The harsh truth is, over 60 percent of the new restaurants fail in their first year of service. In fact, this known truth happens to be the primary reason why most entrepreneurs fear the restaurant industry.
Nevertheless, while this space is ruthless as it can be, there are still a good lot of restaurants that open up and not just survive but lead the race. How do they do it?
Though numerous factors contribute to the success of a restaurant, the talent for managing restaurant finances efficiently is one noteworthy reason behind it.
Not all restaurant owners are born businesspeople. Often, people enter the industry just because of their love of food and great customer service. For such restaurateurs who don’t have a strong business background, or haven’t gone to business school, investing in an excellent financial management system is vital.
Furthermore, knowing how to manage cash flow while keeping an eye on other things going around you will help you tackle your restaurant finances efficiently.
Control the Use of Credit
Relying on credit will definitely help you get your business off the ground. However, being overly dependent on credit can be dangerous.
When it’s time to pay back your debts and it becomes the greatest part of your overheads, it might result in your restaurant spiraling down to closure. Be careful!
Instead of accepting credit offers from your suppliers, ask them if they would give you a discount on making an immediate payment. Just like you, your suppliers are equally concerned about their cash flow. What’s more, you will find taking up big upfront payments is cheaper than credit in the long run.
Pay Attention to Payroll
Now, payroll is an area you should be vigilant about when running a restaurant. In order to provide remarkable customer service, you need enough staff both in the front and the back of the house without overstaffing. Overstaffing creates a few problems of which two are-you paying more and servers receiving less in tips.
Thus, you have to efficiently manage staff time. Refer to your daily business reviews from the past years to get insights about the sales pattern. Additionally, put together a policy where the staff will have to ask before switching shifts. Both of these measures will help immensely reduce overtime.
Set Seasonal Budgets
Often restaurateurs rely on an annual budget to run their business. However, annual budgets aren’t as effective as season budgets in the restaurant industry. The seasonal nature of your business demands that you set budgets frequently.
Thus, refer your cash flow forecast to budget our several months ahead of seasonal upswings. This will give you a clear understanding of your needs and will help you allot costs of seasonal stock, staff, and marketing before busy times. Further, it will also provide you with the flexibility to adapt to periods of slow business.
Optimize and Integrate Your POS System
Presently, around 92 percent of customers read restaurant reviews before deciding to dine in. Consumers always prefer restaurants that serve the customers in a hassle-free and timely manner. A restaurant POS credit card processing systems help with transactions and eliminates the need for separate systems. Additionally, it stores data and compiles reports making it easier for you to track sales and make important business decisions.
Analyze Sales Data Regularly
Get into the habit of checking your sales data regularly-better if you do it daily. Doing so will give you clear insights into what your daily sales and expenses look like. This will, in turn, help you track your restaurant’s performance. If it’s doing not so well enough, make improvements based on the pattern of sales.
Additionally, rather than helping you plan and boost your sales, analyzing sales data regularly will also help you cut down unnecessary expenses. Spend a few minutes every day to look at the reports and devise plans on how you can improve. This will help you quickly accelerate your restaurant towards success.
You can read a few more restaurant finance management tips from RestaurantEngine.com here.
Take Baby Steps & Save Every Day
While there are heavy ways to save huge chunks of money at your restaurant like investing in energy-efficient appliances, simple and cheaper ways are great to save money every day. For instance, having your menu updated regularly to make sure food costs are correct, getting rid of the items that don’t sell, and keeping your inventory low are inexpensive ways to save money in the long run.
Furthermore, mastering the art of restaurant finance management takes time and isn’t something that can be learned overnight. Nevertheless, the above-mentioned ways will definitely help you manage your restaurant finances more efficiently. Keep practicing and turn it into a habit to take your restaurant to the top of the industry.
About Author: Chris Fraser
Chris has served as a business advisor to a big list of small and micro businesses; localized businesses and social enterprise in particular. Chris is also an avid reader and loves to stay updated about latest tech and innovation.