Balancing your duties as a successful business owner can be challenging, the most critical of which include management, sales, and marketing. The most important of all, however, is money management. The ability to effectively balance expenditure with earnings should rank right up there, along with sales, as a top concern.
This is especially crucial for a restaurant business. In order to be able to pay your rent, employees, suppliers, and vendors, your finances must be in order. Poor restaurant financial management can lead to failure. On the other hand, long-term eateries that survive the vagaries of the market employ efficient money-management techniques to remain afloat, if not thrive.
How to Manage Restaurant Finances in 2022
Understanding your finances and controlling expenditures are crucial components of a successful business. Typically, first-time restaurateurs are so preoccupied with securing the finances to start a restaurant that they overlook the need for working capital until it breaks even and becomes a profit. However, the possibilities of doing so are mired by the absence of proper finance management. Here are a few tips you must follow when managing your restaurant's finances.
Setting a budget is the first step in managing your finances. Budgeting keeps you aware of your expenses, operating expenses, available money, and earning potential. To eliminate confusion and maintain track of all costs, be sure to create an overall budget and ensure you stay well-within your restaurant marketing budget as this is primarily where overspending happens.
After creating a budget, conduct regular audits of your income and expenses.
Investing in technology and equipment
Cutting back on equipment can reduce production, which can adversely impact customer service and lead to a decrease in profits. Buying new restaurant equipment like refrigeration units, ovens, utensils, and freezers are essential for any commercial kitchen. In addition, customers now demand both traditional dining courtesy and current technological comforts. As a result, all facets of restaurant operations, such as staff scheduling, kitchen management, and customer service, are impacted by restaurant technology.
Some benefits of such investments include:
- Increased efficiency
- Improved dining experience
- Cost reductions
It can be challenging for some staff members who aren't accustomed to using technology to adapt to new systems. However, the benefits of updating your restaurant to the most recent technology far exceed these drawbacks.
Creating a safety net of working capital
Most personal financial advisors advise setting up a safety net of three to six months' worth of costs. You might profit from looking into restaurant finance alternatives, including business loans, credit cards, and lines of credit, in addition to having a safety net.
Of course, your ability to qualify for these products will depend on your credit score, the length of your business, and daily sales.
Minimize labor costs
The most crucial thing you can do is constantly monitor labor costs and their impact on cash flow. This will enable you to determine your present financial situation. In addition, your labor expenditures can be reduced by employing practices to lower staff turnover and enhance employee experiences.
Check your reports on a daily basis
Due to the hectic nature of the restaurant business, many restaurateurs seldom review their finances. However, checking your money should be a continuous activity rather than something you do once a month to ensure everything is on track.
Take time from your daily schedule to log daily sales. A daily business review will enable you to look back at essential metrics such as labor costs, customer numbers, and sales to help you plan effectively for the future.
Best Restaurant Management Platforms in 2022
When appropriately used, restaurant management software is a surefire way to guarantee a restaurant's success. It’s wise to choose industry-specific solutions in this case, as you’ll get features tailored to your particular business. The same applies in other scenarios, whether you need solutions to manage your brewery efficiently or tools to take the sting out of overseeing hospitality operations.
Some of the most popular restaurant management software you can choose from include:
Point of Sales System (POS)
Today, one of the most effective restaurant management software tools is the point-of-sale (POS) system. Modern POS systems function as a computer and cash register with the capacity to accept credit card payments, print receipts, display information on a user-friendly screen, and function as a service station.
Features of a POS system include:
- The capacity to calculate cash registered throughout the day
- The ability to create sales reports for different time frames
- The ability to calculate payroll data
- The capacity to keep track of sales metrics
Make sure to conduct adequate research based on the needs of your restaurant before investing.
The Best POS Systems in 2022:
- Harbortouch: It provides free and no-cost POS hardware and software installation services.
- micros by Oracle: This software is an expert in restaurant POS systems.
- Square POS: This software provides an easy setup with excellent marketing compatibility.
- Revel: Revel offers a user-friendly interface with built-in loyalty and gift card systems.
Restaurant Reservation Software/Table Management System
A restaurant reservation system can significantly improve sales at establishments that accept reservations. In addition, utilizing restaurant reservation software greatly simplifies your daily operations and enhances your customers’ user experience.
Features of a restaurant reservation system include:
- Online reservations
- Inventory management
- Restaurant automation
- Saves guest information for future restaurant marketing initiatives
The Best Restaurant Reservation and Table Management System for 2022:
Eat App: Eat App is an all-encompassing front-of-house table management system accessible via the web, tablets, and smartphones.
Restaurant Accounting Software
Restaurant accounting is an indispensable aspect of running a restaurant. Restaurants with no accounting processes are destined for failure. Fortunately, software for restaurant accounting today is often affordable and easy to use.
Features of restaurant accounting software include:
- Provides you with current financial information
- Displays both payment and receivable accounts
- Connections to further restaurant software
- Access from anywhere
The Best Restaurant Accounting Software in 2022:
- Zipbooks: Zipbooks provides customizable email templates and invoices, making them ideal for small business owners.
- QuickBooks: QuickBooks makes it possible to create accounting reports quickly, and its portability makes it available on any device.
Payroll management can be a nightmare for many restaurants. It is challenging and time-consuming to keep track of dozens or even hundreds of shift hours, shift changes, tips, and overtime payments across numerous locations. Fortunately, payroll software exists that is tailored exclusively for restaurants.
The Best Restaurant Payroll Software:
- Gusto: Gusto is an expert in automated payroll.
- Square Payroll: Square is the best choice for seasonal restaurants.
- Toast: Toast provides an overall POS and payroll system.
- Restaurant365 – 365 is an expert in managing payroll for large, established eateries.
- Payroll4free – This is the best free payroll option available today.
An employee self-service feature in payroll software can save you and your staff a lot of time. In addition, it simplifies the onboarding process for new employees.
Online Ordering Software
We've seen a surplus of online ordering software suppliers emerge due to changes in consumer tastes, challenging the traditional online ordering method with all-in-one systems.
In 2022, if you're having trouble bringing in business, it may be time to consider using online ordering software at your restaurant.
Features of online ordering software include:
- Website ordering
- Integrated marketing
- Order management
- POS integration
- Payment integration
The best online ordering software in 2022:
UpMenu: An A-to-Z online-ordering system, UpMenu provides a restaurant website builder, and branded restaurant apps are available.
Restaurant financial management is a skill that you must develop over time as a restaurateur. With the help of readily available technologies that simplify expense management and our handy tips to manage your restaurant’s finances, you should be able to build your business towards long-term success and reliable, positive cash flow.