The Greater Houston Restaurant Association hosted its second Educational Outlet on November 16, 2010 at Central Market. “The ABC’s of Restaurant Cash Flow Management” was a perfect way for our members to learn the basics of managing finances, looking at historical trends in sales, and increasing profits.
Throughout the seminar, the panelists discussed the different ways to improve the cash flow of restaurants. Having a strategic marketing plan as well as understanding the break -even point are essential to managing your restaurant’s finances. The panelists also stressed the importance of proactively anticipating unexpected expenditures, such as equipment replacement or structural repairs. Additionally, the panelist noted that whether you enjoy reviewing your books or not it is a necessary task of all successful restaurateurs.
The seminar had panelists from various backgrounds within the restaurant industry: Ernie Pekmezaris, CFO and Treasurer of Pappas Restaurants, Inc., Ric Mausser, owner of Campioni Restaurant, and Joe Erickson, leading contributor and Vice-President of www.RestaurantOwner.com . The seminar was moderated by Chris Tripoli of A’la Carte Foodservice Consulting Group. Each participant brought a unique perspective to the class, making it highly informative and beneficial to anyone needing advice or tips on how to manage restaurant cash flow.
The GHRA holds a different Educational Outlet every quarter, and the next one will be on February 16, 2010 in the Central Market Community room from 3:30-5:00 p.m. The seminar will cover the Healthcare Bill and how it will affect restaurateurs in the future. For more information, please call the GHRA office at 713.802.1200 or email assistant@ghra.com.
Cash flow is the sometimes the measure that restaurants live and die by. Most restaurants fail in their first year of operation because they simply run out of cash to keep the business going. The funds from the loan run out, credit cards and lines of credit have been tapped, and the money faucet has dried up.
Cash Management on Premises
- If you accept cash only, robbers make you number one on their hit lists. Accept credit cards. Shop around for the cheapest processing rate and settle your transactions on a daily basis after closing. The GHRA recommends Hartland Payment Systems. They even have next day deposits! http://www.heartlandpaymentsystems.com/gofullcourse/solutions.aspx?state=TX
- Keep a drop safe in the office and make cash deposits at least once a day, varying the times and people you send to the bank.
Top Cash Burners
- Payroll - Staff must be paid on time. Morale will plummet and service will take a nosedive if staff is not paid, aside from it being unethical. Both Ernie Pekmezaris and Joe Erickson recommended that you use a separate bank account for payroll only!
- Food Inventory - There’s no way to know exactly how many people will order food in your restaurant on any given day, but you still must have enough fresh food on hand to make all the items on your menu. While good chefs know how to minimize waste, there is no way to avoid spoilage when business is down 50% on a Friday night because there’s a major thunderstorm with torrential rain right outside your door. Fish, for example, is only at peak freshness for a relatively short period of time.
- Loan Payments - Loans and mortgages must be paid on time. If they’re not, the bank or mortgage company may foreclose.
- Vendor Bills - The monthly phone, utility and other bills must be paid on time, regardless of how business is.
- Miscellaneous Expenses - Even though you may budget for repairs and other unforeseen expenses, things always seem to crop up which require immediate cash. It’s easy to underestimate the costs of re-printing the menu, paying the plumber for fixing the leak in the restroom and all the rest.
Maximizing Cash Flow
- Delay payments as long as possible to those vendors that don’t give you a discount for paying early. One of our panelist, Ric Mauser likes to pay all of his vendors as soon as possible he said this really allows him to get a true depiction of his actual cash on hand and he gets some of the best rates because of it.
- Negotiate with staff to pay as many workers as possible every other week. It was noted by the panelist to make sure you set aside all of the applicable fees and pay your taxes timely.
www.ghra.com/blog/e02-abcs-of-restaurant-cash-flow-mangement
