Improve your restaurant’s cash flow with this secret ingredient

Sunday, October 31, 2021

Let’s start at the beginning: What exactly is cash flow?

Cash flow is defined as “the total amount of money being transferred into and out of a business, especially as affecting liquidity.”

In other words, it’s the amount of cash coming in, minus the amount of cash going out:

Inflow – Outflow = Total restaurant cash flow

This isn’t a new concept, but the past couple of years have shown just how critical it is for small businesses to have a positive cash flow that offers a buffer in the case of unexpected expenses or short-term closures (global pandemic sound familiar, anyone?). And getting there starts with having the right technology, like a restaurant point of sale system.

What does your POS have to do with your restaurant's cash flow? More than you think. From powerful features that streamline ordering to robust data that helps you make better financial decisions, POS systems are a big piece of the puzzle. The right one will help nip cash flow issues in the bud, or prevent them before they even arise.

Read on for how to:

  • Choose the best restaurant management system for your business

  • Increase sales and decrease costs with mobile ordering

  • Use data to supercharge the customer experience

  • Cut down on food waste with inventory visibility

First things first: How to choose the right POS system

Keep in mind that restaurant POS systems aren't one size fits all. What works for a retail store probably isn't going to be the best choice for your restaurant. You need one that offers solutions unique to the challenges restaurant owners face, like keeping inventory fresh and wait times short.

You also need a POS with rich reporting features. When you can look back at historical sales, inventory and overhead expenses, you can make a budget and cash flow forecast based on your data, as opposed to intuition, restaurant industry averages or whatever else you’re relying on. This kind of reporting is especially useful if you’re a seasonal restaurant business with varying peaks.

Let’s dive into a few more specific features that will help with cash flow management.

Keep things moving with mobile ordering

The quicker you turn tables, the shorter your wait times. That equates to happier customers (and more of them).

You can speed up the whole dining process by offering mobile and self-ordering options (like Heartland Restaurant’s Scan to Order and Scan to Pay).

These features keep things moving quickly for the kitchen, servers and customers, meaning higher sales and more cash coming in. They also keep more cash from going out, because they can cut down on labor costs and menu printing.

Use customer insights to increase tickets and repeat visits

It might sound obvious, but it’s easy to forget: Customers are almost always your biggest cash flow generator. On top of that, 80% of your revenue comes from just 20% of your customers. That means it’s loyal customers who really need your attention and nurturing.

How do successful restaurants build that loyalty? The key is knowing your clientele inside and out. Track things like their favorite menu items and pairings, the average time between visits, if they prefer to eat in or order out and if they usually dine as a family, a couple or on their own. Then, use these insights to craft more personalized promotions, emails and social media campaigns.

You can also use customer insights found in your POS system to increase your average ticket. For example, if you’re seeing a trend in customers pairing certain drinks and dishes together, train your staff to make those popular suggestions to all diners. Higher tickets = more revenue = healthier cash flow.

Focus on inventory to decrease food waste

The average restaurant wastes 4-10% of its purchased food. That means you’re leaving – forgive the pun – a lot of money on the table.

Restaurateurs can use their POS’s inventory management features and reporting to track exactly what’s selling and what isn’t (and when).

If you’re consistently stocking ingredients for a dish that’s rarely ordered, it’s probably time to take that item off the menu. Or if you’re stocking the same volume of ingredients every day despite varying traffic peaks, work with your vendors to edit those orders.

You can also use POS inventory features to keep a close eye on inventory levels and place quick reorders when necessary. Imagine running out of brie when you have an apple & brie crepe on your menu. Now you’ve likely wasted all of the apples you had on hand (and disappointed a few customers, too!).

Whether you're a business owner with one location or ten, there’s no way for you to have a totally clear picture of your revenue, labor and food costs, customers and inventory without a data management system. And the more you know, the better business decisions you will make — all leading to more customers, sales and savings, with fewer cash flow problems. Learn more about our cloud restaurant point of sale products.