It’s the side of running a restaurant that’s much less exciting than launching a new menu or the day you open your doors for the first time. But cash flow can make or break a business.
It can creep into your business plan just as easily in your first year as after a successful decade with a steady clientele. How do you move into a comfortable place where the day-to-day management feels consistent and hums along, where you’re not worried about paying bills, cutting back the menu or—worse—laying off employees?
“The more people talk about it, it’s only going to benefit them,” says Steven Waters, founder of Take Care Brands Hospitality, and also Soigné Holdings, a hospitality development and consulting firm, about managing cash flow. “This is a challenge for everyone.” In addition to helping clients, knowing how to ward off a problem is even more important for Waters as he’s preparing to open All Inn this spring in Denver, a 54-room hotel with a restaurant and lobby lounge, as well as Fino, a Mediterranean-inspired restaurant also in Denver.
The winter can be a slow time for restaurants, as fewer people dine out when regions are hit with cold weather and storms. But even if your restaurant doesn’t currently struggle with cash flow, there are ways to ward off this problem before it even starts.
In January of 2025, Maddie and Matt Armistead opened The Inn in Hartland, Wisconsin, a wood-fired culinary concept. “We told ourselves we would never open in winter and then we couldn’t avoid it,” explains Maddie. “We were so delayed we just needed to get open.” But, due to locals’ curiosity about a new restaurant, tables quickly filled. Now their first-anniversary celebration will always fall during an historically slower month, when they can offer diners a new reason to come in: complimentary glasses of sparkling wine and birthday cake.
Evan Hennessey, a James Beard Award semifinalist and three-time “Chopped” champion, who owns three Dover, New Hampshire, restaurants (Stages at One Washington and Topolino), along with a nearby cocktail bar called The Living Room, suggests that one way you can manage cash flow is being extra intentional about the restaurant’s location. This is overhead you can control, unlike the cost of labor and culinary ingredients, which tend to be fixed.
“My rent and overhead are extremely low. It makes up less than 20 percent,” says Hennessey, because he’s in New Hampshire and not a large city. “That allows us to flex with the labor market a little better. I knew if I kept the overhead low, it would allow me to be braver in going into business.”
In lieu of lowering overhead costs, adjust how you stay on top of bills. Waters adopts a proactive approach with a weekly—not 30-day—payment cycle. “We’re not holding hundreds of thousands of outstanding bills,” he says. “If you’re running your fiscal year as your financial year, you’re trying to settle up outstanding bills and payments before January, so you’re depleting any cash reserves you have. In November, start to reconcile your fiscal and financial year and plan for a slower January.”
Maddie’s advice is to not only keep an expenses spreadsheet or use QuickBooks for budgeting, but also track percentages by category—“staffing and payroll percentages, beverage purchases, and other operating expenses,” she says. Factoring in competing events that would draw customers away from the restaurant is also crucial. Before opening The Inn, she did projections, noting that they knew they would be closed Sundays and Mondays, plus holidays and Green Bay Packers games. They also guesstimated how many diners they’d serve on a certain day of the week. All of this served as a strong guideline for how much money they’d be earning from diners’ checks, as well as spending on labor.
When seeking outside advice in managing cash flow, a common mistake is to hire a business expert not tied to the hospitality industry, who doesn’t understand running a restaurant or bar. “Search for somebody who is as close to your business concept as possible,” says Hennessey. “Month to month, it’s so different. A strategy for ‘Month A’ does not work for ‘Month B.’” The same is true for an accountant: hire one who knows your industry well.
Even if a restaurant does report a successful financial year, some months will be slower than others. Prepare for this by spending conservatively in the two months prior, so that revenue from those months will spill into the slower month. One way to boost income during a slow period is to utilize your space for events. These could be hosted by the restaurant, or rented out as an event space for community-engagement events. Hennessey’s spaces are commonly used by outside groups, whether it’s a wildlife non-profit that gives talks and brings in animals for “show and tell,” or a cribbage tournament. “You have a platform that’s a restaurant. You have a community spot,” says Hennessey. “It opened up our lounge and people were ordering food and beverage. Whoever wins the [cribbage] tournament wins a gift card and that incentivizes them to come back.”
In February, The Inn is partnering with another business to host afternoon tea, hoping this limited-time experience will bring in new and existing customers who want to try something different.
Another way to increase cash flow during slower months is looking creatively at inventory you haven’t been able to move. If it’s a few cases of wine, run a special on the wine list, says Waters. “Let’s give somebody a reason to come in,” he says.
That creativity is what inspires restauranteurs to pivot during a slow period. “You can have all the business degrees you want in the world but intuition is the biggest thing,” says Hennessey. “You need to watch [your restaurant or bar] all the time. It’s a living, breathing organism. You have to be reactionary and proactive, all at the same time.”
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