7 Tips for Improving Your Restaurant's Cash Flow

By Joseph Brady, Senior Director of Digital Marketing, Reliant Funding

Cash-flow is a term that isn’t new to any business owner. The first thing that comes to mind is the inflow and outflow of money, although managing a cash flow means much more than that.

Unlike most other businesses, restaurants have unique cash flow challenges to deal with. Issues like handling fresh inventory -- which puts themselves at risk of losses if stock goes bad-- and dealing with a volatile income. This can make predicting or projecting cash flow for small business restaurants difficult. However, there are certain changes you can make to improve your cash flow and bring some financial stability to your business.

Be Proactive

Restaurants need to be proactive about their cash flow

Staying proactive is the best way to manage your cash flow. There will always be the occasional emergency that pops up and dampens your capital. Having some savings for those bad days will help you when you’re down, but we know that it can be tough if your margins are already tight.

But there are other ways you can be proactive with your cash flow. For example, if your business historically has slower or busier seasons, you can project your cash flows around these circumstances and make sure the good times pay for the slow.

You should also take a proactive step to spend more on marketing to help ease through the slow seasons. It can be as simple as increasing your spending on local advertising or marketing to try to get more bodies through the door. Just be sure to include that spending in your cash flow projections. It helps you take action of any cash flow issues before they even come up. Be proactive about financing for your small business restaurant.  

Identifying Problems

Restaurant operators should ifentify cash flow issues to address ahead of time.

Although labor costs and payroll are the most important factors of cash flow, you may suffer a poor cash flow due to other factors as well. Every quarter analyze your restaurant to identify issues that may cause a snag in your cash flow. This can include excess inventory, how the dishes are being served (buffet, take-away, a la carte, etc.), seating arrangements, and other logistics of your day-to-day business operations. 

A mishandled payroll can also mean huge losses for small businesses, so review it with the help of an accountant if you’re having doubts. Other financial aspects may include the tax overhaul that will continue through 2019, the limited labor pool available, and the increase in the minimum wage of workers.

Decrease Overhead Expenses

Restaurants can improve cash flow by reducing overhead expenses.

Utility expenses are generally the hardest to cut down on, but there are other overhead expenses that can be cut. Re-check your menu and replace/remove menu items that are never ordered. This can help you cut down inventory on any special ingredients these dishes need as well. Why not even cross-utilize the items on your menu to reduce cash flow?  

Integrate Your Process

Restaurants can integrate their processes to improve cash flow

Once you’ve analyzed the various individual aspects of your business, you may like to try integrating some parts of your restaurant together. Similar to the gears of a machine, you may have several independent working parts, but you can try bringing them together to run your restaurant more efficiently.  

For instance, you can get more people involved in management roles along with serving tables. Combining your payroll and benefits management can also help you operate more efficiently. An integrated business report will not only make handling your accounts easier as everything will be in one place but will also help you identify business patterns that you may not have noticed before.

Diversify Your Vendor List

Restaurants can diversify their vendors to improve cash flow.

When your vendors are unable to deliver your products or inventory on time, your cash flow can take a hit. Diversify the vendors you order from so you’re up to date on the best in the market, as well as encourage healthy competition between vendors for your business. This will also ensure more efficiency in deliveries for your restaurant.

Budget Seasonally

Restaurants can improve cash flow by budgeting seasonally.

Take every season as an opportunity to sort out your budgets again. This will help you monitor your cash flow and understand how close you are to your projections.

This will help you gauge your business patterns according to the seasons and increase or decrease your vendor and staff frequencies accordingly. Also consider rotating your menu to feature food that are in-season which will help you save some money while keeping your menu fresh and interesting to guests. When it comes to making the most of your cash flow, every little thing can count.

Promote Your Restaurant

Don’t forget to market your restaurant!

Finally, promoting your restaurant is critical. It’s the number one way to drive more sales and increase traffic to your restaurant. Use social media marketing to offer discounts when your sales seem too slow, and Groupon codes to pull in larger crowds. Partner with local event organizers, alumni groups and recreational organizations, and offer to cater their parties and corporate programs. This will help spread your brand and create a social connection with your guests.


On a final note, your cash flow numbers reflect the position of your business and its potential growth. It acts as a looking glass both for you and any investors to understand the opportunities your business presents and the ways to meet them. As your business changes, you may unravel more ways your cash flow can be increased. Feel free to share any secrets you use for handling cash flow in the comments below!

About the Author
Joseph Brady is Senior Director of Digital Marketing for Reliant Funding, a provider of short-term working capital to small and mid-sized businesses nationwide. He has more than 14 years of experience in B2B digital marketing, optimization and operations, with a focus in the financial services market.