Cashflow planning is crucial for every restaurant owner. Many restaurants experience seasonal dips or unexpected expenses that require them to temporarily use their reserves. In this article, you'll learn step-by-step how to calculate when you need your financial buffer.
Why cashflow planning is essential
Your restaurant can be profitable on paper, but still run short on cash temporarily. This happens because of:
- Seasonal dips (winter, summer holidays)
- Large expenses (new equipment, renovations)
- Suppliers who want to be paid faster
- VAT payments that fall due quarterly
Calculate your monthly cashflow
For a good cashflow analysis you need three figures per month:
💡 Example cashflow calculation:
Restaurant with €40,000 average monthly revenue:
- January income: €28,000 (quiet month)
- Fixed costs: €18,000 (rent, staff, insurance)
- Variable costs: €12,000 (supplies, energy)
- Total expenses: €30,000
January shortfall: €2,000
The formula is simple:
Cashflow = Income - Expenses
A negative cashflow means you need to use your reserves.
Recognize seasonal patterns
Look at your revenue figures from last year by month. Which months were consistently lower?
⚠️ Watch out:
Many restaurants underestimate January and February. After the holidays, people eat out less. Plan accordingly.
Predict large expenses
Besides seasonal dips, there are predictable large expenses:
- VAT payment (every quarter)
- Annual insurance
- Maintenance and repairs
- Staff vacation pay (May)
- 13th month bonus (December)
💡 Example VAT impact:
Restaurant with €120,000 quarterly revenue:
- 9% VAT on food: €9,720
- 21% VAT on beverages: €4,200
- Supply VAT refund: €3,500
VAT liability: €10,420 in one payment
Calculate your reserve buffer
A good rule of thumb is 3 months of fixed costs as a minimum reserve. But calculate it specifically for your situation:
Required reserve = Largest monthly shortfall × 2
Multiply by 2 for unforeseen circumstances.
Monthly monitoring
Check your cashflow position every month. Ask yourself these questions:
- How much cash do I have available now?
- What are my expenses next month?
- Do I expect normal revenue?
- Are there large expenses coming up?
⚠️ Watch out:
Don't wait to start saving until your reserves are already depleted. Build up a buffer during good months for the slower times.
Tools that help
An app like KitchenNmbrs can help you track your monthly costs. By monitoring your food cost and other expenses, you'll get better insight into your cashflow patterns.
How do you calculate when you need your reserves? (step by step)
Gather 12 months of revenue data
Get your revenue figures from the past year by month. Look for patterns: which months were consistently lower? This becomes your basis for forecasts.
Calculate your monthly fixed costs
Add up: rent, staff, insurance, energy, phone. These costs you have every month, regardless of your revenue. This is your minimum monthly expense.
Forecast cashflow per month
For each month: expected revenue minus fixed costs minus variable costs (30-35% of revenue). Negative months are your risk moments.
Plan in large expenses
Add VAT payments, vacation pay, 13th month bonus, and annual costs to your cashflow planning. These often coincide with quiet periods.
Calculate required reserve
Take your largest monthly shortfall and multiply by 2. This is your minimum reserve to get through difficult months without stress.
✨ Pro tip
Check your cashflow position on the 25th of each month for the following month. That way you still have time to adjust if things don't go as planned.
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
How many months of reserves should I keep?
A rule of thumb is 3 months of fixed costs as a minimum. But calculate it specifically: take your largest expected monthly shortfall and multiply by 2 for unforeseen circumstances.
What if I don't have reserves right now?
Start immediately by setting aside 5-10% from your good months. Even small amounts help. At the same time, try to improve your cashflow by reducing costs or increasing revenue.
Should I account for VAT in my cashflow?
Absolutely. VAT payments come due every quarter and can be substantial. For a restaurant with €40,000 monthly revenue, this can be €8,000-12,000 per quarter that you need to pay in one lump sum.
How do I forecast unexpected costs?
You can't predict all unexpected costs, but you can prepare for them. Plan for 10-15% extra on top of your calculated reserve for repairs, replacements, or other unforeseen expenses.
When should I start saving for difficult months?
Right after a good month. If March was good, start setting money aside in April for the expected dip in July. Don't wait until the difficult period has already started.
📚 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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