+27 60 837 4667
Client Login
Skip to content
Home » Articles » Don’t Blow Your Budget in One Go!

Don’t Blow Your Budget in One Go!

  • by
Don’t Blow Your Budget in One Go!

Whether you’ve already opened your dream restaurant or you’re thinking of buying one, you’re going to spend a fair amount of time thinking about and planning your first successful year. One of the cornerstones of running a profitable restaurant is controlling your cash flow in such a way so as to ensure both short and medium-term stability. A well-planned and executed budget should provide a higher cash inflow versus outflow. If your outflow is higher than your inflow, you need to take an objective look at your expenses and start putting cost-saving measures in place to shift that balance.

Hire the Right People

At the end of the day, you are running a business, and it’s important to remember this. When starting out, focus on building a team with a strong work ethic that results in increased profitability and waste elimination. Look for reliable and collaborative staff who share your vision. Firing and replacing staff can be a costly and disruptive exercise, affecting the consistency of your business as customers see new faces each time they visit.

Keep a Capital Cushion

Expenses can quickly add up, so it’s crucial to plan for the unexpected. Ensure you have enough capital available to cover your operational expenses for the first six months. Keeping a sufficient capital cushion will give you time to get the business off the ground and start turning a profit. After the initial buzz around your establishment fades, you may experience a decrease in sales. This is when your capital cushion can help fill gaps in cash flow. Plan ahead and avoid wasting extra cash during good times to stay afloat during quieter periods.

Keep the Menu Simple

Many new owners make the mistake of creating overly complicated menus, which can discourage customers instead of attracting them. A complex menu requires a larger stock inventory, increasing your expenses. Unpopular menu items can lead to revenue loss as stocked items age. Start with a simple menu and make adjustments based on customer feedback and preferences. Fine-tuning your menu according to trends and seasons will help maintain steady foot traffic and cash flow. A fresh and exciting, yet uncomplicated menu can also serve as a great marketing tool!

Don’t Rely on Credit

Building good relationships with suppliers and third parties is essential. While payment terms offered by suppliers can be convenient when you’re low on cash, avoid relying on them too heavily. Order what you need for the short term and strive to make prompt payments. Many suppliers offer cash discounts for timely payments, allowing you to save money over time.

Start Taking Stock

Being prepared for various scenarios is essential. Avoid running out of key ingredients during busy periods by conducting daily or weekly stock takes. This practice not only helps prevent theft, a significant drain on restaurant finances, but also provides insights into the flow of your kitchen. Consider utilizing point-of-sale systems with stock modules and reports to manage inventory, minimize wastage, and ensure timely replenishment.

By effectively controlling your budget, you can reach your break-even point earlier and start seeing profits sooner. With time, you’ll develop an instinct for budgeting within that range, ensuring the financial stability and success of your restaurant.