Loss of 500,000 yuan in 3 months! The New Year is approaching, and the cash flow of a large number of restaurants is "urgent"

The New Year is approaching, and a group of restaurants that have gritted their teeth and survived the last round of store closures are facing new problems.

This article was originally published by Red Meal Network (ID: hongcan18), author: Li Jinzhi, editor: Fang Yuan.

"Every morning when I wake up, I owe 2,000 yuan. ”

In December last year, an Internet celebrity blogger with nearly 6 million followers on Douyin once "complained" to his fans like this.

The blogger said that her bubble tea shop costs 2,000 yuan a day just for rent, personnel, water and electricity, etc., and counting other costs, she has to sell 200 cups a day to not lose money, "Two days ago, I really couldn't open this store, and now the first thing I do when I open my eyes is to think about how to sell these 200 cups." ”

Since 2023, the catering consumption market has ushered in a recovery, but the situation is far less optimistic than the catering people expected. Especially after October, catering consumption has entered the off-season, and a large number of restaurants are unable to make ends meet. By around December, the cold intensified, and the restaurant market saw a small peak of closures.

Nowadays, a group of restaurants that have gritted their teeth and survived the last round of store closures are facing a new problem - how long can the funds in hand "survive"?

With a loss of 500,000 yuan in 3 months, a group of restaurant owners encountered a cash flow crisis

Chen Ping, the owner of a restaurant in Datong, Shanxi, told Red Food.com that he had closed two of his restaurants by the end of 2023.

Chen Ping opened 4 stores in a county town in Datong, two of which made small hot pot, one made Malatang, and one made fast food.

In April 2023, the small hot pot restaurant has just opened, and the business is not bad, with a monthly turnover of 4-50,000 yuan. After August, business began to deteriorate. In October, the revenue was only half of that in August, and the two small hot pot restaurants lost 10,000 yuan or 20,000 yuan in one month.

Later, because there was really no money to turnover, Chen Ping closed two small hot pot restaurants with high cost pressure, and used the funds on hand for Malatang restaurants and fast food restaurants.

Chen Ping's situation reflects the current embarrassment faced by many small and medium-sized restaurant enterprises. Due to unsatisfactory business, more and more F&B outlets are facing cash flow constraints and turnover problems.

△ Image source: Picture Worm Creative

Not long ago, Yang Shen, who runs a barbecue restaurant in Changsha, Hunan Province, also closed the store due to capital turnover problems.

Yang Shen's barbecue restaurant is located near a gas station, and the 390-square-meter store spent more than 1 million yuan in the early stage of opening. The money was not enough halfway through the decoration, and Yang Shen borrowed a lot of money everywhere.

After opening, the barbecue restaurant has 12 tables and 3 private rooms, and there are not many full seats. Since October last year, outflows have begun to outweigh inflows on a daily basis. "Such a big store has a daily turnover of 4,000-5,000 yuan, and when the situation is bad, it is only 2,000-3,000 yuan. For us, we have to sell at least 5,000 yuan a day to protect our capital. ”

Yang Shen said that at the beginning, her store had 14 employees, 7 back kitchens and 7 front halls, and the first month's staff wages were more than 40,000 yuan. After that, due to the poor operation of the store, some employees were reluctantly laid off, and the monthly employee salary expenditure was reduced to more than 20,000 yuan, but the result was still not sustained.

△ Image source: Courtesy of the interviewee

"It only took 3 months from the opening to the closing. At the end of October last year, after three consecutive months of losses, Li Jun also closed down the private restaurant he operated.

Li Jun's restaurant focuses on high-end seafood ingredients, and the procurement cost is higher than many restaurants, and once the restaurant's business declines, the turnover pressure will be great. "I lost nearly 500,000 yuan in 3 months, and after several years of hard work, the money was gone. ”

Compared with individual small stores, some larger restaurants and chain restaurants have more stores and larger fixed expenses, and often face greater turnover problems.

At the end of 2023, a number of restaurant companies will be exposed to problems with the capital chain, or close stores, owe wages, lay off employees, or collapse with a bang. For example, Changsha's Internet celebrity high-end buffet restaurant - Big Fish Haitang Seafood Posture.

△Changsha Big Fish Haitang, photo by Red Meal Network

In November 2023, Dayu Haitang Seafood Zizao temporarily closed its store due to a shortage of cash flow. It is understood that at present, Dayu Haitang still owes a large number of membership card balances, supplier payments, employee wages and other funds that have not been repaid.

A well-known chain brand was also involved in a wage arrears scandal. The relevant person in charge of its brand said in an interview with Jiemian News, Times Finance and other media that the brand did not owe employees wages, but there was indeed a delay in payment, and said that the brand insisted on direct sales, insisted on not laying off employees or reducing salaries since the epidemic, and the financial pressure was very high.

The end of the year is approaching, close the door early to stop the loss or stay up again?

For restaurants, cash flow is the "lifeblood" of their operations. Most F&B businesses operate abnormally, which is related to cash flow.

The cash flow on the books of small and medium-sized F&B businesses usually depends on revenue. Based on the monthly income, the cost structure of catering stores is mostly as follows: labor costs account for 30%, raw material costs account for 30%, rent costs account for 20%, and gross profit accounts for 20%. This means that nearly 80% of the restaurant's monthly revenue is spent on expenses. Once the income continues to plummet, it is likely to be in trouble.

For example, if the restaurant has no income for 1 month, it will take 2 and a half months to earn back the fixed expenses for 1 month. If you don't have income for 2 months, it will take about 5 months to earn back your fixed expenses.

According to the Red Meal Network, in the past three months since October last year, many small and medium-sized restaurants have "made ends meet" in revenue, losing money when they open their doors, and some bosses have even borrowed money to support their operations.

"I lost 800 yuan a day when I closed my door, and I lost 2,000 yuan a day when I was open. A restaurant owner said.

△ Image source: Picture Worm Creative

At present, the end of the year is approaching, and some restaurant owners are even facing problems such as loan repayment and new lease signing, and the financial pressure is even greater.

For many F&B owners who are strapped for cash, the Spring Festival is a key node, and as an annual consumption peak, Spring Festival consumption can usually contribute a considerable amount of income to the store. Therefore, there are two choices in front of these restaurant owners, one is to close the store early and stop the loss, and the other is to stay up and wait until after the Spring Festival.

Some restaurant owners choose to take early holidays and close their businesses to go home for the New Year.

A bakery in Guangzhou has begun to have its annual holiday on January 6, and the owner said that the New Year is approaching, and the streets of Guangzhou feel that there are fewer people, and the store has no business, so he simply went home on vacation, and will open again when the workers return to Guangzhou next year.

Due to bad business, Chongqing Yibo Chicken Store closed even earlier, from December 20 before the Spring Festival to February 24 after the holiday.

Some restaurateurs decide to stay up and stick to it until after the Spring Festival.

"It will probably be open until the end of March this year, and if it doesn't work, it will close down on the spot. A Yin (pseudonym), the owner of a coffee shop in Guangzhou, told Red Meal that her coffee shop's business is getting worse and worse, and she wants to hold out until March to see if there will be a turnaround.

△ Image source: Picture Worm Creative

The Spring Festival has always been the peak of traditional consumption of catering, can a large number of hard-working stores take advantage of this to "regain blood"?

Some industry insiders predict that consumption will continue to decline, and there is a high probability that there will not be "revenge consumption" like the Spring Festival in 2023 during the Spring Festival in 2024, and many restaurants may not even be able to wait for a consumption peak.

"If the Spring Festival can't return a wave of blood, March to May is a long off-season, many hard-supporting restaurants will have no money to pay a new round of rent, and there may be a number of restaurants out after the holiday. The above-mentioned industry insiders said.

It is worth noting that at present, some restaurant owners have chosen to close their stores completely and say goodbye to catering.

"The store that has been open for 5 years has been losing money for half a year after May last year, and it really can't hold on and goes out of business. A restaurant owner wrote on social platforms that his store failed to survive the peak consumption of the Spring Festival.

Not long ago, when the red food network passed a street near Chebei, Guangzhou, it was about 300 meters along the street, and 6 restaurants were closed on both sides of the street.

Through the cycle, how can the caterers who are still at the table resist the cold?

As a livelihood industry, the catering industry is endless, and there is no doubt that the spring of the industry will come.

Under the new cycle, how can the caterers who are still at the table resist the cold?

1. Pay attention to cash flow, 3 months is the line of life and death, and 6 months is the safety line

At present, the restaurant owner should always pay attention to the revenue and expenditure of the store, and do not wait until one day to suddenly find that the cash flow on the restaurant's books is not much left.

It is generally believed in the industry that 3 months of cash flow is the line of life and death, and 6 months is the safety line. If the cash reserve is less than 3 months, the boss should consider cutting the loss in time or taking steps to reduce expenses.

2. Cut what should be cut, cut what should be closed, and leave the green mountains without worrying about no firewood

As soon as possible, cut down some stores that are not making money and are in a state of loss, or have poor performance. The customs that should be closed, the closure of the business, the materials that can be realized in the store will be realized, and try to save some expenses.

Many restaurant owners may feel sorry for the cost they have paid before, thinking that they may be able to survive if they hold on, but often the longer it takes, the more they will lose.

In the case of unstable income, not being light means that you will have to bear more pressure on property rent, labor, water, electricity and food losses. If a restaurant is losing money for a long time, these poorly run stores can also bring down the entire business. "A strong man breaks his wrist", leaving the limited cash flow to other stores, or leaving it to the next step of the company's planning.

△ Image source: Picture Worm Creative

3. Cultivate internal skills and reduce non-essential expenses such as marketing

During the bad business period, many restaurants are pinning their hopes on various marketing and group buying activities to attract more consumers with low prices. Many restaurants offer discounts of 6%, 5% or even as low as 2 or 3 percent, even if such prices attract customers, they will not bring much profit to the restaurant, and will even lose more raw materials, labor and other costs.

And with the gradual crowding of major online platforms, the effect of large-scale investment and low-price drainage is also weakening. Blindly investing in marketing will only lead to a vicious circle, and eventually even drag down the enterprise.

4. Control costs and reduce variable costs as much as possible

The biggest variable cost for restaurant companies is the cost of raw materials. In the process of restaurant operation, raw material cost control is very important.

For example, streamlining the menu. Eliminating dishes that don't have many customers, or that are complex and inefficient, can not only reduce the cost of ingredients, but also improve the efficiency of the restaurant.

Secondly, improve the reuse rate of raw materials. The higher the reuse rate of raw materials, the lower the cost.

In addition, optimize raw material procurement, storage and other links to reduce losses. For example, according to the data of the front office and back kitchen, accurate procurement. These are all details in business management, but they can save a lot of money if they are done well, especially when the store is large.

Winter will eventually pass, spring will come, I hope that every catering person who is struggling can survive the winter.