The Effects of Seasonality on Life-Cycle Pricing
To cope with an increased demand of inventory is to understand seasonality and that seasonality is in fact predictable. Seasonality is a cycle of time that is predicted by repetitious consumer behavior and product demand. There are two classes to seasonality: Broad Seasonality and Event-Related Seasonality.
You’ll want to know how to distinguish the two because seasonality has substantial and deep impacts on consumer purchases throughout the entire year with your business. Understanding seasonality will allow for better planning and forecasting during holidays and other seasonal highs or lows.
The Differences between Broad Seasonality and Event-Related Seasonality
Broad seasonality is a period of highs and lows throughout the year due to changes in weather, customer preference and fashion. Event-Related Seasonality refers to all of the major holidays such as Halloween, Christmas, New Year’s Eve, New Year’s Day, Easter, etc. Event-related seasonality would even include events such as a major sporting event or any major election. But the focus of this article is on holidays.
Event-driven seasonality will ultimately influence the demand of consumers both before and after a major holiday. Customer demand seems to pile up on restaurant owners in the weeks or days before a major holiday, whereas during the period immediately following a major holiday, it’s more difficult to forecast demand.
This is because immediately following a major holiday; the restaurant’s demand needs may dip to normal levels or well-below normal levels before returning to normal seasonal demand behavior. This demand may also vary per holiday. The best way to forecast demand is based on the history of your restaurant during each holiday; particularly if you’re able to compare multiple years while forecasting.
You should also know that the day of the week that the holiday falls on will impact and effect accurate forecasting as well. Every year holidays land on different days of the week. When planning to meet future inventory demands, you should always take into consideration the day of the week that the holiday you’re planning for lands on.
How to Meet Inventory Demand during the Holidays
With restaurant owners said to be losing an average of 10% on beverages and 15% on food due to fluctuations in seasonality, it’s important to do the job right with effective and accurate inventory reporting and planning. Reduce inventory loss during the holiday by first reviewing your present inventory control process. You’ll want to look into who’s doing the reporting, how often they are doing the reporting and their method of completion.
Make sure that your staff and managers understand the importance of above average inventory control because average inventory control leads to 10% losses. Consider creating visible inventory goals for your staff by keeping a literal scoreboard. Creating visibility promotes an improved inventory control. Make sure to provide guidance, support, budgets and clear expectations to your entire management team, giving them some control too.
Don’t be afraid to step out of your comfort zone and change the way you do things. Accurate reporting and communication with staff year-round will allow for accurate forecasting for future holiday inventory to avoid loss and increase revenues.
Now it’s your turn. What tips do you use for controlling inventory in your restaurant? Share with us below.
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