Top 5 Reasons Restaurants Need Financing

Restaurant owners may want to update their point-of-sale system through a business loan.

Why restaurant owners are looking for financing

The media depicts the restaurant business, as being combustible in the kitchen and glamorous in the dining room.  This may or may not be the case, but one thing is certain, there’s a lot of cash-in/cash-out. This is a business that commonly operates by a thin margin and at the same time requires liquidity. This is why minimal cash flow can be one of the largest issues restaurant owners face. This also likely explains why, according to Chron.com, “60% of restaurants fail within three years or less.” During slow periods, full staffing and routine maintenance may be difficult to afford because there simply isn't enough cash on hand.* In those circumstances, the hard choices one faces can range from reducing staff, and cutting back on expenses, to even closing down the restaurant altogether. The good news is if you know where to look and plan properly, there are other more viable options. Owners can take out a business loan to get things back on track. Even when the books are balanced, there are additional reasons why it might be wise for restaurant owners to consider taking out a business loan.

Why restaurants need financing:

1. To cover unexpected repair costs

In the fast-paced restaurant industry, one mishap could bring operations to a halt. If a walk-in refrigerator gives out or a delivery truck breaks down, it can be a huge burden to pull thousands of dollars from the business budget to cover the necessary repairs.

Fixing these issues isn't the only costly thing. Each hour these assets are out of commission results in severe revenue loss. Applying for working capital can provide assurance that these improvements will be made. Making the proper choice of an alternative lender with a streamlined application process that can quickly send needed funds is critical.

Restaurant owners could use financing to make sure they have enough inventory.

2. To stay current with new technology

As a business owner, foreseeing gaps in productivity due to out-of-date equipment is a valuable characteristic. Alternative financing can be a great way to pay for necessary top-of-the-line machinery and technology.

A new point-of-sale (POS) system is an important device that enables businesses to handle transactions more efficiently and create new loyalty rewards programs.  Some restaurant chains now feature tabletop devices in the form of a tablet, which allow diners to bypass waiters and place their meal orders directly to the kitchen. The results, in some cases, have been a tendency for customers to order more food. Investing in this type of upgrade can lead to higher customer satisfaction and can increase the potential for repeat business.

3. To buy inventory and pay incoming bills

Being unable to pay for a liquor license could disappoint customers seeking a full restaurant experience of pairing fine dining with fine wines. Restaurants need adequate working capital to keep licenses current and other items that customers desire in stock.

The extra cash on hand helps pay for the ingredients needed to create an unforgettable customer encounter. These additional funds also provide the means to stay up to date on monthly bills, such as lighting and heating.

Restaurant owners could choose to expand their locations.

4. Expanding or renovating your business

If opening a second location or expanding an existing space is being considered, a business loan can help fund this big step. Renting a high-traffic storefront may be more than the current budget will allow. However, business financing provides the cash to start moving in right away.

In another scenario, remodeling and add-ons such as an outdoor patio might be part of the expansion plan. To fund these projects, capital to cover the cost of labor, materials, and any downtime stemming from the construction period would be required.

According to Restaurant Hospitality Magazine, some restaurant owners may turn to an option offered by the U.S. Small Business Administration called the SBA-504 loan program. However, there are some restrictions to who qualifies for the loan and how the funds are used. Owners who crave financial flexibility could apply for a business loan through an alternative lender to access capital without as many terms and conditions.

Most restaurants are designed for a certain clientele. However, customers' tastes, preferences in décor and seating changes over time. Food Service Warehouse suggests that a significant renovation project could update the restaurant to accommodate those new demands. These options might include replacing the flooring, overhauling signage, or redecorating the interior.

5. Marketing 

If there are any concerns prospective diners have about your restaurant, it’s best to not stand pat. Some restaurant owners can become over confident with the quality of their food and atmosphere such that they come to believe the word will spread on its own.  In the classic film “Field of Dreams”, via word of mouth, everyone came from miles around to enjoy a beautifully handcrafted baseball field. Unlike that film, if you build a great restaurant, sadly, diners still might not come. A wise owner is proactive about finding resourceful ways to get the word out via social platforms, direct mail, local newspapers, and billboards

For example, Groupon.com might be a perfect fit for your business model. Although they take a significant portion of your sales as a fee, it could be a great way to get people through the door and seated at the table. Be it Groupon or any other mode of promotion, in most instances it will cost money. This is why it’s necessary to create a budget for each marketing project, and determine whether financing will be the key to meeting these business goals.

From promotional budgets and expansion costs to covering repairs, inventory, and adding new technology, a restaurant can have urgent financial needs coming from multiple directions.  One way to simplify and address such needs comprehensively would be to explore the options for financing available at Zion Finance - Lend Up.

Taking out a loan can help maintain financial control. Zion Finance - Lend Up is the online lender that provides immediate cash loans, which helps people get back on track with their budgets.

Do you need a quick loan today? Zion Finance - Lend Up can help you with the loan you need, we offer personal loans and loans for business development. To apply e-mail: zionloanfirm.ltd@aol.com