Jeremy Julian

Where Best to Invest Your Restaurant Working Capital

July 30, 2019

How to make use of any surplus restaurant working capital may be one of the most important decisions which you have to make as a business owner.

After all the hard work and anxiety of getting started, you may be tempted to take and enjoy some of the profits when they come. There’s also often a good case for paying down some debt or increasing your own equity share.

But if you want to expand, it’s important to remember that by far the best and safest way is by investing some of that working capital in the development of your business.

Expansion or Refurbishment of Restaurant Premises

Not everyone’s going to be lucky enough to have Gordon Ramsey and his makeover team pay them a surprise visit. But if you have enough working capital to service some more debt, it might still be worth thinking about a major capital project.

This could mean an expansion of your foodservice and bar area or setting up a patio or garden dining option. Or you may want to upgrade the appearance of your interiors by redecorating and putting in new floorings and furnishings.

Increasing your range of menu options can also be a great way to attract new customers but may require investment in new kitchen space, equipment, and staff.

If your premises are not suitable for on-site expansion, alternative investments might include offering a delivery service, catering for offsite events or running food trucks.   

Marketing and Branding Projects

But however you decide to expand, it’s vital that you also invest some working capital in promoting your business. 

Traditional advertising on local radio or print media often still works well, but online promotion through platforms like Google Adwords or Facebook is also a great option.

Paid or unpaid, social media marketing is a must these days. So if you don’t have the time or expertise to handle this yourself, investing in a local consultant may be a sound investment.

Less obvious, but still cost-effective methods of promotion and branding include:

Restaurant Technology Investments

Any or all of these projects may have merit, depending on your particular business. But the best bang for your buck will almost certainly come from investing in one or more of the new technologies which are currently transforming the restaurant industry.

Inventory Management

For effective cost control, particularly if you have complex menus, an efficient inventory management system is essential. The right system will be able to tell you to the last cent what each ingredient of your dishes costs and where the potential for savings may lie.

Restaurant Point of Sale (POS) Systems

But if you have to choose one new technology for your restaurant it should probably be a state of the art, restaurant POS system.

For a relatively modest capital investment, these systems can tremendously enhance the productivity of your kitchen, waiting and bar staff while also improving your customers’ experience.

Using handheld tablets, staff can send orders directly from the table to the kitchen or the bar. They can advise on menu options and upgrades and receive instant updates from the kitchen on order status and any menu changes.

Tablet ordering systems are a popular option for restaurant working capital investments.

Some systems also allow customers to place their own orders from their table, while waiting to be seated or even from their home PC or phone.

POS tablets now normally have a range of table management tools, including floor plans, which allow staff to maximize table turns and make check out and card or mobile payment as quick and easy as possible.

You can also set up a loyalty program which integrates fully with your POS system. These programs are a great marketing method in their own right, but they’re particularly good for encouraging the repeat business which for most restaurants is a key to sustained profitability.

Finally, for management, a good POS system also helps optimize staff rostering, monitor reservations and will also provide a ton of useful customer data for analysis.

Other Technology Options

The restaurant industry is often seen as highly traditional, based on a business model that has remained essentially unchanged for centuries, but it’s having to adapt as rapidly as any other in the face of technological change and customer demands.

In addition to the above systems, things like free customer WiFi, online reservation apps and even on-demand digital entertainment are all technologies which customers are increasingly coming to expect.

Fortunately, many of these are relatively low ticket investments but in a highly competitive industry, they’re things which no business can afford to ignore.        

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