How to Calculate Projected Sales in Your Restaurant

Accurate sales forecasting is essential for restaurant owners looking to maintain profitability and plan for growth. If you’re able to predict future sales accurately, this helps you with budgeting, staffing, and inventory management.  

Want to manage your restaurant more effectively? This guide will walk you through how to calculate projected sales and make data-driven decisions for your restaurant. 

What Are Projected Sales? 

Projected sales refer to estimated future revenue based on past sales data, market trends, and other external factors. The formula for calculating projected sales is: 

Projected Sales = (Average Monthly Sales × Expected Growth Rate) 

Why bother calculating your projected sales? In the restaurant industry, forecasting sales is crucial for managing operational costs, optimizing menu pricing, and setting realistic financial goals. A well-calculated sales forecast allows restaurant owners like yourself to prepare for fluctuations in demand and adjust your sales strategies accordingly. 

5 Factors Influencing Your Projected Sales 

Many factors affect future sales revenue, making it important to analyze multiple variables when forecasting sales. Here are five factors to consider: 

1. Seasonal Trends: Sales typically increase during holidays and peak seasons but may drop during off-peak months. 
2. Economic Conditions: Inflation and market downturns decrease consumer spending, leading to lower sales, while economic growth boosts revenue. 
3. Competitive Landscape: New competitors decrease sales by drawing customers away, while weak competition may increase revenue. 
4. Marketing Efforts: Effective promotions and advertising increase sales, whereas poor marketing or negative reviews reduce them. 
5. Customer Preferences: Rising demand for things like delivery or plant-based options increases sales if adapted to, while ignoring trends may decrease revenue. 

4 Types of Data Needed for Sales Projections 

To calculate projected sales or projected revenue, you need a mix of historical and real-time sales data. Four important data sources include: 

1. Historical Sales Data: Analyze past sales over different periods to identify patterns. 
2. Market Research Reports: Review external data, such as industry trends and demographic changes, that may impact future sales. 
3. Sales Pipeline Insights: Examine reservations, online orders, and walk-in traffic to forecast future sales. 
4. Marketing Campaigns: Evaluate the effectiveness of past promotions to improve future sales forecasting. 

To efficiently gather and organize sales data, integrate a point of sale (POS) system to track transactions and store historical records. Use CRM software to compile reservations and orders, and supplement this with market research reports to monitor industry trends. Additionally, analyze marketing performance by linking sales data to past promotions, and regularly clean and review your data.  

Step-by-Step Guide to Calculating Projected Sales 

Let’s calculate the projected sales revenue for a restaurant together. Suppose the restaurant currently generates $50,000 in monthly sales. Based on market research, an expected growth rate of 5% is applied. 

Step 1: Use the Formula 

Projected Sales = Average Monthly Sales × Expected Growth Rate 

Step 2: Apply the Numbers 

$50,000 × 1.05 = $52,500 

Step 3: Interpret the Results 

With a 5% growth rate, next month’s projected sales would be $52,500. This provides a baseline estimate, but adjustments should be made based on market conditions, seasonal trends, and recent sales data. 

3 Tools to Improve Sales Forecasting 

While the above formula provides a basic forecasting method for calculating projected sales, it's a highly simplified model. If you’re able to, utilize modern tools and technologies that offer deeper insights and more accurate sales projections. Here are three such tools: 

1. POS Systems: These track real-time sales data, allowing you to identify trends and compare them with past performance for more precise predictions. 
2. Sales Projection Tools: These use historical data and advanced algorithms to generate forecasts, accounting for factors like seasonality and promotions. 
3. Market Research Reports: These provide valuable data on broader economic trends, helping you adjust projections based on shifts in consumer behavior and market conditions. 

4 Mistakes to Avoid in Sales Projections 

Many restaurant owners make errors when forecasting sales, leading to inaccurate projections. Here are four common mistakes, along with strategies on how to avoid them: 

3 Ways to Use Your Projected Sales Data 

By analyzing your sales data and using it strategically, you can greatly improve your decision-making process. Here are three ways to use your projected sales data:  

1. Staffing: Adjust schedules based on projected sales to make sure you have the right number of employees during peak and off-peak hours. 
2. Inventory Management: Forecast ingredient needs to minimize waste. 
3. Marketing: Use sales projections to identify slow periods, then create promotions and campaigns to drive traffic during those times. 

For example, if historical sales data analysis indicates a slow period ahead, you could use this information to launch a targeted restaurant social media marketing campaign, discussing a limited-time offer or special event, to drive traffic. Consider introducing a "Happy Hour" promotion or a "Buy One, Get One Free" deal to encourage visits during off-peak hours, driving both sales and customer engagement. 

2 Steps to Adjust Projections Based on Real-Time Data 

Forecasting shouldn’t be a one-time task—you should change the way you calculate sales projections as new data becomes available. Here are two steps to help you maintain accurate sales forecasts: 

1. Monitor Weekly and Monthly Sales Reports: Regularly compare actual sales revenue with your projections. If discrepancies arise, adjust your forecast to reflect changes in customer behavior, unexpected events, or other influencing factors. This will help you stay agile and avoid costly miscalculations. 
2. Track External Factors: Stay informed on broader economic conditions, such as shifts in consumer spending or supply chain disruptions, that can affect sales. Pay attention to local events, weather patterns, and industry trends that might influence customer demand. Incorporate this information into your projections to make sure you're not blindsided by changes outside your control. 

Frequently Asked Questions About Calculating Restaurant Projected Sales 

When it comes to calculating sales forecasts for a restaurant, understanding the key concepts makes a significant difference in forecasting accuracy. Below are answers to some common questions about different sales forecasting methods to help guide your sales forecasting calculations. 

What does projected sales mean? 

Projected sales refer to the estimated revenue a restaurant expects to generate over a specific period, such as a month or year. It is calculated based on historical data, market trends, seasonal factors, and expected growth. By accurately projecting sales, you can plan for staffing, inventory, and marketing, while making informed business decisions. 

What is the formula for projected sales? 

The formula for projected sales is: 

Projected Sales = Average Monthly Sales × Expected Growth Rate. 

For example, if your restaurant’s average monthly sales are $50,000, and the expected growth rate is 5%, the projected sales would be $50,000 × 1.05 = $52,500. This simple sales forecast formula helps estimate sales, though it should be adjusted based on real-time data and market conditions to make sure that it’s accurate. 

How do I calculate estimated sales in Excel? 

To calculate estimated sales in Excel, use a basic formula: multiply the average monthly sales by the expected growth rate. Set up a spreadsheet by entering historical sales data and using Excel’s formula functions to project future sales. By adjusting variables like growth rate or seasonal factors, you can create multiple scenarios to assess different sales outcomes and plan accordingly. 

What is an example of a sales forecast? 

An example of a sales forecast for a restaurant might look like this: Based on historical data, the restaurant expects $50,000 in monthly sales, with a 5% growth rate.  

With this data, the forecast for the next month would be $52,500. This forecast can be further refined by considering factors like local events, holidays, or economic changes that could influence customer traffic and spending habits. 

Increasing Your Sales and Keeping Them High 

Imagine this: It's a busy Friday evening, and your restaurant is understaffed because your sales forecast was off. Customers are waiting, inventory is running low, and valuable sales opportunities are slipping through the cracks. Now, picture this happening week after week—how much money would you be leaving on the table? 

To manage your restaurant effectively, there’s no way around it—you need to accurately calculate projected sales and figure out your average monthly sales rate. Start with the basics and continuously refine your forecasting techniques as you go. If you need advice about sales forecasting and growing your sales revenue, get in touch with our team.