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CHAPTER 18

CHAPTER 18. DETERMINING SALES FORECASTS. 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. What is FORECASTING ?.

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CHAPTER 18

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  1. CHAPTER 18 DETERMINING SALES FORECASTS

  2. 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

  3. What is FORECASTING? • Forecasts of future sales are normally based on your sales history. • A sales forecastpredicts the # of guests you will serve and the revenues they will generate in a given future time period.

  4. SALES VS VOLUME • SALES = • SALES VOLUME= COVERS REVENUE

  5. 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 dateis the cumulative total of sales reported in the unit.

  6. 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. Ex: (6+9+18 =33/3) • Fixed average is an average in which you determine a specific time period. Ex: 14 days in a month • Rolling average is the average amount of sales or volume over a changing time period. Ex: examining only 7 days prior for a bar

  7. Sales History • Record both revenue and guest counts • Compute averagesales per guest, a term also known as check average Total Sales Number of Guests Served = Average Sales per Guest

  8. Average Sales per guest Tues Total Sales: $1,826.27 Total Guests = 79 Avg. Sales per Guest= $23.12 Formula Total Sales # of Guests Served = AvgSales per Guest

  9. Maintaining Sales Histories • Sales history may consist of : • revenue, number of guests served, and average sales per guest. • the number of a particular menu item served, the number of guests served in a specific meal or time period, or the method of meal delivery (for example, drive-through vs. counter sales). • In most cases, your sales histories should be kept for a period of at least two years.

  10. Chapter 19 Managing the Cost of Food

  11. Menu item Forecasting • How many servings of each item should we produce? • You don’t want to run out • You don’t want to make too much. • Menu item forecasting addresses the questions: • “How many people will I serve today?” • “What will they order?”

  12. Menu Item Forecasting • Popularity index is defined as the percentage of total guests choosing a given menu item from a list of alternatives. Popularity Index =Total Number of a Specific Menu Item Sold Total Number of All Menu Items Sold

  13. Chpt 19: Fig 19.1Menu Item 5 day Sales History

  14. Forecasting Item Sales Use the previous table to follow the formula: Step 1: Popularity Index = Total # of a specific menu item sold (= %) Total # of all menu items sold Step 2: Take the Popularity index in decimal form and x by the guest forecast to come up with the predicted # to be sold. 400 x popularity index = predicted # to be sold.

  15. Factors that influence Predicted # to be sold • Competition • Weather • Special Events in your area • Facility Occupancy (hospitals, dorms, hotels, etc.) • Your own promotions • Quality of service • Operational consistency These & factors affect sales volume, make guest count prediction very difficult.

  16. Forecasting Summary Empower Develop Record Failure Potential Answer Questions • Knowledge of potential price changes, new competitors, facility renovations and improved selling programs = factors to predicting future sales. • Must develop, monitor, daily, a sales history report appropriate for your operation. • With out accurate data, control systems, are very likely to fail. • Help you answer: “How many people are coming tomorrow?, “How much is each person likely to spend?

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