Restaurants are notoriously risky business ventures. You have to invest a lot of capital into the business upfront and know that you may not turn a profit for at least a year. Especially as a local restaurant, you need to quickly get people interested in your food and environment to foster a following that will keep you afloat. Because of the risk of these business ventures, managing money becomes more important than ever.
The goal of all businesses is to turn a profit, so finances are a huge part of the operation. In order to create the experiences and the great food you want to sell at your restaurant, you have to first learn how to manage your finances. This can help you grow and thrive and continue creating for your community. As you work to keep your restaurant running successfully, here are just a few tips for how to best monitor your money.
Save on equipment when it’s possible.
To run a restaurant, you’re going to need a lot of equipment. Beyond just the fresh food and produce, you need dining furniture, sanitizing stations, refrigerators, freezers, stoves, and dishwasher to name a few. When purchasing your commercial restaurant equipment, find the best price for you. Save on these pieces whenever possible by buying in bulk or looking at discount sites. It may take some searching, but it will be worth it to have the best equipment at the right price.
Always get an upfront payment.
As you start, it can be exciting to fill big catering orders or host events at your restaurant. Be sure you get a downpayment in moments like these. This adds security that you will be paid for the great job you’re doing. It will add extra stress to your life if you need to resort to commercial debt collection to get what you are owed. And while these litigators and collectors are great at their job and can file a lawsuit for a flat rate, you don’t want to resort to that if you don’t have to. Ask for payment upfront and guarantee you get your money.
Track daily sales and overall profits.
The first step to managing your money is knowing all the facts. Track your daily sales and your daily expenses. Knowing the fine details of your profit margins will allow you to make better financial choices going forward. Daily sales totals as well as overall profits will give you a complete picture of your cash flow.
Forecast your cash flow.
Speaking of cash flow, it’s a good idea to forecast the amount of money coming in and out of your restaurant. This includes your budget for rent, utilities, and food supply. You always want to be able to afford your expenses rather than relying on credit. So budget appropriately for what you know is coming.
Don’t overstaff or go overboard on the payroll.
To run a restaurant, you need multiple different employees. From servers to hosts to kitchen staff to managers, there are plenty of jobs to fill. Be sure to monitor your payroll expenses and try not to over staff. You need enough people working to provide a great guest experience, but not too many that you’re paying people to stand around. This may also include hiring more staff during peak times and cutting hours during the slower seasons.
Cut down on building expenses.
Running a restaurant doesn’t mean your only expenses are food-related. You’re also maintaining a building and need to pay for all the things that the building entails. Rent, energy costs, and the water bill are all aspects of a restaurant that you’re responsible for paying. Can you save money by switching to more energy-efficient appliances or using cost-efficient lighting methods? These are little ways to cut back on expenses and stretch your net profits.