Forecasting is Crucial to Controlling Labor Costs - AI Can Help!

In my previous article, I went over a success story involving one restaurant chain’s practice of managing labor as a percentage of sales. For the final article in this series, I want to take a closer look at the technology behind the next generation of restaurant forecasting—artificial intelligence and machine learning.?

In the restaurant industry, owners, operators, and managers are faced with a difficult balance. Customer service and efficient operations are paramount and require adequate staffing, while at the same time, managing labor costs is crucial to achieving profitability. With rising wage rates and ever-changing market conditions, restaurants need innovative solutions to optimize labor and inventory expenses while maintaining food quality and customer service.?

Artificial intelligence (AI) has emerged as a powerful ally in this battle for balance, offering forecasting solutions based on pertinent data and delivering actionable information. As labor costs become greater, the significance of precise forecasts is growing—a challenge that AI is rising to meet.

Let me walk you through the ways forecasting helps with labor planning and inventory management, the role this ever-growing technology plays in those forecasts, and how Lineup.ai can help your restaurant start efficiently managing labor and inventory costs today.

The Crucial Role of Accurate Forecasts

Effective labor cost and inventory management can be the difference between a business that succeeds and one that fails. Accurate forecasting is an indispensable part of mastering the art of both. Without valid forecasts, restaurants are at greater risk for understaffing, which leads to dissatisfied customers and revenue loss, or overstaffing, which increases labor costs and eats into profit margins. Food waste accounts for a significant portion of lost revenue as well. With better forecasting, restaurants can plan for their expected sales by ordering the correct amount of inventory, leading to less waste. For specialty concepts, forecasts can also prevent sellouts of menu items that are essential to their brand identity.

Traditionally, the forecasting process has involved hours of manual data analysis and spreadsheet work, adding time to a manager’s already busy day and preventing them from performing other core functions of their job. With the advent of AI technology, this process can now take far less time while offering much more sophisticated results, especially because AI can automatically consider many more factors that affect demand.

AI: A Game-Changer in Restaurant Forecasting

The last year or so has been one of tremendous growth for AI. The news has shown us the surprising results that ChatGPT and Dall-E produce with documents and images, but that only scratches the surface. AI has emerged as a game-changer in restaurant forecasting with advanced functionality for sales, labor, and inventory management. AI algorithms possess the ability to process vast amounts of data, recognize patterns, and make predictions.

Leveraging AI, businesses can now generate forecasts based on historical and forward-looking data - predicting future sales and the labor and inventory needed to meet them. When it comes to managing labor costs specifically, AI can take in historical sales data from a restaurant’s point of sale system (POS), consider external factors such as holidays, local events, or weather to offer staffing predictions, factor in seasonality, and predict labor needs down to the hour (or even to 15-minute intervals!). That same data can be used to predict sales down to the item level to inform inventory ordering and prep labor needs. AI forecasts can be as good as your best manager in a fraction of the time. That lets your managers level up—spending their time on better-informed, high-value work.

AI has executive-level benefits, too. Operations and finance executives can use AI to help managers hit labor cost and food waste targets by managing them as a percentage of total sales. It’s an excellent way to hold locations accountable to profitability goals.?

How Lineup.ai Uses Artificial Intelligence for Forecasting

At Lineup.ai, using artificial intelligence and machine learning for forecasting is our bread and butter. Our platform offers restaurants a powerful solution for sales, labor, and item-level forecasting, all of which have a direct impact on the bottom line. Our cutting-edge algorithms use historical sales, local weather, events, foot traffic, and more to build accurate forecasts.?

Using that data, Lineup.ai is able to predict a restaurant’s labor requirements, making it easy to optimize staff scheduling and forecast item-level sales to inform inventory. The result ensures exceptional customer service while managing costs to target levels. If you take anything away from this article, it should be that you cannot achieve effective labor cost and inventory management without good forecasting. AI, and Lineup.ai specifically, can deliver precise forecasts in a fraction of the time it takes to prepare them manually.

Advantages of Lineup.ai

1. Cost Savings: Lineup.ai assists businesses in reducing labor and food costs through improved labor scheduling and inventory ordering.
2. Forecasting Quality: Our forecasts are data-driven, eliminating the need for manual calculations or guesswork. This ensures that your staffing and inventory levels are closely aligned with demand, resulting in top-notch service with increased profitability.?
3. Flexibility: Lineup.ai adapts seamlessly to changing conditions, adjusting forecasts to meet the dynamic nature of hospitality. This adaptability equips restaurants to remain profitable in a rapidly changing environment.
4. Easy Integration: We integrate with popular POS systems including Toast, Square, Heartland, Clover, Snowflake, Brink, Upserve, and UGK. Our team handles the legwork, setting your restaurant up for success with minimal work on your end.
5. Competitive Advantage: Leveraging AI forecasts through Lineup.ai empowers restaurants with streamlined operations, heightened customer satisfaction, and ultimately, an increased bottom line. When a restaurant runs efficiently, customers take notice and your reputation grows.?

The restaurant industry moves quickly. Controlling labor and inventory costs is essential for profitability, particularly in the face of rising wage rates as we’re expecting to continue seeing over the next year and more. Precise forecasting is the cornerstone of achieving and maintaining higher profit margins, and AI-driven solutions like Lineup.ai make forecasting more efficient than ever. Restaurants that embrace AI forecasting are not only better prepared to navigate these ever-shifting circumstances but are also poised to excel by providing better customer service and boosting profitability. When it comes to managing labor costs and forecasting inventory at the item level, Lineup.ai is a restaurant’s best friend.?

If you’re interested in seeing how Lineup.ai can do this for your business, we’d love to show you. Schedule a demo today.?