Boost Cashflow with Inventory in Your Restaurant Business

Why is it you can be hitting all your profitability numbers such as food cost, pour cost and labor cost, yet not have money in the bank? If you struggle with having enough cash to pay your bills, I'm going to talk about how you can boost cashflow with inventory in your restaurant business.

Yes, I often come across restaurant owners who show that they're making money on their profit and loss statement, yet they're struggling to pay their bills or worse themselves. How could this be right?

I want to ask you a question: What pays your bills, cash or profits? Cash is king. Profits are good for paying taxes. There are lots of fancy accounting terms like amortization and depreciation, but they're not cash flow items. You may show you make money but you're shelving money through inventory. In a recent video, I shared with you my experience with one of the worst managers I've ever worked for. He walked me into a walk-in cooler and asked me what I saw on the shelves. I told him food and he corrected me. He said, “No, money.” The lesson he taught me is that everywhere you look is money, your money. And the last time I checked you can't go to the power company with a case of steaks and a case of Tito's and say, “We’re even.” They want money.

The point here is you need to work toward getting excessive products off your shelves. When you work toward that one goal, you're going to put more money in your bank account. You’ll also have less product on your shelves to be wasted, stolen or spoiled. This will not only increase your bank account and improve your cash flow, it will also help you control your cost of goods sold.

If you want to learn more about the key calculation to take control of your inventory, it's something called an inventory turn, watch this video.

Be sure to visit my YouTube channel for more helpful restaurant management video tips.