Cash before profit: planning a year in F&B

A profitable month and a comfortable month are not the same thing. Rent is paid on a date, payroll on a date, suppliers on their terms, and none of them wait for a strong season to arrive. A plan built only on profitability can be entirely correct and still lead a business into a month it cannot fund.

## What an annual plan should contain

**A revenue model by daypart and channel**, not a single growth percentage applied to last year. Different parts of the business grow differently, and some will not grow at all.

**Cost of sales by category**, built from the menu mix rather than as a flat ratio. If the mix shifts, the ratio shifts with it.

**Labour modelled as a schedule.** Labour is not a percentage of revenue; it is people on a rota, and the rota is driven by opening hours and the demand curve. Modelling it as a ratio hides the decision that actually controls it.

**Fixed overheads**, including the ones that arrive annually and are forgotten monthly: licences, insurance, maintenance contracts, equipment servicing.

**Seasonality**, honestly. Most venues have a predictable slow period and plan as though they do not.

**A monthly cash flow** showing the balance, not just the result.

## Reading the cash curve

The cash curve is the part that changes decisions. It answers questions the P&L cannot.

When is the lowest point of the year, and how low? What funds it? Is there a month where a supplier payment, a rent quarter and a slow season coincide? What happens if revenue is ten per cent below plan for two consecutive months — does the business tighten, or does it run out?

A plan that identifies the tight month in advance turns it into a manageable event. The same month arriving unannounced becomes an emergency, and emergency decisions in F&B are expensive: rushed discounting, delayed supplier payments, deferred maintenance that costs more later.

## Where plans usually go wrong

**Growth applied evenly.** A single percentage across the whole business assumes every part grows at the same rate, which is almost never true.

**Labour as a target ratio.** This produces a plan that cannot be executed by a rota, so it is missed every month and eventually ignored.

**Annual costs forgotten.** Licence renewals, insurance and maintenance land in specific months and are frequently absent from a monthly model.

**Optimistic seasonality.** Planning for the slow season to be less slow this year, without a specific reason it would be.

**No range.** A single-line plan is a forecast that will be wrong. Two or three cases with explicit assumptions are far more useful.

## The reporting that keeps it alive

A plan is worth building only if it is compared to reality on a schedule. That requires a short monthly pack: actual against plan for the measures that matter, the cash position, and one written paragraph explaining variance.

The written paragraph is the part that gets skipped and the part that produces decisions. A number without an explanation invites a debate; a number with one invites an action.

## Practical recommendations

1. Build the plan monthly, not annually divided by twelve.
2. Model labour from a rota, not from a ratio.
3. List every annual and quarterly cost and place it in the month it actually lands.
4. Produce the cash curve and mark its lowest point.
5. Build a downside case where revenue runs ten per cent below plan for two months, and check the business survives it.
6. Review actual against plan monthly, with one written paragraph, and adjust rather than defend.

## In short

Profitability tells you whether the business model works. Cash tells you whether the business survives long enough to prove it. An annual plan that shows only the first is answering the less urgent question.