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BFS Capital Blog

Tips for Restaurant Owners on How to Keep Up With Debt Payments

November 23, 2015

Restaurant owners have a lot on their minds.

It’s often their responsibility to decide whether to hire more staff, what to put on the menu, how to arrange the room, how to market the restaurant and, perhaps most importantly, how to finance the whole operation.

Financing a restaurant can be a tricky business though, especially because it’s so hard to predict how many customers will come in. Many restaurant owners have to take out small business loans to help pay for start-up or growth expenses, but due to the industry’s unpredictability, keeping up with debt payments can be a constant challenge.

Here are three tips for restaurant owners to help pay debts on time.

Put the Customer First

Many restaurant owners may be tempted to raise their prices to help pay down debt. However, you shouldn’t assume that your customers will be willing to pay whatever you charge. Food is an incredibly elastic good, meaning that demand for the good can fluctuate wildly depending on the price. Customers have nearly infinite options when it comes to food and they won’t appreciate an increase in prices without any commensurate increase in service or quality.

Restaurant owners should always put the customer first and look to other ways of cutting costs. For example, pare down the menu to only the most profitable or most popular items. Or take a few months off from participating in promotional events or activities. Either of these options is preferable to alienating the most important part of your business—the customer.

Plan Ahead for Slow Months

It’s well-known in the restaurant industry that some months are slower than others. For beachfront restaurants, the summertime means business is booming. But as soon as it gets cold or the beach closes to the public, the customers quickly disappear. It’s often the same for restaurants in many other parts of the country, too. Even the most popular restaurants can go through slow periods.

Restaurant owners with sizeable debt payments should plan ahead for these slow months by saving as much cash as possible during the busy season. Debt payments are usually constant each month, so it should be easy to figure out how much you need to save to be able to make your debt payments even when no customers are coming in.

Be Patient About Expanding

Many restaurant owners dream about expanding all over the city, or even across the country. But just because one restaurant is successful doesn’t necessarily mean the next one will be. Restaurant owners need to be patient when it comes to choosing whether or not to scale their business, and when. Any expansion plan will typically require an influx of more capital, often in the form a small business loan. But if you still owe money on a previous loan, then it might be in your best interests to pay off the current loan first and make sure your business is financially strong before expanding. The last thing you want is to accumulate more debt than you can handle.

Whatever the approach, debt payment is an unavoidable part of almost every restaurant owner’s daily life. But if handled responsibly, those payments need not be a burden. At BFS Capital, we always encourage our small business customers to talk with their lending provider to figure out a payment schedule that makes sense for them.

Image courtesy of Sira Anamwong at