7 Tips to Improve Your Restaurant’s Cash Flow

Restaurant Cash Flow Tips

Cash flow is an indispensable aspect of any business.

And if you ask any experienced accountant, it’s also one of the greatest indicators of success or failure for companies. 

In simple terms, cash flow represents the money flowing in and out of your restaurant business.

Yet, it’s not always a smooth ride.

In today’s blog, our experienced restaurant accountant shares his 7 tips for improving cash flow in your restaurant business. 

Need more help? Keep reading until the end for the option of a 1:1 chat. 

Restaurant Cash Flow Savings Tip #1: Cut Expenses

Tip #1 isn’t rocket science. You need to cut your expenses. 

When was the last time you actually took out your statements and went line by line through all of your expenses? 

And on top of that, when was the last time you actually cut them?

Remember, every $1 you save, you will add $1 to profit. 

So start with your biggest expenses, like food and beverage. 

Try to buy as much as you can in large quantities. We recommend joining a restaurant buying group to get better pricing and discounts.

Pay special attention to your outside vendors, like linens, cleaning, maintenance, and other service providers. There’s a good chance that you could find other vendors to charge you less. 

Go get bids from other vendors even if you don’t want to make the switch. At least these outside bids will confirm that you’re not being overcharged.

Restaurant Cash Flow Savings Tip #2: Increase Your Prices

On the flip side of expenses comes sales. 

When is the last time that you increased your menu prices? 

If you’ve done it in the last few months, good job.

But most restaurant owners we speak to out there haven’t, and for some, haven’t done so in at least a year! 

Your business every day is getting more expensive to run, so your pricing has to go up as well.

Go check out your competition. Eat out there. Experience their dishes, drinks, and what they’re doing. Go in person to see what they are charging and what they are delivering.

And if you can’t get there, you can always Google their menus instead (although they may not always be up-to-date). 

Without knowing you or your restaurant, we can take an educated guess that your prices are too low. Go read our full blog on restaurant pricing to get a few tips for making the price hikes easier, and make the changes. 

Increased prices will go a long way in easing your cash flow worries.

Restaurant Cash Flow Savings Tip #3: Cut Back On Menu Items

As a restaurant owner, you’ve probably watched a few food shows on bar and restaurant operations. (And if you haven’t, you should. It’s a great way to keep you honest on what you’re doing.)

And have you ever heard any of the professionals on the shows advise to make the menu larger? 

No! They never advise this. Because a large menu only adds to the complication of your business. 

And in doing so, it adds expenses and can shrinks your profits. 

Shrinking your menu will help streamline your operation.

It makes it easier for both back of house and front of house, and will allow you to buy more of the same ingredients, which should lower your purchase costs and make you more MONEY.

When it comes to cutting back on your menu items, we recommend looking at your most expensive menu items (in terms of cost) first. 

Not expensive what you charge customers, but what it costs you to produce, and see if you can substitute or replace expensive ingredients with cheaper ones that still deliver a great tasting dish. 

You can charge practically the same amount of money but make a lot more profit.

Restaurant Cash Flow Savings Tip #4: Look at Your Portion Sizes

This one is an easy one. Have a look at your portion sizes. 

If food is routinely being thrown out or handed out in takeout boxes to your customers, your portion sizes are too big. 

You are wasting MONEY. Simply wasting MONEY! 

You’re in the business to make profit, not to give people two meals.

Cut back on your portion sizes, save on waste and save on second meals to customers.

Restaurant Cash Flow Savings Tip #5: Create a Reliable Forecast

As a restaurant owner, you need a reliable cash flow forecast to run your business. 

We won’t get into the nitty gritty of making a forecast as it’s quite complicated for business owners to do. You might need to ask your experienced restaurant CPA to help, or use a simple cash flow tool like Float, or Cash Flow Frog. 

These software help show where your cash flow is going, and help you know if you need to put money into the business or when to look for financing help. 

Restaurant Cash Flow Savings Tip #6: Stick to Your Budget!

In the midst of cash flow issues, or any time really, you have to stick to your budget. 

And not just any budget. Ideally, you’re using the Profit First method that we’ve spoken about on our other blogs. 

The Profit First budget is a great system that can help you stick to your budget, prioritize your spending, and help you review your budget vs. actual as it’s occurring in real-time. 

If you decide to make a discretionary spend or spend over your budget with the Profit First method, you will have to borrow funds from your profit account, and watch yourself “dipping” or “stealing” into your profits. 

The repercussions are real and witnessed in real-time, rather than waiting to see it at the end of the month on your P&L. 

Restaurant Cash Flow Savings Tip #7: Don’t Ignore Customer Feedback 

Last but not least, pay attention to customer feedback regarding service and specific dishes. 

We get it, it makes you upset. 

You don’t like being told you’re doing something wrong.

But more than likely, they’re absolutely correct. 

And if you’re customers aren’t telling you, pay attention to their behavior. 

Do you routinely see the same plate of food back in the kitchen to be thrown out? That’s your customer saying it’s in need of a replacement or complete do-over. 

Paying attention to consumer feedback and behavior can save you a lot of heartache (and wasted money) in the long run. 

Get Help With Your Restaurant Cash Flow

Here at U-Nique Accounting, helping restaurant owners with their cash flow is one of the most important things we do. 

If you need extra help identifying your cash flow concerns or would like help creating a forecast for your business, you can get in touch with us any time. 

Simply make a quick appointment using our calendar below. 

And in the meantime, go back through the tips we just shared and action a few of our suggestions. The end result will be more money in your pocket. 

Until then, remember, don’t conform. Stay U-Nique! 

Matt C


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