Working Capital Math for Restaurants

Prime cost — food plus labor — should sit near 60 to 65 percent of sales for a full-service room. What remains covers occupancy, utilities, marketing, debt service, and owner return. Capital planning that starts from top-line revenue overestimates capacity every time.

Take monthly sales, subtract prime cost and fixed occupancy, and you have the real envelope from which any remittance is paid.

A remittance that works in a strong week and fails in a slow one is a default waiting for a rainy Tuesday. Model the debit against your slowest four weeks of last year, not the average.

Most healthy restaurant files carry total daily debits at or below 8 to 12 percent of daily deposits.

Equipment that raises covers per hour, a patio build-out, a second POS station, delivery packaging at volume pricing — these have measurable returns per seat and per shift.

Capital used to cover last month's shortfall buys thirty days and adds a debit. Capital used to raise throughput pays for itself in covers.