Despite Reports to the Contrary, Independently Owned Restaurant Operators Planning to Expand

A recent report reveals what’s on the minds of restaurant customers and operators today. Consumer data from the 2017 American Express Restaurant Trade Survey, based on a sample of 1,016 respondents weighted to US census based upon gender, age, education, race and region, has some insights on a few matters.

According to the report, more than half of respondents feel that it is important for a restaurant to use local ingredients in their menu (56% answered “very important” or “somewhat important”).

In a separate survey of restaurant officials, many are trying but still lag consumer interest in local ingredients: 44% restaurants currently use locally sourced ingredients while another 39% plan to or are considering doing so.

In other trends, some restaurants are adopting communal seating where customers share tables with others not in their party. The majority of customers (57%) don’t like the idea, with one-third fine with the idea, but not interested in seeking out this type of restaurant. Just 10% of respondents said they like the idea of communal seating and would try a restaurant that offers it.

Dramatically different were the responses of Millennials. Fifty-three percent are on board with communal seating and 17% would seek out a restaurant that offers this type of seating.

Restaurants have a slightly different take when it comes to communal seating. More than half either currently offer (28%) or are planning/considering adopting (24%) communal seating.

When it comes to social media, 31% of consumers have written a favorable review or social media post about their restaurant experience, and almost half (47%) will post other aspects of their dining experience on social media like check-ins or photos of their meal and/or drink. Nearly three-quarters of Millennials (72%) will post their restaurant experience on social media, including 25% who will post photos of their meal and/or drink.

On average, the American Express report continued, consumers have visited a restaurant twice in the past month. Most frequently, they are visiting fast food, casual or fast-casual restaurants. In the past month, 43% have visited a fine-dining restaurant, and 85% have visited a casual restaurant with table service.

Despite recent fears of an impending restaurant consolidation, restaurant owners and managers surveyed generally gave positive responses. Over half (54%) report that their revenue is more than it was one year ago, and nearly three-quarters (72%) expect a continued increase over the next year. Eight in 10 restaurant owners/managers plan to hire staff in the next year, and more than a quarter (28%) are likely to seek financing over the next 12 months in order to hire and for remodeling (34%), expansion (33%), technology (33%) and marketing (31%).

Nearly half (47%) are very confident that they would have sufficient access to capital if needed for their restaurant, and nearly two-thirds (65%) have plans for technology investments in the next 12 months. On average they plan to spend around $4,200.

Running a successful restaurant should be an exceptionally satisfying experience, yet it can pose certain challenges. In a late study of restaurant owners, just 38% depicted their current financial picture “good to excellent." Being ready to handle a wide range of difficulties is the wellspring of incredible fulfillment, alongside a few cerebral pains as well.

In any case, when restaurant owners are requested to state their most prominent test, one issue tends to seems to make its way to the top… Cash Flow! Many restaurant owners have trouble gaining access to business cash and working capital to oversee income. As such, ensuring there is sufficient cash flow streaming in will cover the funding that is flowing out.

Most restaurant ideas start from the passion of cooking, but much more than culinary passion is required to run a successful restaurant. You need funding to make your dream come true, keep the lights on, and expand. The problem is that many restaurant owners wait until they require funding before applying, and at that point, they are in a financially weak position. Once you are in that position, it is very rare to get a loan from the bank or other lending houses.

The solution is being proactive about your working capital needs. Here are 2 effective resources for obtaining the working capital you need, when you need it:

#1. Restaurant Cash Flow Loan - Even if your restaurant is growing, you may find yourself needing extra cash to cover day-to-day expenses such as payroll, rent and inventory, or to pay for short-term projects that could grow your revenue in the long run. Uneven cash flow is one of the biggest challenges of restaurants throughout all industries. In a perfect world, you’d walk into your local bank and walk out with a restaurant loan long before you wound up in a cash crunch. Well, those days are long gone! If you haven’t been in restaurant at least two years, or lack good credit and collateral, chances are a traditional bank loan is never going to happen.

In order to deal with this shortfall, a cash flow loan may be your best option. For this type of restaurant financing, lenders provide you funds and use your future expected cash flow as collateral for the loan. You’re essentially borrowing from cash that you expect to receive in the future by giving the lender the rights to a predetermined amount of these receivables. These are primarily used for working capital or take advantage of short-term ROI opportunities. Your credit scores will usually be checked, but they play less of a role. As the name indicates, the lender is more concerned with inspecting your cash flow (usually bank statements) to approve your application. Turnaround time is another great feature of a cash flow loan, as funding usually takes place in a matter of days.

A restaurant ash flow loan may be used for any restaurant expense, but some common uses are:

  • Working capital for restaurants

  • High ROI short-term opportunities

  • Purchasing highly-discounted inventory

  • Payroll

  • Marketing

  • restaurant expansion

Short-term cash flow loans are best used for short-term projects that would divert money from day-to-day expenses but ultimately grow your restaurant, like taking on a big contract with a major company or adding extra seating in your restaurant. If you need cash fast, a cash flow loan may be your lifeline.

#2. Restaurant Merchant Cash Advance or Credit Card Cash Advance for Restaurants - A Merchant Cash Advance (MCA) can provide restaurant owners with an upfront fixed amount of cash in as little as 24 hours. The funding amount is based upon a percentage of the restaurant's credit card receivables or daily cash balances using historical credit card receipts and bank statements to determine the initial advance. The restaurant pays back the advance, plus a percentage, often referred to as a discount factor, from a portion of their credit card receivables or cash available plus a percentage which is often referred to as a discount factor. The remittances are drawn from the restaurant customer on a daily, or weekly basis until the obligation has been met. MCA's are good options for restaurant owners who may not have strong credit but have lots of credit card activity and need financing quickly.

One of the greatest benefits of a Merchant Cash Advance is that the funds can be used for a host of restaurant expenses. There are typically no restrictions on how you choose to use your Merchant Cash Advance, however some of the more typical uses of an MCA include:

  • Buying equipment – Could a new computer, desk, telephone, cash register or software come in handy? Money to pay for the purchase of necessary restaurant equipment could help boost your profits. And if this cash isn’t readily available in your account, a Merchant Cash Advance can provide you with these funds.

  • Paying employees – Instead of running your restaurant like a one-man show, a few extra hands could really help. Spending borrowed money on employee’s salaries can be the answer rather than disrupting your cash flow to cover this expense.

  • Purchasing inventory – One of the most common uses for a Merchant Cash Advance is buying inventory. It takes products in stock to make restaurant profitable, so it only makes sense to invest in enough inventory to make sure you always have enough to sell to clients.

  • Expanding the restaurant – If your restaurant is experiencing some success, you might want to start thinking about taking things to the next level. A lump sum of cash might be just what you need to get restaurant booming.

When does it make sense for a restaurant to use a Merchant Cash Advance? An MCA is an option when a restaurant needs access to capital quickly to take advantage of an opportunity to purchase inventory at a discount, a special marketing opportunity, or other short-term capital need. And, because credit requirements are less stringent, it could be an option for a restaurant that does a lot of credit card transactions, but might have less-than-perfect credit.

In addition to the much easier method of obtaining working capital from an MCA provider than from a bank, the Merchant Cash Advance has a lot of incentives when it comes to restaurant financing:

  • Much quicker approval times from an MCA provider than a bank. This translates to faster cash-in-hand, allowing you to take advantage of current market prices.

  • Whereas restaurant loans require you to have collateral in order to gain favorable consideration, an MCA simply requires you to be subject to a limited amount of conditions.

  • A cash advance is also much more beneficial to the cash flow of a company since it does not require any monthly payments or upfront fees that are characteristic of loans.

  • There is no limitation on how the funds acquired from an MCA can be used. Funds that are loaned through a financial institution must be used for the stated purpose by the restaurant. As a result, money from a restaurant loan has a very narrow scope of action as compared to money that comes from a cash advance.

  • No UCC-1 is required for an MCA

  • A restaurant stands to benefit more from an MCA because of how payments are made. So, if a restaurant’ income slows down, payments are adjusted to reflect this change in income.

Fortunately, the options mentioned above can provide necessary cash flow for such things as:

  • Expanding or remodeling your restaurant to bring in more customers
  • Purchasing new kitchen equipment or a POS system to improve efficiency
  • Advertising to attract more customers and/or promote special events
  • Boosting your cash flow to help with unexpected business expenses

If you are interested in exploring this option to grow your restaurant, but are questioning the ROI, here is a breakdown on how a small $50,000 restaurant loan or merchant cash advance can help your business.

Example: Advance Amount $50,000

Use of Funds:
• 10 Tables and 40 Chairs: $10,000
• Dry Bar (Includes Install): $10,000
• Heating & Lighting: $10,000
• Structural Renovations: $15,000
• Table Supplies & Décor: $5,000

Sales Increase Breakdown:
$240 in Daily Sales for every 1 Table Added
(Above Based Upon $40 Average Ticket Per Table x 6 Daily Operating Hours)

$240 in Daily Sales per Table x 10 Tables = 
$2,400 in Daily Sales

$2,400 in Daily Sales Minus 81% for Expenses (National Average) = 
$456 in Additional Daily Profit

$456 in Additional Daily Profit x 5 Days per Week x 52 Weeks = 
$118,560 in Additional Profit Annually By Adding 10 Tables

As one of the country's leading source of working capital for restaurants, we are aware that when restaurant owners need financing, they require it now and can't hold up for weeks, or months. Along these lines, we've made the application procedure as straightforward as could be expected, with minimal documentation required.

Once approved, you'll receive an offer in just a matter of hours and the funds deposited in your business bank account usually within a day. So what are you waiting for? Restaurants in every city throughout the U.S. are relishing their prosperity on account of a restaurant working capital loans, cash flow loans, business cash advances and business expansion loans from LVRG. If you believe in your restaurant, we’ll help you take that next step to realizing your goals. Get started today and we’ll take care of the rest!


Responses among consumers represent those who have visited a restaurant in the past month based on self-reported responses. The anonymous survey was conducted online April 13-17, 2017. Restaurant owner/manager data is based on an online study conducted among a sample of 488 respondents who are owners/managers/directors/CEOs/etc. of an independently owned restaurant. The sample for the study came from an online panel. Invitations to participate in the study were sent beginning on April 20, 2017 and data collection continued through May 1, 2017.

Referenced: - by Jack Robertiello | Jun 19, 2017 5:00am