With rapid vaccine rollout, restaurant businesses are slowly getting back on track. Now, as your business revives, you need a robust financial plan for your restaurant to achieve a rapid V-shaped recovery.
Firstly, you need to rethink your budget and adapt by adjusting labor and inventory costs. Furthermore, you need to monitor your cash flow, upgrade your menu with profitable and in-demand cuisines, and, most importantly, use restaurant POS systems to streamline your operations, among other measures.
Keep reading; we will dive deep into each of these suggestions. You will have a workable plan to manage your restaurant’s financial health by the end of this article.
How To Manage Your Restaurant’s Financial Health?
1. Rethink Your Budget
In this post-pandemic recovery, every dollar counts.
The rule of thumb while creating a financial plan for a restaurant is to closely re-evaluate current financials and allocate money to business operations that will help you achieve profitability while cutting costs where necessary.
Adjust your variable costs, such as inventory, labor, etc., based on new goals such as focusing more on pickups and profitable in-demand dishes. Most importantly, you need to control cost leakages caused by waste, errors, over-portioning, late payments, and contract violations by the supplier.
In the end, it’s all about how you prioritize your business operations. Ask questions like – Is curating discount offers to attract more customers significant or continuing that less popular dish is essential? Is investing in restaurant POS systems profitable in the long run, or should I stick to traditional bookkeeping that causes cost leakages due to errors?
Answers to questions like these will help better allocate your budget.
2. Control Your Prime Costs
You cannot control fixed costs such as rent. However, you can control costs such as marketing, labor, food, etc., and try to minimize them to attain a positive cash flow.
Here’s how you can better manage your prime costs, i.e., inventory and labor expenses-
● Labor Costs
The first step is to ensure that you allocate the right amount of staff during rush hours and non-peak hours.
If your restaurant is understaffed during peak hours, you will fail to deliver orders leading to revenue loss and customer dissatisfaction. Whereas overstaffing will drain your bankroll.
To better utilize your workforce, you can request your staff to deliver orders during non-rush hours. It is a win-win situation because this way, your staff earns more money while you save some dollars that you would otherwise spend on third-party delivery services.
The next and the most important step is to track employee hours and turnover using employee management software to optimize your labor.
Honestly, individually managing all your software – accounting, employee management, payments, etc. can be a nightmare. For this, you can use KAPED’s free-of-cost 360-degree merchant account that offers everything from payments, employee management services to restaurant POS systems under one roof.
● Inventory Costs
To control inventory expenses, you should avoid overstocking as this leads to food wastage. Instead, you should procure raw materials in smaller batches.
Furthermore, you should use locally available seasonal foods as they are comparatively cheaper and popular in the local cuisine.
3. Micro-Manage Your Cash Flow
Creating a budget is one thing and monitoring the financial plan of a restaurant is another. However, monitoring your cash flow can be the difference between shutting down and thriving.
To understand your cash flow, you need to track both – inflow and outflow. For this, review the sources of your income, such as sales revenue and funding. Now, compare that to your outflow sources such as rent, payroll, invoices, inventory costs, maintenance, etc.
Moreover, if your business requires you to outsource accounting from a Certified Public Accountant (CPA), don’t shy away from it. The money you spend on accounting will pay for itself as you will gain granular insights into your cash flow that will help you eliminate the financial inefficiencies in your business.
4. Track Your Finances Daily
The obvious next step in the financial plan of a restaurant should be reviewing your financial statements regularly.
The restaurant business is dynamic; you have more orders on festivals and important occasions, while the customer base is low on other days. Daily reviewing your statements will help you make necessary adjustments quickly and run your business accordingly.
Profit/loss statements and your credit reports are amongst the most important. These reports help you track where your money is going and how to manage your cash flow better.
In addition to managing your cash flow, credit data tells you whether or not you qualify for a loan. You can know your credit health using Trak. It is a credit monitoring software that pulls all your credit data at one place into any report or presentation. Thanks to this, you can quickly examine your business health.
5. Optimize Your Menu
You should create a customer-focused menu.
For this, you need to monitor all the activities of food production. Be it sourcing, ingredients, in-demand recipes, or customer reviews, you should scan everything. All this will help you identify where you can cut costs, how you can increase your food quality, and which dishes are popular. Then, based on your observations, you can upgrade your menu to include profitable and in-demand dishes and remove the ones which are not.
As mentioned, including seasonal dishes in your menu is a no-brainer as they are cost-effective and attract more customers. Additionally, as more and more people are ordering food online, you should partner with online delivery services and include delivery-focused meals in your menu.
6. Make The Most Of Your Marketing Spend
Marketing your business is more important than ever. To attract more customers, you need to offer special discounts (while keeping profitability in mind) and run ad campaigns marketing those discount offers.
The best way to run low-cost marketing campaigns that reach more and more people is social media marketing. You need to run catchy ad campaigns on platforms like Google, Facebook, Instagram, Twitter, etc. You can promote special prices on dishes, create hype around festival offers, provide bulk prices for events like birthdays, among many other things.
To save more dollars on your marketing spend, you can use exclusive cards for running digital ads such as Flex AdCard. With Flex AdCard, you get up to 3% unlimited cash back on your Facebook and Google ad spend, sign-up bonuses, free ad compliance audits, among other perks.
7. Seek Expert Guidance And Get Access to Capital
To ease the financial burden, the U.S. government has introduced several federal loans to help small businesses. One such loan is the Paycheck Protection Program (PPP).
PPP is a forgivable loan given you use the loan amount to keep your employees on the payroll, pay your bills, mortgage interest, and utilities. As per this loan contract, you need to use 60% of the loan amount on payroll and 40% on other costs.
Getting access to credit in these times is crucial to get your business back on track. However, selecting the right fund for your business and lengthy paperwork may seem daunting. At worst, some application errors might lead to loan cancellation.
Considering this, whether you want an SBA loan, a Business Line of Credit, or a Working Capital Loan, it is always better to consult loan experts. You can use KAPED to make your credit application process a breeze. Forget lengthy paperwork. KAPED’s matching engine pre-approves you with the best credit offers from more than 500 funding options.
In A Nutshell
As lockdown restrictions are now over, you can expect more revenue for your restaurant business. First, however, your business needs a solid financial plan for your restaurant for a fast-paced recovery.
A good financial plan includes –
- Creating a budget while controlling variable costs
- Monitoring your cash flow regularly
- Maintaining an updated account of your business
- Optimizing your menu
- Social media marketing
Additionally, you might also seek expert guidance to help you with your business finances and credit access.
If you want a 360-degree financial solution tailored for your restaurant, KAPED can be your go-to software.
With KAPED, you get an inexpensive solution to manage your procurement expenses, easy credit access, most rewarding business cards, a no-cost merchant account with in-depth reporting and integrations like Quickbooks, and Homebase, and much more. To know more, contact KAPED now!