Working Capital For Restaurants

Independent, Locally Owned Restaurants Outpacing Chains

Research continues to show that chain restaurants are less likely to be the types of dining and drinking establishments that today’s customers favor.

In fact, annual revenue for independent operators will grow about 5% through 2020, exceeding chain growth of about 3%, according to Pentallect Inc., a Chicago-based industry research firm,  in conjunction with research partner Critical Mix.

In ratings, consumers give independents the edge in 12 of 15 metrics surveyed. For instance, consumers saw independent restaurants as being more community-oriented, unique and offering personalized service. Independent restaurants were also far more likely to be perceived as sharing consumers' values, offering quality food, value, better service and atmosphere, and menu innovation.

Delivery was one area where the gap almost disappeared, with consumers rating independents and chains almost equally. Consumers had a higher opinion of chain restaurants in only three categories:

  • Use of technology;
  • Use of social media;
  • Convenient locations.

The one category where chains have the biggest edge – using technology – is important to consumers, particularly those seeking delivery.

Both traffic and revenue growth among independent restaurants is outperforming chains, the report said, indicating a shift from historical patterns when chains were driving growth across the industry. Pentallect estimated 2016 sales of $210 billion for independent restaurants and small chains, while larger chains saw sales of $312 billion.

"Independent restaurants are not only perceived to be doing a better job of meeting consumers' expectations regarding the dining experience and ambiance, they are also doing better than chains in the 'table stakes' of food quality, service, value and menu innovation than have traditionally been a strength of many chains," Pentallect's president Rob Veidenheimer said. "This combined set of favorable attributes represents a significant advantage for well-managed independents, and overcoming the perceived gap represents a major challenge for chains."

Bob Goldin, a partner at Pentallect, commented that "based on these fundamentals, we project that independent restaurants will grow at 4-5% per year for the balance of the decade, almost double the 2-3%  chain growth rate. This has significant implications for supply chain partners' go-to-market strategies and resource allocations". 

Pentallect reported that chain restaurants, which account for well over one half of all restaurant sales, will respond forcefully to regain traffic and continue to receive support among their suppliers, but that the favorable consumer perceptions driving independent restaurant growth are likely to remain and even possibly accelerate over the next several years.

Running a successful restaurant can be a very fulfilling, yet challenging task. In a recent survey of restaurant owners, only 30% described their financial situation as “good to excellent.” Being able to handle many different challenges is the source of great satisfaction, along with some headaches too.

In the last five years, it has become increasingly difficult for a business owner to access funds through a loan system by a financial institution. Statistically, approximately 80% of ALL small business that apply for loans from big banks get rejected. Sadly, that number is even higher for restaurant owners, as restaurants are typically on a banks restricted industry list. In order to deal with this shortfall, the Merchant Cash Advance (MCA) was developed in order to help small business owners obtain the capital needed to operate and grow their businesses. The key characteristics of a merchant cash advance include a limited amount of paperwork and quick access to funds, both of which see it as a much better source of funding than a loan. Loans from financial institutions routinely take weeks to months to complete processing, and the release of funds is sometimes just as slow. Assume you have an 800 credit score, a flawless credit history, and plenty of free time on your hands to upload endless amounts of paperwork, do you really want to wait 4 months to get the capital you need to grow your business...today? A merchant cash advance provider such as LVRG delivers funds to the receiver in a single lump sum payment and then is repaid over time like a loan. One of the major differences between a loan and a merchant cash advance (MCA), is that an MCA deals with the purchasing of a business' future income whereas a loan deals with lending money to a business in exchange for payment over time with attached interest.

There happen to be many terms used to describe a Merchant Cash Advance, here are a few to be aware of: Same Day Small Business Financing, Merchant Cash Advance Loans, Business Cash Advance, Unsecured Business Loans, Merchant Money Advancement, Merchant Cash Financing, No Interest Merchant Loans, Unsecured Business Loans, Business Cash Advances, Merchant Cash Advance Loans, Merchant Cash Advances

How does a Merchant Cash Advance Work?

An agreement is made between the business owner and the MCA provider regarding the advance amount, payback amount, hold-back and term of the advance. Once an agreement is made, the advance is transferred to the business’ bank account in exchange for a future percentage of credit card receipts.

Each day, an agreed upon percentage of the daily credit card receipts are withheld to pay back the MCA. This is called a “holdback” and will continue until the advance is paid in full. Access to the business owner's merchant account eliminates the collateral requirement required for a traditional small business loan.

Because repayment is based upon a percentage of the daily balance in the merchant account, the more credit card transactions a business does, the faster they’re able to repay the advance. And, should transactions be lower on any given day, the draw from the merchant account will also be less. This means that during times of slow business, the business’ payback is relative to their incoming cash flow.

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

Restaurants like yours, all over the U.S. are savoring their success thanks to merchant cash advances from LVRG. The beauty of a merchant cash advance to grow your restaurant is, there is no collateral required, no minimum credit score and you can get your funds in a day. 

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! Give us a call (855)998-5874, we're here to help!

Reference: http://www.nightclub.com/industry-news/independent-restaurants-growing-faster-than-chains (by Jack Robertiello | Jun 5, 2017 5:00am)

 

Restaurant Loans: 3 Funding Options to BOOST Your Restaurants Revenue.

Restaurant Loans:
3 Funding Options to BOOST Your Restaurants Revenue.

#1. Restaurant Term Loan - Running a restaurant takes a lot of dedication and constant cash flow. For quick restaurant financing, term loans may turn out to be your best solution. This new alternative to traditional bank loans offers several advantages and delivers the cash you need for your restaurant in record time, often times in as little as a few days. Our term loans range from $50,000 to $1 Million with rates between 7.99% to 24.99% APR.

The approval criteria for restaurant term loans are much like those of restaurant bank loans. You’ll need a financially profitable restaurant that’s been operating for at least one year and taking in $1 Million or more annually. It's important to know that both your personal and restaurant financial history, as well as your credit scores will most likely be the deciding factor during the application process. This includes your FICO and SBSS score. Term loans are tailored to finance restaurant owners with a profitable restaurant and great personal credit.

Unlike bank loans, collateral is not typically required for term-loan approval, depending on the amount borrowed; signing a personal guarantee to repay the loan should be sufficient. Another important area that sets these loans apart from bank financing is turnaround time. While bank loans require a wait of two to six months before disbursement, you should have your term-loan funded within about a week of completing the application.

A term loan is what most people think of when they think of restaurant lending. They are loans with a set repayment time, set number of payments, and have a fixed or variable interest rate. The terms of the loans vary, from 1 year to 4 years fully amortizing. You can use a restaurant term loan to meet virtually any restaurant need, including purchasing restaurant equipment or inventory, working capital, paying back other debts, meeting tax obligations, or large single purchases. Our term loans have no pre-payment penalty, and they can be re-financed to better rates as your restaurant improves.

#2. 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.

#3. 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.

Our expert funding advisors are ready to learn about your restaurant needs to determine if a Merchant Cash Advance is right for you and we do so with speed and transparency.

Call us for more info (855) 998-5874 or click below.

 

Restaurant Working Capital: How a Revenue Based Loan Could Quickly Boost Your Restaurants Growth.

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.

A revenue based loan could be your restaurants lifeblood and provide it with several financial benefits. When your restaurant is growing, chances are you'll need an injection of cash to continue its growth. Bank loans are often times too restrictive and near impossible to obtain these days. In this situation, a revenue based loan may be the best solution. If you use it wisely, a revenue based loan could do wonders for your restaurant. Without being capitalized, chances are you will wind up in a growth stalemate. Here are three ways that revenue based loan can save, and add limitless growth possibilities to your restaurant. For a restaurant owner who needs a quick, reliable outlet for restaurant working capital, or even fast restaurant cash due to an emergency, a revenue based restaurant loan may be your best option. 

Helps Grow Your Restaurant

If your restaurant is under 2 years old and starting to scale, you obviously want to ride the wave. You cannot do this without a dependable source of capital. Bank criteria is typically a minimum of 2 years in business, strong cash flow, positive ratios and near perfect credit. However, a revenue based lender will fund newer restaurants, with less stringent credit requirements and use of capital restrictions. This type of loan will give you a shortcut to cash since it only requires a few months of business bank statements; whereas banks require 2 to 3 year business and personal tax returns, income statement, balance sheet, personal financial statement, debt schedule and countless other documents to complete loan package. Many times, your bank statements are enough to demonstrate to a revenue based lender that you can repay your loan.

Get Cash Quickly

You're busy running a restaurant, you don't have to time to compile overly detailed loan packages and chasing after loan sources. All you know is that you need cash quickly and even if you could get approved for a bank loan, is it really worth all the trouble? A revenue based loan will provide cash quickly with a very short turnaround time. If you are prepared to apply for a revenue based loan and have the appropriate supporting documents ready to go, you may be able to get funding in as little as 24 hours. Compare that to a bank loan where the loan process is on average 2 to 4 months. This is one of the main advantages of a revenue based loan. Some restaurants actually consider this a lifesaver, and will go this route over a bank loan any day.

No Lingering Debt

A revenue based loan will not weigh you down with long-term debt. When you obtain a revenue based loan, you will not be looking at 5 to 10 years to repay a loan for money that you're using today. Think about it, why would you want the headache of paying off a 2015 marketing campaign all the way into 2025? Not to mention, having this type of long-term loan could hurt your chances for getting funding in the near future, which all restaurants will need if they plan to scale. With a revenue based loan, you will pay it off in roughly 6-12 months, which makes more sense for short-term expenses. Additionally, lenders are usually willing to replenish the loan after roughly 50% is paid down, so you can continue getting more capital along the way. One more point to mention, going the bank route you'll also have to be aware of up-front fees, equity injections, referral fees, packaging fees, guarantee fees, and closing costs.

As you see, the preceding three steps show you how a revenue based loan could be advantageous for your restaurant. It helps you grow your restaurant quickly and it does not saddle you down with long-term, highly encumbering debt. It gives you the cash that you need quickly, to grow your restaurant your way. What more could a growing restaurant need?

LVRG Funding is one of the nation's largest and most trusted resources of revenue based loans. Want to know if a revenue based loan is right for your restaurant, give us a call (855) 998-5874. We're here to help!

 

The Role of Working Capital for Restaurants

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.

There are many reasons why income can be a precarious test for restaurant owners. First off, it's extremely costly to own and operate a restaurant, things like workman’s comp and food cost expenses are over the top. Other matters such as acquiring an intemperate stock of perishable food, poor anticipation of the volume of business, and even the powerlessness to alter costs as frequently as the primary expenses vacillate. Possibly you have poor payment terms with the suppliers, or maybe the restaurant is located in a vacation spot, so your business is more occasional.

Frequently, restaurant owners can advance income by arranging longer installment cycles, yet that is not generally a choice. Fortunately, there are different restaurant finance solutions that 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

There are a few terms that may be associated with restaurant funding or working capital loans, these terms include: working capital for restaurants, merchant cash advance, cash flow for restaurants, merchant loans, cash advance business loans, loans against credit card sales and revenue based loans.

Unlike conventional bank loans, we won’t make you jump through hoops or wait for months for financing. Our small business loans and merchant cash advances give you the flexibility to address the unique needs of your restaurant. Our cash flow loans, cash advance business loans, merchant loans, restaurant loans and other funding options give you the freedom to grow your restaurant, your way.

You can put a merchant loan, business cash advance or restaurant cash flow loan to work immediately,  whether it implies meeting certain financial obligations for a couple of months, ordering additional inventory, hiring new staff or running a marketing campaign. Then, there are still expenses that no restaurant owner can anticipate; the sudden need to replace broken restaurant equipment, a POS system failure or walk in cooler malfunction. Repairs, sprucing the outside or lounge area, notwithstanding advertising and marketing campaign can all be basic components to your image. In today's aggressive environment, there is no room for error. Working capital for your restaurant is only a couple of clicks away!

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. 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 loans against credit card sales 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!

 

How to Utilize a Merchant Cash Advance to GROW Your Restaurant

Running a successful restaurant can be a very fulfilling, yet challenging task. In a recent survey of restaurant owners, only 30% described their financial situation as “good to excellent.” Being able to handle many different challenges is the source of great satisfaction, along with some headaches too.

In the last five years, it has become increasingly difficult for a business owner to access funds through a loan system by a financial institution. Statistically, approximately 80% of ALL small business that apply for loans from big banks get rejected. Sadly, that number is even higher for restaurant owners, as restaurants are typically on a banks restricted industry list. In order to deal with this shortfall, the Merchant Cash Advance (MCA) was developed in order to help small business owners obtain the capital needed to operate and grow their businesses. The key characteristics of a merchant cash advance include a limited amount of paperwork and quick access to funds, both of which see it as a much better source of funding than a loan. Loans from financial institutions routinely take weeks to months to complete processing, and the release of funds is sometimes just as slow. Assume you have an 800 credit score, a flawless credit history, and plenty of free time on your hands to upload endless amounts of paperwork, do you really want to wait 4 months to get the capital you need to grow your business...today? A merchant cash advance provider such as LVRG delivers funds to the receiver in a single lump sum payment and then is repaid over time like a loan. One of the major differences between a loan and a merchant cash advance (MCA), is that an MCA deals with the purchasing of a business' future income whereas a loan deals with lending money to a business in exchange for payment over time with attached interest.

There happen to be many terms used to describe a Merchant Cash Advance, here are a few to be aware of: Same Day Small Business Financing, Merchant Cash Advance Loans, Business Cash Advance, Unsecured Business Loans, Merchant Money Advancement, Merchant Cash Financing, No Interest Merchant Loans, Unsecured Business Loans, Business Cash Advances, Merchant Cash Advance Loans, Merchant Cash Advances

How does a Merchant Cash Advance Work?

An agreement is made between the business owner and the MCA provider regarding the advance amount, payback amount, hold-back and term of the advance. Once an agreement is made, the advance is transferred to the business’ bank account in exchange for a future percentage of credit card receipts.

Each day, an agreed upon percentage of the daily credit card receipts are withheld to pay back the MCA. This is called a “holdback” and will continue until the advance is paid in full. Access to the business owner's merchant account eliminates the collateral requirement required for a traditional small business loan.

Because repayment is based upon a percentage of the daily balance in the merchant account, the more credit card transactions a business does, the faster they’re able to repay the advance. And, should transactions be lower on any given day, the draw from the merchant account will also be less. This means that during times of slow business, the business’ payback is relative to their incoming cash flow.

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

Restaurants like yours, all over the U.S. are savoring their success thanks to merchant cash advances from LVRG. The beauty of a merchant cash advance to grow your restaurant is, there is no collateral required, no minimum credit score and you can get your funds in a day. 

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! Give us a call (855)998-5874, we're here to help!