Creating a yearly sales budget is vital for any restaurant aiming for growth and profitability. A well-crafted budget helps businesses set clear goals, plan for future investments, and ensures financial stability. Here are our comprehensive tips to help you build an effective sales budget for the upcoming year.

Step 1: Review Last Year’s Performance

Revenue Growth by Location

Begin by looking through your sales data from the previous year, broken down by each location. This will provide a clear picture of how each site performed individually and allow you to identify any trends or anomalies. Compare the sales figures with the prior year’s data to understand growth patterns. Key questions to consider include:

  • How many sales did each location generate?
  • How did these figures compare to the previous year?
  • Were any new locations opened last year that haven’t had a full year of sales yet?
  • What does the like-for-like growth look like?

This detailed analysis helps in understanding whether your strategies were successful and where there might be room for improvement.

Guest Volume

Next, conduct a similar exercise for guest count. Accurate guest data is crucial for understanding customer behaviour and preferences. Consider whether you have reliable data on the number of guests served. If not, you could use the number of mains ordered as a proxy for guest count. Reflect on any notable spikes in guest numbers throughout the year, such as during major events like the World Cup, which might have influenced the number of patrons, especially in pubs and sports bars.

Spend per Head or Average Ticket Value

After evaluating sales numbers and guest volume, focus on the average transaction value or spend per head. This metric indicates how much each customer spends on average per visit. Questions to consider include:

  • How did the average transaction value compare to the previous year?
  • How many and how large were any price increases during the year?

Understanding the spend per head is essential for planning pricing strategies and promotions for the upcoming year.

Step 2: Dive Deeper into What Impacted This Past Year’s Performance

Look at When You Saw Improvements vs. Last Year

Going deeper into the analysis of why you saw sales increase or decrease over the last year will give you valuable insights into your restaurant’s performance. Look for any periods that bucked previous trend lines. Consider:

  • Where there specific times of the year that were more popular than they traditionally had been?
  • Did certain days of the week see higher sales, possibly due to changes in work patterns as people returned to offices more frequently?
  • Did any particular day parts (breakfast, lunch, dinner) show notable growth?
  • Were there any new day parts introduced that could have influenced sales growth?

Look into Your Channel Mix

Channel mix is something we often see slightly overlooked. Go deeper than just delivery vs eat-in. Look at your different revenue centres within the site (bar vs dining vs terrace) as well as the individual delivery aggregators. Some things to consider:

  • Have you opened more delivery channels?
  • Are you receiving more orders or achieving higher transaction values per order through these channels?
  • Have marketing campaigns been successful across multiple channels?
  • Are you at capacity for dine-in services or are you turning tables more frequently?

Step 3: Decide on Next Year’s Budget

With a comprehensive review of the past year and an understanding of the factors influencing performance, it’s time to set the budget for the upcoming year. Consider the following:

  • New Locations: Are you planning to open new sites? If so, how will this impact overall sales?
  • Inflation and Pricing: Reflect on how inflation affected your pricing strategy last year. Were prices increased more than initially planned to combat inflation? With inflation stabilising, how will this affect your pricing strategy moving forward?
  • Operational Changes: Is a general strategy of adding 5% to the budget feasible without significant operational changes such as extending hours of operation?

Step 4: What Levers Will You Pull to Achieve This New Budget?

Once you have determined how much of an increase you will add to your sales budget, it’s time to think about the strategies and levers you can pull to achieve it. Consider the following:

  • Average Transaction Value (ATV): Can you increase prices, or will you focus on upselling to boost sales of sides and drinks?
  • New Sales Channels: Are there new channels you can explore to expand your market reach?
  • Day Parts and Open Days: Is it possible to extend your hours or add new day parts to increase sales? Is there sufficient demand to justify these changes?
  • Any business-specific levers: Can you draw on extra kitchen space for more delivery concepts? Is there a USP that you haven’t exploited? 

Step 5: Break It Down

The final step in budgeting is breaking down your targets to make them manageable and actionable for the team. This involves:

  • Site-Level Breakdown: Analyse the location sales mix to assign realistic targets to each site. Consider each location’s potential and historical performance.
  • Seasonal and Periodic Fluctuations: Understand the peaks and troughs in demand across seasons, months, weeks, and days. Setting static daily targets can be demoralising if they are not achievable. Instead, create flexible targets that account for periods of high and low demand.
  • Cost Considerations: Reflect on how the levers you choose to pull will affect costs. For instance, a marketing campaign that bundles items may lower your gross margin, while increasing prices could reduce the labour cost percentage since you won’t need more staff to accommodate price increases.

How Tenzo can help

Tenzo’s budgets feature allows you to input a yearly or monthly sales budget figure and then automatically analyses historical sales trends to break that budget down into daily targets by location. Plus, the greater visibility of trends with Tenzo reporting allows you to quickly pick up on any insights from the previous year. 

Get in touch to find out how Tenzo could help with your yearly sales budgets.   

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