How to Tackle Food Waste Using Demand Forecasting

Demand forecasting software can help you make better purchasing decisions, which lead to a reduction in food waste.

Purchasing Optimization
Demand forecasting software can help you make better purchasing decisions, which lead to a reduction in food waste.
Branden McRill
October 3, 2022

It’s estimated that $2.6 trillion is lost every year to food waste in restaurants. While some waste is inevitable, there’s a huge opportunity to save on food costs by reducing the amount of food that is thrown away. 

Food waste occurs before and after food is served to customers. The most common problems that lead to food being wasted are over-ordering and over-production leading to unsold food being tossed.

New innovations in demand forecasting could be a key part of the puzzle in tackling food waste. Using AI to analyze the wealth of data available to restaurants, demand forecasting software can help you make better purchasing decisions, which lead to a reduction in food waste.

Here we’ll explore how to use demand forecasting to reduce food waste and improve your margins.

What is demand forecasting?

Demand forecasting is the process of making predictions about future demand in order to make better business decisions. While it used to be a manual process based largely on historical sales data, now machine learning algorithms can take in a whole lot more data and make smarter predictions using AI.

Demand forecasting software uses all possible relevant data to make better projections, including: 

  • Weather forecasts – local weather affects people’s moods and behaviors so weather forecasts can tell you a lot about demand, whether customers will order for delivery or eat in, and what they choose to eat and drink.
  • Events and holidays – local events bring people to an area and increase foot traffic. . Holidays can have an effect on what customers order and may increase the number of people dining out.
  • Traffic information – traffic tells you a lot about the number of people in an area.
  • Reservations – your reservation system tells you how many customers are booked in but also stores vital demographic data that reveals a lot about their preferences.
  • Local competition – what other restaurants in the area are doing can affect your demand on a given day.

Using all this data, demand forecasting software can give you incredibly accurate insights into how much you’re going to sell and when, down to the hour. It also gives you detail down to the sales category level on what you are going to sell. This is invaluable in making purchasing and prep decisions which can make a huge difference in reducing food waste. Bonus -you can even keep track in real-time of how your predictions match up to reality. 

How to reduce food waste with demand forecasting

Food waste is a huge problem, but there are many ways to tackle it. A few simple changes can have a massive impact that compounds over time. 

Not only will you reduce the amount of food being thrown away, you’ll cut your food costs, run a more efficient kitchen, and ultimately get a boost to your bottom line.

Let’s get into the nitty-gritty and see how you can tackle the problem of food waste with a little extra help from demand forecasting. 

Measure food waste

The first step to reducing food waste is to measure it. Not just the total amount, but at a more granular level, so you know exactly where the problem lies. You can do this by separating food waste into categories based on where in the system the waste is being generated. 

For example, you might have a waste bin for: 

  • Kitchen trim
  • Spoiled and out-of-date food
  • Plate scrapings

Weight each bin at the end of the day to see where the biggest problem lies. Are you taking too much material off your vegetables before cooking them, are you over-ordering and letting food spoil? Or do customers order too much resulting in food coming back on plates? 

Once you know where your problem lies, you can move on to putting in practical measures to solve it.

Avoid over purchasing 

One of the major causes of over-purchasing is the fear of running out of an ingredient. So having more certainty about much you need helps your team make better decisions and not worry about being understocked. 

When you have accurate forecasts, you can be much more accurate with your purchasing and avoid food sitting on the shelves for too long leading to spoilage.

Reduce spoilage

As mentioned above over-purchasing is a major cause of spoilage but there are other factors at play here. Organization and proper rotation of ingredients are key to using the freshest first and improving purchasing. 

A first-in-first-out approach is the industry standard. Having your fridges and storerooms tidy with everything in its right place helps to keep this system functional. This approach also helps identify when an ingredient is overstocked. 

Temperature monitors are a great way to ensure you don’t have a major fridge or freezer disaster. They constantly monitor the temperature of your storage areas and alert you if they go out of a safe range. Many a food waste disaster has been averted this way.

Plan specials based on demand

When you have accurate demand forecasts by category and time of day, you don’t have to only put specials on to shift ingredients, although that’s one great way to avoid food waste. You can plan specials you know your customers will love at the perfect time. 

A demand forecast can tell you what is the most popular dish during different times of the week and year, so you can excite your customers with the ideal dish for the season and weather.

Keep an eye on your deliveries

Dealing with deliveries using a repeatable system is one of the best ways to ensure you are receiving the right produce, in quality condition, and get it stored away safely. This will reduce the amount of food that spoils and save you a ton of money.

Demand forecasting can help you know when your quieter times are so you can schedule your staff better and have enough people on shift to properly handle deliveries. It’s vital that team members have the time to inspect and properly put away ingredients to reduce the chance of accepting poor-quality ingredients and to keep your storage areas tidy and organized.

Prep just the right amount

Over-zealous prepping by chefs, who are trying to get ahead, leads to prepped ingredients ending up as waste. 

It’s great that they want to be ready, but you can be smarter and use demand forecasting to know exactly how much you need to prep and get it right. Produce your prep sheets based on the predicted demand and you’ll always have the right amount on hand without being over-prepped. 

Reduce food waste & boost profitability with accurate demand forecasting

Reducing food waste is inherently a noble goal but it’s also good for business. More control over what comes into your kitchen, how food is prepared, and tracking the waste you produce leads to better efficiency, lower food costs, and a better-run restaurant. 

Accurate demand forecasting has a major role to play in your efforts to curb food waste, giving you certainty over how much food to prep, limiting over-production and reducing spoilage. 

Incredible advances in AI and food data are making demand forecasts better and better by the day. To see how accurate forecasts can help your business reduce food waste and boost profitability, find out more about 5-Out’s cutting-edge automated demand forecasting tools.

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