Cash-flow management is an ongoing issue for the restaurant and hospitality industries. In fact, it is often one of the biggest barriers to success. Technology is helping entrepreneurs get immediate access to working capita. In this Q&A, Kabbage’s Head of Customer Experience and Success Aditya Narula explains the importance of cash-flow management and the meaning of "let the bakers bake."
How big of an issue is cash flow for restaurants?
Cash flow for restaurants can be quite volatile and uncertain. Margins are particularly thin due to food and employee costs, which typically consume more than half of all goods sold. Compound that with a highly seasonal business reliant on tourism, holidays and weather, as well as ever-changing taste preferences, competition, shifting customer expectations, rising property costs and more—it requires diligence to maintain a healthy cash position to build and maintain a successful restaurant.
What should restaurant owners know about what it takes to get working capital when they need it?
The good news for restaurant owners is this has changed dramatically. At Kabbage, we have more than 175,000 customers and the restaurant industry is one of the largest verticals we serve. In minutes, businesses can apply for, be approved for and access a Kabbage line of credit up to $250,000. There are no fees to apply, no fees to maintain the line of credit and no obligations to take funds. By analyzing a company's real-time performance, we remove the paper-heavy application process and waiting weeks or months for an answer from the traditional lending process.
What are the pros and cons of reaching out for financial help?
Borrowing obviously comes with the obligation of repayment. We always encourage business owners to thoroughly consider the use of funds prior to borrowing. But, with proper consideration, customers often know exactly how the extra funds will generate more revenue and pay for itself.
Any case studies you can share about restaurant owners who have used Kabbage?
We have a host of examples live on our website. All of the use cases stem back to supporting cash flow and expansion opportunities. Si Pie Pizzeria uses Kabbage funding to help with inventory, Rolling J’s needed to repair their food truck and is now using the funding to open its first brick and mortar location, Serendipity Cafe and Cienfuegos Cuban Cafe use Kabbage funding to cover payroll, and Tin Whistle needed more cash to handle maintenance costs at their local pub.
How is technology changing the way small businesses can get ahead?
Time is everyone's most valuable resource, especially business owners who wear multiple hats in the business. Technology solutions are helping automate common activities so they aren't wasting unnecessary time on the tasks that don't generate revenue.
At Kabbage, we have an internal motto which is, "Let the bakers bake." Business owners did not start a business to spend all of their time on cash-flow management. They started the business to pursue their passion—like baking amazing products for their customers. We're committed to building the technology solutions and services that give them back the time to focus on what they love.