September 29, 2022

Demand Planning for Hospitality Industry Businesses

By TopUp Mama

A leading restaurant in Nairobi, Kenya uses its historical sales, purchases, and current inventory data including customer trends and seasonality data to forecast for the future with the main aim of meeting customers’ demands in a timely and efficient manner. With the festive season coming up, the key team members are looking at the business' performance for the past two years to accurately forecast demand for the upcoming festive season. This is demand planning, where a business establishment prepares for customers' demand by relying on past data to inform purchase decisions, as well as optimal stock holding for a predetermined period of time. 

Why is Demand Planning Important?

Demand planning takes the forecast and makes sure that capacity is available, orders are placed in good time, inventory levels for the predicted period are optimized, and delivery of customers' requirements can be achieved in the proper sequence.

Considerations when Demand Planning

There are 3 key elements to consider when planning for demand in the hospitality industry; 

  1. Events and Seasonal Promotions - These events and seasons lead to higher demand for certain meals, which means certain ingredients have to be available. This also applies to different weather seasons, for example during the cold season guests might need a lot of soups and hot chocolate. 

  1. Internal Trends obtained from sales data also assist managers to work up a proper demand plan. Other factors such as the availability of certain staff internally also affect this process - you do not want to host a BBQ event when your pitmaster is away on holiday. 

  1. External Trends such as the economy, natural calamities, and war, affect your demand planning as demand might go lower during certain low periods. 

Demand Planning  Benefits

When demand planning is accurately done, there are several benefits that will be realized. These include:

  1. Better Financial Control

With accurate forecasts and data-driven demand planning, restaurants can improve cash flow, optimize inventories, and meet customer expectations.

  1. Better Operations Planning

Accurate demand planning will help the restaurants plan operations better, proper labor utilization, maintenance scheduling, and capacity planning benefit from a sound demand plan.

  1. Better Marketing Strategies

By forecasting accurately and planning with data-driven insights, demand planning for restaurants offers sales and marketing teams better information and leverage to target sales that match the demand curve.

Follow the below best practices to kick start Demand Planning for your Restaurant;

  1. Track and analyze your historical data (sales, purchases, Inventory levels) to identify trends in your restaurant business.
  2. Use the insights to plan for future demand while factoring in projected growth for your restaurant business. 
  3. Account for external factors like weather, events, holidays, and government regulations, and adjust plans accordingly. 
  4. Track your customer spending, preferences, and demands for particular periods to plan for the future.

How do you plan for shifting demand in your business?

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