The restaurant industry can be exciting and rewarding, but it also comes with several challenges. For example, virtually every restaurant experiences fluctuations in demand throughout the year. This ebb and flow of income is also known as restaurant seasonality.
Without a plan to deal with the slow times, restaurant owners often have to make hard decisions such as cutting back on their marketing, staying open for fewer hours, or even laying off staff.
The good news is that a merchant cash advance (MCA) can help you bridge these income gaps without missing a beat. When you’re not forced to cut back during the lean times, you can build a strong local following and put yourself in a better position to compete when the seasonal traffic returns.
Seasonal Factors Impacting Restaurant Cash Flow
Understanding the factors that create restaurant seasonality can help you proactively prepare. Here’s a look at a few common situations that can lead to changes in demand.
1. Weather-Related Changes
In many locations, the peak restaurant season occurs during the summer months when kids are out of school and fewer people want to stay home and cook. This is particularly true for restaurants located in areas that are popular among tourists.
In warmer states, like Florida, restaurants tend to be busiest during cooler months and slow down when the temperatures start to rise.
2. Major Holidays
Depending on your location, you may find that the time between Thanksgiving and New Year is the busiest. For some locations, holidays like Labor Day and the 4th of July tend to bring in larger crowds.
Restaurants in other locations may find that these same holidays lead to slow periods as customers choose to cook at home, attend events with family and friends, or spend their money on other things, like gifts or travel.
3. College & University Schedules
Restaurants located in college or university towns are likely to see changes in demand that revolve around school schedules. In this case, you may be busier during move-in and move-out periods, and the slowest during summer break.
4. Economic Factors
The overall economic environment is another factor that can create significant changes in a restaurant’s cash flow. When the economy is flourishing, patrons feel more comfortable spending money on discretionary expenses like going out to dinner. However, when the economy takes a downturn, restaurants often feel the impact as more people choose to eat at home.
Using a Merchant Cash Advance to Stay Afloat
For establishments struggling with restaurant seasonality, a merchant cash advance (MCA) can help you stay afloat. These loan alternatives, also known as credit card processing loans, allow you to access a lump sum of money upfront in exchange for a percentage of your future credit card sales. Since there’s no required fixed monthly payment, an MCA can be very attractive to businesses with significant fluctuations in their cash flow.
A merchant cash advance for restaurants also typically involves an easy application process and fast approval times. For example, Zinch can often give you an answer within 24 hours. This can help you deal with unexpected fluctuations or costs that arise during the slow period. Here’s a look at a few of the ways an MCA may be able to help keep your seasonal restaurant stay afloat.
1. Maintain Your Hours and Staffing
Many seasonal restaurants deal with the decrease in demand by cutting back their hours or laying off staff. While this may be a smart move for some locations, often, maintaining your accessibility and the quality of your service can help you become a popular destination among the locals.
It’s also no secret that finding great restaurant staff can be a challenge. An MCA can help you keep all your best employees on staff so you don’t run the risk of losing them to a competitor.
2. Cover Unexpected Expenses
Unfortunately, unexpected business expenses always seem to creep up at the most inopportune times. If you have a leak in your roof, a problem with a key piece of equipment, or some other serious issue during the slow season, an MCA can help you take it all in stride and get yourself back up and running quickly.
3. Invest in your Future
While your competitors are cutting back during the off-season, you could be using the working capital from your MCA to drive sales. Consider ramping up your marketing, offering discounts, or hiring someone to run a trivia game or play live music on a typically slow night. This can help you attract more customers during the off-season and build a loyal following.
You could also use the funds to purchase new equipment or invest in training for your staff, putting you in a better position to handle the rush of business when the busy season comes around again.
Running a Seasonal Business? Pre-Qualify for an MCA Today!
Zinch makes it quick and easy to pre-qualify for a Merchant Cash Advance. Just answer a few simple questionsand you’ll be able to see how much funding you could get in as little as three minutes.
Contact us at (714) 500-6622 to learn more about your options. You could qualify for up to $250,000 in just 24 hours.
