control over, meaning they can influence and minimise it through careful monitoring. Among the expenses that are categorised under prime costs are; cost of goods sold (COGS) and labour costs.
Adopting an inventory management software can aid restaurateurs in tracking their COGS, which then gives them the capability to budget their expenses accordingly. Using platforms such as Food Market Hub, restaurateurs can gain full insights on food wastage, allowing them to minimise it by 40%. The software is also able with AI, of suggesting orders, which enables restaurateurs to optimise their next purchase orders based on their current sales.
3. Consider other operating expenses
Factoring other operating expenses is a must when it comes to restaurant budgeting. Expenses required to run a restaurant such as; equipment and maintenance, rent, utilities and insurance take up a major part of spending.
These expenses can even include restaurant technology and marketing costs too. Ultimately, restaurateurs need to include these aspects of operating expenses, strategise on how to minimise them and incorporate them into restaurant budgeting.
4. Quantify the net income
After all expenses have been paid, restaurateurs should calculate the exact income left (ie. net income). This then helps them to accurately pinpoint, using their current budget, whether the restaurant is generating profit, breaking even or incurring losses.
For generating automated reports, restaurateurs can utilise Food Market Hub to forgo manual calculations. As the platform facilitates third-party integration with both the restaurant’s accounting and POS systems, it is able to automatically produce real-time reports, allowing restaurateurs to track sales data and analyse their purchasing trends.
Should the restaurant’s net income indicate a subpar performance, restaurateurs need to re-evaluate their budgeting plan. Using this strategy, restaurateurs can then spot recurring trends over time and make proactive decisions that can help improve their income in the long term.
How to forecast the restaurant’s sales
Monitor past performances and seasonal trends
To obtain the right sales forecast, restaurateurs must consider past years’ performance and seasonal trends for F&B business growth. They should take into account fluctuations and annual historical sales in different seasons. Finding the right variables that directly influence past sales (such as weather, events, traffic) can effectively help restaurateurs in generating an accurate sales forecast.
Keep a lookout on competitors
In forecasting restaurant sales, simply relying on POS and accounting systems is not enough. It is vital to closely monitor the restaurant’s competitors, both indirect and direct ones. Tracking the competitors’ pricing, marketing strategies and menu changes can help restaurateurs remain competitive and thrive in the industry as they can make large decisions based on multiple sources.
Anticipate economic shifts
With the current global trend of inflation, restaurateurs should best prepare themselves for major economic shifts that can impact their future sales. Carefully observing past price fluctuations, rising food prices and minimum wage changes can enable restaurateurs to predict their sales realistically.
Restaurateurs should also consider adopting Food Market Hub in analysing price changes, gain a better understanding of price trends and how to get the best deals from their preferred suppliers. The AI-powered platform also generates a complete purchase analysis and price history reports, allowing restaurateurs to better anticipate possible economic shifts.
To read more about methods to survive our current inflation rate, click here.
Restaurant budgeting and forecasting - the roadmap to a successful restaurant operation
Sticking to a restaurant budget requires flexibility, as it requires restaurateurs to have both the right tools and mindset. At its core, restaurant budgeting and forecasting empowers restaurateurs to identify possible cost leaks and solve them before they result in huge losses. For further reading on cost management, check out this article.