Cash flow is the lifeblood of your restaurant - the difference between what comes in and what goes out each month. Many restaurant owners have a busy place but still have money problems, because they don't keep track of their cash flow. In this article you'll learn step-by-step how to calculate your monthly cash flow and what to watch out for.
What exactly is cash flow?
Cash flow is simple: how much money comes in and how much goes out in a certain period. It differs from profit because you also account for expenses that aren't costs (like loan repayments) and income that isn't revenue (like loans).
💡 Example:
Restaurant De Smaak in March:
- Revenue: €45,000
- Costs: €38,000
- Profit: €7,000
But also:
- Loan repayment: €2,500
- New refrigerator purchased: €3,000
Cash flow: €45,000 - €38,000 - €2,500 - €3,000 = €1,500
You made €7,000 profit, but only €1,500 extra cash. That's why your account can be overdrawn while you're making a profit.
The three components of cash flow
1. Operating cash flow
This is your day-to-day business operations: revenue minus all operating costs like purchasing, staff, rent, energy.
2. Investment cash flow
Expenses for equipment, renovations, new inventory. These are one-time large expenses.
3. Financing cash flow
Loans, repayments, private withdrawals, invested capital.
Calculate monthly income
Start with your revenue, but pay attention to timing:
- Cash sales: Count them immediately
- Card payments: Usually 1-2 days later in your account
- Invoices (catering/events): Often 14-30 days payment terms
- Online orders: Platforms pay out weekly
⚠️ Watch out:
Recording revenue and receiving money are two different things. For cash flow, only what actually comes in counts.
Map out monthly expenses
Divide your expenses into categories to keep track:
Fixed costs (same every month):
- Rent and service charges
- Insurance
- Subscriptions (software, phone)
- Lease obligations
- Loan repayments
Variable costs (depending on revenue):
- Ingredient purchases
- Staff (casual workers)
- Energy (partly variable)
- Packaging materials
💡 Example variable costs:
At €40,000 revenue:
- Purchasing: €12,000 (30% food cost)
- Extra staff: €3,200 (8%)
- Variable energy: €800 (2%)
Total variable: €16,000 (40%)
Include VAT and taxes
Don't forget that you have to pay VAT and other taxes:
- VAT: Difference between VAT received and VAT paid, usually quarterly
- Wage tax: Monthly payment
- Corporate income tax: Annually, but reserve monthly
Reserve approximately 15-20% of your profit for taxes that come later.
Recognize seasonal patterns
Most restaurants have seasonal fluctuations. Therefore, also calculate your annual cash flow:
💡 Example seasonal pattern:
Beach restaurant per month:
- Summer (Jun-Aug): +€8,000 cash flow
- Spring/Fall (Apr-May, Sep-Oct): +€2,000
- Winter (Nov-Mar): -€3,000
So you need to save in summer for winter
Improve cash flow: where can you steer?
Get money in faster:
- Shorter payment terms for catering (7 instead of 30 days)
- Encourage more cash sales
- Request advance payment for large events
Delay expenses without problems:
- Ask suppliers for longer payment terms
- Spread large investments throughout the year
- Don't stack inventory too high
⚠️ Watch out:
Delaying payment can improve your cash flow, but remember you still have to pay eventually. Only use it to smooth out peaks and valleys.
Digital tools for cash flow
You can track cash flow in Excel, but there are also apps that help:
- Accounting software: Connect to your bank account for automatic overview
- KitchenNmbrs: Helps with cost prices and margins, so you know how much you really earn per dish
- POS systems: Provide real-time revenue insights
The most important thing is that you check every week: how much money do I have now, and how much will I need next month?
How do you calculate your monthly cash flow? (step by step)
Gather all income for the month
Add up: cash sales, card payments, invoice payments that have come in, and payouts from delivery platforms. Watch out: only money that's actually in your account, not invoiced amounts that haven't been paid yet.
Add up all expenses you actually paid
Distinguish between fixed costs (rent, insurance, loans) and variable costs (purchasing, staff, energy). Don't forget one-time expenses like new equipment or renovations.
Calculate your net cash flow
Subtract all expenses from all income. This gives you net cash flow for that month. A positive number means you have money left over, a negative number means you spent more than came in.
✨ Pro tip
Check your bank balance every Monday and compare it to last week. Big differences are often a sign that something in your cash flow management can be improved.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
What's the difference between cash flow and profit?
Profit is revenue minus costs. Cash flow is what actually comes in minus what actually goes out. You can make a profit but have negative cash flow due to repayments, investments, or late customer payments.
How often should I calculate my cash flow?
At least monthly, but with a tight budget you can do it weekly. That way you see problems coming before your account goes overdrawn.
What is a healthy cash flow for a restaurant?
Try to keep at least 2-3 months of fixed costs as a buffer. For most restaurants that's €20,000 to €50,000, depending on your size.
What if my cash flow is structurally negative?
Then you're spending more than you're bringing in and you're drawing on your reserves. Check if it's seasonal or structural. With structural problems, you need to lower costs or increase revenue.
Should I include VAT in my cash flow calculation?
Yes, because you actually have to pay VAT to the tax authority. Calculate with amounts including VAT for a realistic picture of your cash position.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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