Cash Flow Management Tips for Restaurants

restaurants maintain cash flow

These alliances should be strategic and symbiotic, leveraging collective strengths to deliver superior products and services. Operators, treat your suppliers as insiders, and together you will navigate the market’s ebbs and flows with finesse. Consumers now equate value with experience, encompassing ease of ordering, payment options, and reliable delivery services. It’s not just about competitive pricing, but about exceeding expectations with every interaction. Provide an experience that feels personal, from the greeting at the door to the farewell, and cater your approach to your customers unique needs based on the visit occasion. When you infuse value into the ambiance, service, and every customer touch point, you deliver a seamless journey from menu to mouth.

restaurants maintain cash flow

You can access sales data in real-time, analyse key financial metrics, and visualise the cash flow of all your venues at a single glance. Once you have a handle on your restaurant’s cash flow forecasts, you can look at staggering payments so a number of them aren’t taken out at once. Get a deposit upfront so you know your staffing and food costs are covered well in advance.

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This will help prevent any unforeseen events from derailing your business and can help when any of the seasonal fluctuations you’ve already identified threaten your cash flow. Apart from avoiding a potential restaurant cash flow management downturn, having a financial cushion can also better position you to take advantage of unexpected opportunities. Once you’re confident that you have accurate historical numbers, analyze them regularly.

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  • It keeps track of cash flow related to your restaurant’s fundamental operations like labor cost, supply cost, sale of assets, etc. for a given time period.
  • As we continue to navigate these changes, strategic adaptation will be the hallmark of industry leaders.
  • Thankfully, technologies like table management systems now exist to help restaurant owners do just that.
  • Additionally, reading industry-specific books, articles, and case studies can deepen your understanding of cash flow dynamics in the restaurant sector.
  • In the highly competitive landscape of the restaurant industry, effective cash flow management is crucial for sustainable success.

Forty-five percent of public restaurants with positive Net Incomes have Free Cash Flows larger than their Net Income. Leading this group is Red Robin, which touts an FCF that is 322% the size of its Net Income. The burger chain was even able to turn a negative FCF last year into a positive one (over twelve trailing months). Sixty-four percent of those with a positive Net Income are able to convert three-quarters or more of that revenue into FCF. On the other hand, many companies have an FCF lower than their Net Income.

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Money may be tight, but slightly reducing your menu prices could make your restaurant more appealing for curbside pickup and delivery customers. If it keeps the cash flow coming in, it might be worth the dip in revenue. Planning in advance will help you to keep that end goal in mind when considering other purchases, managing your budget, and making pricing decisions. Once you have your budget in hand, you can plan on your other purchases accordingly. This way, you’ll be able to make adjustments to your restaurant cash flow as needed throughout the year.

Tim Hand and Kim Letizia are with Kinetic12 Consulting, a Chicago-based Foodservice and general management consulting firm. The firm works with leading Foodservice suppliers, operators and organizations on customized strategic initiatives as well as guiding multiple collaborative forums and best practice projects. They also engage as keynote speakers at industry conferences and supplier sales meetings. Their previous leadership roles in restaurant chain operations and at Foodservice manufacturers provide a balanced industry perspective.

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If she isn’t writing, you can find her on a patio with friends and a pitcher of white wine sangria. While your first few profit & loss reports may uncover patterns you didn’t want to address, knowledge is power! Your profit and loss statement will tell you exactly how much to need to trim from your expenses and distributions to get back in the black. Being aware of these figures will help you prevent a cash flow crisis before it starts. You also want to prepare for any differences in customer behavior, like national holidays or bad weather. In today’s uncertain economy, characterized by frequent market fluctuations and rising interest rates, many small businesses with limited financial knowledge are struggling to stay alive, let alone grow.

Bookkeeping is a business function that you do not want to eliminate, even if you are experiencing cash flow problems. As a restaurant owner, it comes as no surprise that your business sales can fluctuate significantly depending on the season. Using your cash flow forecast as a guide, you can budget several months ahead of various seasonal upswings or downturns. This gives you the advantage of being able to increase or decrease your staffing and inventory levels accordingly. It also allows you to compare your budget to your actual numbers to determine where any discrepancies are arising from.

How to create a cash flow statement

Our firm has expertise in industries including manufacturing, construction, real estate, financial services, healthcare, government, education and retail. Restaurants often extend credit to regular customers, particularly for events and catering customers. However, this courtesy can create problems if your customers don’t pay their bills promptly. Knowing your earnings isn’t just about feeling good at the end of the day—it’s foundational data. Restaurant finance considerations are unique in that leaders must navigate an industry fraught with fluctuating variables like seasonal customer flow, perishable inventory and unpredictable expenses. Take a look at these strategies to manage your cash flow across all your venues.


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