Top Restaurant Cash Flow Hacks Every Restaurant Owner Should Know

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SoftwareSuggest

Senior editor

Parul Saxena

Chief editor

Last updated: May 21, 2021

Finance management is one of the basic entities of any successful business that aids it in avoiding financial mishappening. Undoubtedly, positive cash flow is what keeps the business running incessantly. Restaurant cash flow is required to pay to the vendors, buy equipment and raw materials, cover the payroll of the staff, to begin a new marketing campaign by catering to the ongoing trends and to take care of the uncertainties like a sudden rise in demand. It can be a tedious and tricky task for the restaurant owners to manage the cash flow.  However, by exploiting restaurant management software, the task can be accomplished quite seamlessly. In addition to using restaurant billing software, you should also keep a check on other things to easily manage the cash flow. Here are some killer tips to get started   

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Top Strategies For Restaurant Cash Flow Management

1. Assessing Menu

The menu has a direct impact on the restaurant cash flow. Since the menu contains pricing of different items, so updating the menu according to market changes can help in keeping the cash flow in a positive direction.  For instance, if the inventory cost is on the rise and the pricing mentioned in the menu is unchanged, then it will decrease the profit margin and affect the restaurant cash flow. So, you should raise the prices of such items and even remove slow-moving items from the menu.    

In addition to considering the prices, you should also focus on designing the menu strategically.  You should always keep those dishes in the limelight that yield high-profit margins. Furthermore, the description for the dishes should be such that it tempts the customers to place an order for high-value dishes.  You should look at the menu from the customer’s perspective so that you end up with a stellar menu.

2. Cash flow forecast

This is an essential strategy that helps in avoiding instances of cash woes in the restaurants. You should have a plan for your restaurant and cash forecast at the place. With a restaurant cash flow forecast, you can easily make out when the cash is coming in or moving out. So, you can manage your cash flow according to the situation.   

Forecasts help the restaurant owners to make important decisions regarding the expenditure. They can decipher whether they need to cut an expense or they can invest in certain things. Furthermore, the restaurant owners can also gain insight into the business by comparing actual figures with the forecasted values. The comparison can help in formulating season budgets and in enhancing next year’s model or future strategies.

3. Streamline your overheads

As a restaurant owner, if you find yourself under constant cash woes, then you should consider cutting back the overhead expenses like payroll, utilities, inventory, etc. You should review your bills and look for better deals. You can look for alternative ingredients that are cheaper than the existing ones. One should also look at using the ingredients profitably.

You can decrease your menu during the time of crisis as that will decrease the cost of inventory. Furthermore, you can adopt a flexible working model in order to reduce overheads. So, you can have fewer workforces during low times and have more workforces during the busy period.         

4. Review cash flows weekly to identify trends

It is a wise step to review restaurant cash flow weekly as it helps in many ways. It allows the restaurant owners to analyze the sales pattern and cash flow over a period of time. This also helps in creating cash flow projections. Sales projections then help in understanding the trends that makes cash flow predictable so that you can adjust the expenses accordingly.

5. Don’t rely on credit

Every restaurant owner understands the significance of credit to launch the business. However, you shouldn’t consider it as a crutch and depend totally on it. Instead, credit is like a cobweb that ultimately becomes an overhead. So, a restaurant owner should look for a discount from the vendors on immediate payment instead of taking credit from the suppliers. With proper cash flow management, you can make upfront payments and avoid taking credits.    

6. Diversify the vendor list

For any restaurant owner, its list of vendors is the most important asset. Having vendors is essential as it keeps the delivery of the order in sync with the intended timelines. However, you shouldn’t rely on a single vendor. Relying on a single vendor may delay the delivery at the time of peak demand, which ultimately affects your cash flow.  When you rely on multiple vendors, then that improves the efficiency of delivery. It also gives you different options, so you can rely on them during peak demand phase. This also leads to better restaurant cash flow.  

7. Proper Bookkeeping

Bookkeeping is essential for every business to be it a hotel business, e-commerce or restaurant business. However, the restaurant owners are totally occupied with the task of serving customers and they hardly get time to do the bookkeeping. So, they tend to ignore it. Due to this, many bills are not paid on time and the invoices are not chased properly. Thus, the restaurant owners are left out of pocket in both cases.

Inappropriate or disorganized books thus lead to inaccurate reports as well as forecasting that results in financial losses. On the other hand, proper bookkeeping will give you more control over the finances. It paves the way for regular restaurant cash flow.    

8. Negotiate with the vendors

It is a wise step to negotiate and seek discounts from your regular vendors. You should invest both your time and efforts in having a word with the vendors to see if they are ready to offer a deal on supplies. For instance, you can ask for a discount on bulk supplies that you buy on a regular basis. You should try to ask the vendors for 5-10% of waiver in the cost. In this way, you can save money and boost the restaurant cash flow.

Closing notes

In today’s time, it has become indispensable for the restaurant owners to have restaurant management software to run a restaurant effectively. However, that isn’t just enough to have a constant restaurant cash flow. In addition to using the best restaurant management software, you need to adopt certain strategies to witness positive cash flow. If you follow the aforementioned tips, then you’ll surely see a remarkable improvement in the cash flows in your restaurant.

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