Not only do struggling restaurants seek assistance via commercial finance solutions, restaurants in a strong position looking to grow their operations further will do the same but for different reasons.

It is a misconception that only struggling restaurants require financial help. Instead, you will see restaurants that seek to grow turning to commercial finance support to bring their visions to life.

We will delve into various reasons that occur frequently across the restaurant industry, including start-up costs, equipment upgrades, refurbishment and cash flow, to name a few.

Why Might a Restaurant Require Finance?

Start-up costs

Starting a business is rarely cheap, and restaurants are no exception. New restaurants require significant upfront investment in:

• Premises, either rented, leased or purchased
• Renovations and fit-outs
• Equipment and appliances
• Soft furnishings and decor
• Licensing, permits and legal fees
• Inventory and stock
• Hiring, training and retaining staff
• Marketing
• Launch events

Cash flow

Maintaining a healthy cash flow can be difficult for restaurants given the seasonal fluctuations that many face.

Whether it be months that are known to be slow or unpredictable foot traffic during peak times, restaurants may face significant peaks and troughs in their cash flow.

In these times, financial assistance can help them to pay staff, cover bills and balance upfront costs with delayed revenue from third-party delivery platforms that do not pay straightaway.

Supplier management

Even when business is booming, juggling suppliers can be difficult.

Restaurants are reliant on suppliers such as wholesale fish suppliers to provide a constant stream of fresh ingredients.

Financial assistance can be used to buy relevant stock in bulk for cost savings, handle price increases from suppliers and to pay for goods upfront when credit terms aren’t available.

Equipment repair or replacement

Restaurant kitchens often have some costly equipment, such as commercial ovens and dishwashers.

Should one of these break down, this can bring the whole operation to a grinding halt.

Restaurant finance can help to cover the costs needed for emergency repairs, replacing broken equipment or upgrading to modern technology such as new EPOS systems.

Expansion

Once you’ve cracked one location, many restaurateurs will consider expanding operations with a new location.

For operators looking to open a second location, restaurant finance can provide the funds necessary to expand without threatening the smooth running of the existing location and business.

Refurbishment or rebranding

Running a successful restaurant can take its toll on your premises and brand.

Whether your restaurant is seeking to refit the interiors, add new services such as deliveries, or rebrand the whole concept, specialist restaurant finance can provide the resources to get your business to the next level.

Tax Liabilities

VAT, PAYE and corporation tax bills can all add up rather quickly.

It is quite common for restaurants to seek business debt consolidation loan solutions to help cover outstanding tax debts, relieving the cash flow pressure that these bills can present, especially in the early trading months of the calendar year after a successful festive season.

External economic pressures

It hasn’t been the easiest few years for restaurants. Brexit, the pandemic, the war in Ukraine, and regulatory budget changes from the Treasury, amongst many other pressures, have added to the financial difficulty of running a restaurant in the UK.

These costs can not always be absorbed into the menu costs immediately, often, they need to be implemented slowly over time so as not to alienate the diners.

Short-term restaurant loans can help operators to ride out the storm.

Types of Restaurant Finance

Restaurant finance isn’t one homogeneous entity, instead, there are many different types of financial products that restaurants can use to survive and thrive. These include, but are not necessarily limited to:

• Asset finance, which enables restaurants to acquire the assets they need without having to shell out for large expenditures upfront
• Debt consolidation loans that help to centralise debts into one, manageable repayment amount
• Conventional business loans for restaurants
• Specific leasing and financing options for restaurant equipment
• Fit-out finance provides the dedicated funding to turn visions into reality
• Merchant cash advances are among the more flexible of financing options
• Purchase order financing is a short-term funding solution to pay suppliers upfront

Interested in Commercial Finance for your Restaurant?

Find a Restaurant has partnered with Mill Wood Finance, specialists in hospitality finance, to provide UK restaurants access to a dedicated restaurant finance broker.

They are UK-based, always available at the end of the phone and have worked with a multitude of restaurants across the country for the last three decades. Speak to Michael or Henry Bolland from Mill Wood Finance on 01273 523690 or [email protected] for all of your restaurant finance requirements.