Examples of Working Capital for Restaurants (and How You Benefit)



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Calculating your need for restaurant working capital is crucial — especially if you’re looking to make it through the slow seasons.

As the number of customers who want to dine out or take prepared food home increases day by day, food-service operations have rapidly increased from (and expected to boom again as the COVID-19 pandemic fades into the memory).

But there’s still a lot of space in the market for your restaurant to succeed. Here are some things that restaurant owners have to know regarding working capital.

Working Capital for Your Restaurant: What You Need to Know

In simple terms, capital is the money used to purchase supplies, equipment, and products, while working capital for your restaurant is the money spent to meet the daily operational expenditures of the business.

Think of capital as money to buy things and working capital as money to pay bills. When determining capital needs for your slow seasons, calculate the cost of your needs. You should also keep an eye on the costs of your expansion and growth.


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Working Capital Example for a Restaurant

Here is a small example of calculating the capital needs of a restaurant..

  • Facility (building and land): $500,000
  • Appliances (freezers, stoves, etc.): $150,000
  • Furnishings (chairs, tables, décor, etc.): $75,000
  • Plates, silverware, and glasses: $20,000

Subtotal: $745,000


While that’ll be enough to build and outfit your restaurant, you’ll require working capital for restaurants to keep business going. Your next step is calculating your working capital finances for the next 12 months.

  • Salaries: $400,000
  • Utilities: $25,000
  • Groceries/supplies: Up to 35% of revenue
  • Advertising: $15,000

Subtotal: Upwards of $490,000


Adding up both subtotals, your restaurant will need a grand total of $1,235,000 to cover the first year’s business.

Now let’s say your business does well in the first year and generates roughly $800,000 in revenue.

Even in this scenario, you’ll still be down $435,000 ($1,235,000 minus $800,00) for your first year. Note: Your projected $800,000 won’t be evenly distributed over those 12 months, either.


Working Capital For Restaurant

For most restaurants, some seasons, such as winter, can be slower than others, and can be tough to get through.

And what if your restaurant takes longer to catch on? Having another $200,000 as a cash buffer in case of a business failure is strongly recommended.

Set Your Restaurant Funding Options in Motion

Most restaurant ideas start from the passion for cooking, but much more than culinary passion is required to run a successful restaurant. You need funding to make your dream come true and continue to expand.


The problem is that most businesses wait until they require funding to apply, and at that point, they’re in a financially weak position. Once you’re in that position, it can be difficult to get a loan or the amount of funding you want even if you do get approved. The solution is being proactive about your working capital needs.

Here are two effective resources for obtaining the working capital you need.

  1. Working Capital Loans: Businesses need access to working capital to continue day-to-day operations. It can be difficult for a business owner to get the working capital they need if they don’t meet the stringent criteria for bank loans. In such cases, you can get business working capital loans to meet your overall working capital needs.
  2. Business Expansion Loans: Almost all business owners think of expanding their business at one time or another. However, not everyone is fortunate enough to make that happen. Businesses are often denied access to funding that they need in order to develop. If you fall into this group, you can seek a business expansion loan. Business expansion loans are a more financially robust option than personal loans—allowing you to borrow a higher sum without including your personal assets.


Which Funding Is Right For Your Business?

From short-term working capital to large-scale expansion loans, Credibly has financing options that are built for your needs.

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  1. Other Financing Sources: Finding small business lenders for meeting your working capital needs is often a tough job. This is especially so if you have been denied financing previously. There are various ways to acquire capital loans such as alternative funding, traditional banks, venture capital firms, angel investors, and even from family and friends.

Managing Working Capital for Restaurants

Managing your working capital wisely is just as critical to getting the funding your restaurant needs. As we’ve already mentioned, slow months can be a tough time for a restaurant at any stage of its business lifecycle, and it’s important you get the most out of your money.

Here are some tips on how to manage working capital for your restaurant:

  • Plan ahead to the best of your ability: Even with the most detailed financial forecasting and business planning, maintenance costs can catch up with you. You need to make sure you have enough working capital for your restaurant to be able to make repairs.
  • Know what bills need to be prioritized: It’s essential to keep tabs on what bills need to be paid immediately vs. those that can be put off for a few weeks. That way, you keep better tabs on your restaurant’s working capital.
  • Expand your service offerings: Consider other services you can offer, like event catering, to generate additional revenue. This can be a great way to spread the word about your business, and establish a repeat clientele.

The Power of Working Capital for Restaurants

Working capital loans for your restaurant can help you get through the slow season, providing an additional financial boost. Forecasting your operational costs is just one piece of the puzzle—you also need to think about expanding into the future.

When you work with Credibly, you get the right restaurant business loan to drive your business forward. Apply today.


Working Capital Restaurant


Plan for the future with Credibly.

We recognize the unique financial needs of your business. Although we don’t provide mezzanine financing, we’re equipped to help you assess if this is the right path for you.

Our commitment is to understand your business’s potential beyond just the numbers. We’re here to offer insights and guidance—not just financing.
If you’re considering your next financial move and wondering if mezzanine financing fits your growth strategy, let’s discuss your options.

With experience supporting over 30,000 businesses, we’re prepared to help you make an informed decision.

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