Fix Your Restaurant’s Cash Flow With These 6 Tips
Let’s be honest for a second.
If your restaurant is constantly tight on cash, it’s not because you’re “just having a slow month.”
It’s usually a mix of small decisions that have been stacking up over time.
In today’s blog, we’re going to walk through 6 straightforward ways to improve your cash flow. These come straight from real conversations with restaurant owners and from what we see behind the scenes every day.
If you prefer to watch instead of read, you can watch Matt talk through this topic over on YouTube here:
Let’s get into it.
Tip #1: Cut Expenses (Yes, Actually Do It)
Not exactly groundbreaking advice, right?
But here’s the real question… when was the last time you actually went through your expenses and cut them?
Because most owners don’t.
And here’s why this matters.
Every $1 you save is $1 added directly to profit.
Start with your biggest costs first, like food and beverage. Look at buying in larger quantities where it makes sense. If you’re not part of a restaurant buying group, that’s something worth looking into for better pricing.
Then move on to your vendors.
Linen services, cleaning, maintenance, all of it. Go out and get new bids. Even if you don’t plan to switch, it keeps everyone honest and makes sure you’re not overpaying.
Tip #2: Increase Your Prices
We’re going to say this louder for the people in the back:
Increase your prices.
When was the last time you updated your menu?
If it was a couple months ago, great. You’re ahead of most people.
But for a lot of owners, it’s been a year or possibly longer.
Meanwhile, your costs have been going up every single month. Food costs, labor, everything.
If your pricing hasn’t kept up, your margins are quietly getting squeezed.
Go check your competition. Eat there. Look at their menus online. See what they’re charging and what they’re delivering.
There’s a very good chance your prices are too low.
Tip #3: Cut Back Your Menu
No one successful in the restaurant world is telling you to make your menu bigger.
In fact, it’s the opposite.
A large menu creates complexity. More ingredients. More waste. More things to manage. And ultimately, lower profits.
A smaller menu makes your operation smoother for both the kitchen and the front of house.
It also lets you buy more of the same ingredients, which usually lowers your costs.
Now take it one step further.
Look at your highest-cost dishes. Not what you charge, but what it costs you to make them. Can you swap in more cost-effective ingredients without sacrificing quality?
Most of the time, you can.
And while you’re at it, take a hard look at portion sizes.
If customers are constantly leaving food behind or taking half their meal home, your portions are too big. That’s money walking out the door.
You’re in business to make a profit, not to serve two meals for the price of one.
Tip #4: Create a Reliable Forecast
A lot of restaurant owners operate without a clear view of what’s coming next.
That’s where a simple cash flow forecast comes in.
This doesn’t need to be overly complicated, but it does need to exist.
A tool like Float, which we use with our clients, can show you where your cash is going, what’s coming in, and whether you’re heading toward a shortfall.
Because the worst time to think about cash flow is when you’ve already run out of it.
Tip #5: Stick to a Budget
First step here… you actually need a budget.
Second step… you need to follow it.
We’re big fans of the Profit First method for this.
It forces you to be intentional with your spending and keeps you aware of where your money is going in real time.
Here’s the part most people don’t expect.
If you overspend, you don’t just ignore it and deal with it later. You actually have to pull money from your profit account.
And that stings a little, which is exactly the point.
It keeps you disciplined and forces better decisions.
Tip #6: Don’t Ignore Customer Feedback
This one can be tough.
No one likes hearing that something isn’t working.
But your customers are telling you exactly where the problems are.
If you’re getting consistent feedback about a dish or service issue, pay attention to it.
And even if they’re not saying it out loud, watch what’s happening.
If the same plate keeps coming back half-eaten, that’s feedback. It probably needs to be changed or removed altogether.
Let’s Recap
If your cash flow feels tight, here’s where to start.
- Cut your expenses and actually review them
- Raise your prices if you haven’t recently
- Simplify your menu and control portion sizes
- Use a forecast so you can see what’s coming
- Stick to a real budget
- And listen to what your customers are telling you
None of this is complicated.
But it does require you to take action.
If you’re not sure where to start or want a second set of eyes on your numbers, that’s exactly what we do. If you are not watching your food costs %s and beverage costs % on a consistent basis you need a good system to help you and this is where Xero comes in.
As Xero experts we will help organize your financial records to track and report these important costs so you can make sure your margins and profits are not slipping.
Get in touch with us here at U-Nique Accounting and let’s take a look together
Until next time.
By MATT CIANCIARULO
