3 Warning Signs That Your Restaurant is a Train Wreck

There are few things scarier in the restaurant business than the thought of running out of money. You've probably had that thought cross your mind, too. The good news is, is that you can take action today to avoid the financial train wreck that lurks around the corner. The bad news is you're going to be willing to change. So let's get real and dive into the three signs that your restaurant is on the fast track to running out of cash. And welcome to the Restaurant Coach podcast. It is the cure for the common restaurant. I'm Donald Burns, the restaurant Coach, author of the your restaurant sucks trilogy, Savage Restaurant Success, and the creator of the TRC Method. So here are three warning signs that cash could be a problem, so make sure to take notes. Number one, you are living check to check. Many restaurants run on a cash flow model known as living from check to check. You get paid for food and beverage sales and then you pay your vendors payroll and the other expenses from that check that you just got in. The big problem with this model is that you never build up a reserve. You're living from the last check you received until the next check that comes in. This is a ticking time bomb. One unexpected expense or a slow week can throw your entire operation into chaos. I mean, picture this. A major piece of kitchen equipment breaks down. Or maybe you have a slow season and you suddenly cannot cover payroll. The stress and pressure this creates. I'm telling you from personal experience, this is unbearable. And it's a sign that you are running your business on the edge. Here's the thing. If you're living check to check, you're not alone. A recent survey by the National Restaurant association found that 53%. 53% of restaurants live check to check. I mean, that's a lot of people who are taking a big risk. So how can you tell if you're living from check to check? Look at your cash flow statement. If you see a lot of red in there, that's not a good sign. You need to work on building a cash reserve. Start by setting aside a small percentage of your daily sales into a separate account. This might be really difficult at first, but even if you're just setting aside just 1 or 2%, you can really start to build a safety net over time. As your reserve grows, you're going to find it much easier to handle unexpected expenses without derailing your entire operation. Number two, your debt is growing. If you're not living check to check, you're probably borrowing money. This can be a good thing. If you're using debt to invest in your business. When you use debt to invest in your business, you're creating an asset. This could be new equipment, training for your team, or a marketing campaign. However, when you use debt to pay for everyday expenses, it's a sign that you're swimming in the deep end of the pool. Think about it. Borrowing money to cover payroll or utilities is like digging a hole to fill another hole. Eventually you're going to run out of dirt and you're going to be in a much deeper hole than when you started. So how can you tell if your debt is growing? Look at your balance sheet. If you're seeing an increase in your outstanding debts, that's not good. You need to slow things down and reassess what you're investing in. Are you putting money into areas that will generate more revenue in the long run or are you just trying to keep the lights on? You have to create a plan to reduce your debt now. This might mean making some tough decisions like cutting back on non essential expenses or renegotiating terms with your vendors. Focus on paying down high interest debt first and avoid taking on new debt unless it's for a strategic investment that's actually going to drive future growth. And warning sign number three you're not growing. Hashtag Write this down. If you're not growing, you're dying. If you want to reach your restaurant's maximum potential, you need to grow. If you're not growing, you're losing ground. Staying stagnant is not an option in the fast paced restaurant industry. You need to consistently, constantly innovate, improve and expand your horizons. Grab new market share. So how can you tell if you're not growing? Just look at your sales and guest feedback. If your numbers are flat or declining, you're not growing and you need to take action immediately to boost your growth. Start by analyzing your sales data. Are there certain times of day or days of the week where sales are consistently lower? Could you implement a new promotion, an LTO, or a special event to drive traffic during those times? These are things you want to start looking at. Next, look at your menu. Are there items that are not selling as well as others? Maybe it's time for a refresh. Introduce new dishes that excite your guests and keep them coming back for more. And please don't forget about your marketing efforts in today's digital age. If you're not actively promoting your restaurant online, you're missing out on a huge opportunity. Invest in social media marketing, email campaigns, online advertising to reach new guests and and keep your current ones coming back for more. You also need to invest in your team, provide ongoing training and development opportunities to ensure that your staff is motivated and equipped to deliver the very best guest experience possible. I will tell you from working with over 2900 restaurants that a happy, well trained staff are more likely to provide excellent service, which is in turn going to drive guest satisfaction and repeat business. Now, if any of these signs hit a little too close to home, it's time to get serious about your restaurant's financial health. Ignoring these warning signs is a surefire way to find yourself in a financial disaster. Don't let that happen. Hey, make sure to hit that like and subscribe button before you leave. And please share this video with someone that you feel could really use the message today. So if you want to break free from the chains of financial stress and unlock the full potential of your restaurant, Apply today for my next eight week restaurant owner academy. Just head over to warriorrestaurants.com right now. Watch a short film that's going to delve deeper into the transformative power of how my unique blend of the Warriors Way and the TRC Method is going to help you get the have it all lifestyle. I mean, take advantage of my insights from 45 years of experience in the trenches of the restaurant industry and discover how to reclaim your passion and your purpose and get your profitability back on track. Don't settle for mediocrity. It's time to thrive. Visit warriorrestaurants.com now and take your first step to a brighter future for your restaurant. Apply today for my next eight Week Restaurant Owner Academy.