There’s no question that owning and operating a restaurant can be volatile in the best of times. Throw in the worldwide COVID-19 pandemic that had restaurants shuttering all across the country, that were then forced to either survive with takeout only, or drastically reduced seating capacity, and it has left restaurants struggling for cash.
Even if your restaurant has managed to weather the storm and come up with solutions that work, it may be that it was already experiencing cash flow problems and those same issues continue to plague the business. So, what can you do? What happens when you need an injection of cash in order for your restaurant to survive? Here are some options that may work as a solution.
Apply for a Business Loan
Often restaurateurs look at a business a loan as a way to secure financing and get that much-needed cash that they can invest in the business. As the saying goes, you have to spend money to make money, but first, you need to come up with that spending cash. Unfortunately, not every business will be approved for a loan by their bank, which may leave you wondering what you can do when denied funding.
The bank will look at how long you’ve been in business, your credit rating, collateral, cash flow, debt utilization, and more. It’s important to keep in mind that there are lenders outside of the bank that will consider your loan.
Get Tight with Inventory Management
Now is also a great time to start tightening up where inventory management is concerned. You don’t want to be ordering and holding on to excess that isn’t really needed and just burning through your cash. Stricter inventory management is an excellent way to actually reduce the expenses and cut down on the amount of waste.
Rein in the Overhead Costs
Overhead costs should also be examined. Look at all aspects of the overhead costs and look for creative ways to at least reduce them, if not eliminate some unnecessary ones.
Can Your Marketing/Advertising Budget be Cut Back?
Sure, it’s important to have a robust marketing and advertising plan, but when times are tough and cash flow is thin to say the least, it can help to make some cuts here too. One solution can be to focus on online advertising through social media accounts. Ensure the restaurant has its own Facebook, Instagram, and Twitter accounts and start posting information, promotions, deals, upcoming events, on those pages. This is essentially free advertising.
Just be sure to also engage with people who do comment, like, retweet, and share your content. This is a great way to give some personality to your restaurant.
Freeing Up Cash Can Be Done
The good news is that even though times may seem tough and cash flow isn’t exactly at the level you need it to be, there are ways to free up cash in your restaurant business. With a little planning, re-organizing, and potentially an injection of outside cash, things can be well on their way again.