Cash Flow Management Tips for Restaurants

Cash flow tracks the lifeblood of any company, regardless of industry. When your business is enjoying a nice profit, consider setting aside at least 20% so you have a cushion to fall back on during slow times. It’s also nice to have a nest egg so you can rely on your savings instead of leaning on credit if there’s an unexpected expense. Your restaurant may be selling out every night, but if you’re spending more cash than you’re bringing in, you have a problem. Since sales happen every day, whereas expenses tend to trickle in over weeks and months, it’s tricky to truly know where you stand. Many restaurateurs turn to a business loan or use credit cards to cover their start-up costs.

Improve Payment Terms

Using a restaurant cash flow forecast, you can decide when is the right time to make a capital expenditure or predict when to cut back on expenses. For example, you might find that by hiring seasonal staff during the summer, you can reduce costs with a smaller, more efficient, year-round salaried staff. To improve cash flow, you can implement a cash discount program, conduct regular inventory audits, utilize forecasting tools, and foster strong vendor relationships. These strategies enhance revenue retention and optimize resource management effectively.

Why is it difficult to improve cash flow?

• Additionally, it’s best practice to stipulate how much will not be returned if you need to prepare for the event days in advance.
• With a solid projection in place, restaurant owners can feel more confident making investments, hiring, or even launching new restaurant promotions, knowing their cash position is stable.
• By implementing proven financial strategies, restaurant owners can enhance their profitability and maintain financial stability.
• Calculating your restaurant’s cash flow isn’t as complicated as it sounds—and it’s one of the most important habits for long-term success.
• A cash flow statement shares two overriding figures – cash inflow and cash outflow – and it’s necessary to have accurate numbers.
• While cash flow forecasting might seem intimidating at first, it’s an essential tool that can greatly influence your restaurant’s financial health.

Utilizing inventory management software provides real-time insights into stock levels and sales patterns, empowering your team to make informed decisions. By investing in staff training, you’ll create a more efficient inventory management system that stabilizes your restaurant’s cash flow. For restaurant owners, mastering cash flow forecasting isn’t just about keeping the lights on; it’s about positioning your restaurant for growth and resilience in a competitive market. Embrace this practice to secure your establishment’s future and enhance overall financial health. To maintain positive cash flow, owners should create efficient employee schedules that align staffing levels with expected demand. Using scheduling software and analyzing peak business hours can help prevent overstaffing and keep payroll expenses under control.

Restaurant Cash Flow Management: What Every Restaurant Leader Needs to Know

With up-to-date and accurate books, you can generate valuable spending reports and be in charge. Look into an option like Lavu Capital to find easy and affordable on-demand financing for your restaurant. Lavu, in partnership with Parafin, now offers restaurants cash advances for working capital through their Lavu POS dashboard. You can select pre-approved cash advance offers with flexible payment terms in your Lavu dashboard and receive funds directly to your bank account in 1-2 business days. Start by hosting unique events like wine restaurants maintain cash flow tastings or themed dinners.

Convert your workers to delivery drivers, or start Car Dealership Accounting delivering food yourself. If delivery isn’t an option, curbside pickup is a great way to keep food moving out the door and cash coming in. Beyond those, there are also services like Menulog, Deliveroo, and Postmates to choose from.

Strategy 5: Leveraging Technology for Efficient Cash Management

• Cash flow from Operating Activities lists the transactions accounting for the bulk of your restaurant’s cash flows, such as food and beverage sales, merchandise sales, and rental receipts.
• This is when revenue is strong, giving you more breathing room to absorb the cost without affecting everyday operations.
• At TGG, we understand the unique challenges restaurants face and are committed to making business owners’ lives better through excellent financial management.
• Cash discounting provides a discount to customers when they pay in cash.
• Extending terms from 15 or 30 days to 45 or 60 days helps you maintain cash on hand and increase your financial flexibility.

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• Integrations help reduce the complexity of what are often manual and time-intensive processes when reconciling data and information from separate POS and HR software platforms.
• They run reports across units to understand what’s working and what isn’t, and then make a plan to adapt to market changes and boost efficiency.
• By understanding and implementing these practices, you’ll be able to navigate potential financial challenges, ensuring your restaurant’s profitability.
• She doesn’t shy away from the finer things in life, but no matter how much success she continues to acquire, she stays true to her roots and still considers imitation crab as gourmet.
• Even a short-term hurdle in the way revenue flows can make it challenging to make payroll, buy supplies, or pay rent.

Your Restaurant Cash Flow Playbook: Practical Strategies That Work

• But with the right cash flow strategies, you can set your store up for success.
• Our all-in-one POS at Order Chimps offers extensive features beyond basic payment and ordering automation.
• This helps you plan for busy or slow periods and facilitates budgeting, especially for things like significant renovations or purchases.
• During a no-contact delivery, the driver places the food on the recipient’s porch or in another agreed-upon spot.
• You could save up to 20% on energy costs, which adds up over time.

For example, you could ask for a 60-day payment term instead of the usual 30. But it gives you extra breathing room to handle your bills without ruining cash management for you. For example, if your business has a good month, set aside a fixed amount. Above all, the purpose of these mandated shutdowns is to enforce social distancing and prevent the spread of the virus. When offering delivery service or curbside pickup, maintain a 6-foot radius between customers. Avoid physical contact, and ask your workers to wear gloves when transferring food.