How To Get A Restaurant Business Loan

Sep 2017
Camino Financial Blog

If you run a restaurant, there is a chance you may have already applied to a restaurant business loan, or you may be considering applying for one. This article will walk you through the process to properly apply for a loan that works for you.

As a restaurant owner, you have to ensure that there is always an adequate amount of cash at your disposal. When there is a constant stream of customers, and sales are high, the business will generate the funds that you need to pay for your regular expenses. But there may be times when business is down. During these periods, you may need less cash, but you will still have to find the funds for fixed expenses like electricity, rent, wages, and license fees.

A restaurant business loan could offer the best solution. These loans are available from a wide range of lenders including banks and other financial institutions.

Remember that a restaurant business loan can be difficult to obtain. Lenders need to be sure that they will get their money back. A report on states that 60% of new restaurants fail within their first year. By year five, this percentage climbs to 80%. Even if these statistics are off the mark, it is no surprise that lenders are wary about advancing money to restaurant owners.

Now, the good news: here you have some steps you can take to ensure you have the best possible chance of getting your restaurant business loan approved.

4 Steps To Get Approved for a Restaurant Business Loan

1. Get your paperwork in order

Lenders are reassured if you can produce documents that substantiate your claims. It is a good idea to keep your personal tax returns handy and show them to the bank’s officials. Ideally, you should prepare copies of the last three years’ returns.

Make sure your bank statements are in order. They provide proof of your sales volumes and expenses. If a significant portion of your sales is in cash, you can show the deposits that you have made into the bank and tie up these figures with your sales records.

A business plan, a business resume and your profit and loss statements may also be required during the loan application process. For a comprehensive list of the documents typically by a bank, read the 5 Keys to a successful loan application.

2. Keep your credit report ready

The lender will access your credit report directly. But, it is important for you to familiarize yourself with its contents. A first step is to completely understand the difference between your personal credit and your business credit. Then you need to know how to read your credit report.

Also, if you have delayed payments in the past, you should be in a position to explain the reasons. The loan officer will be particularly interested in knowing about how the problem was eventually resolved.

Obviously, your chances of getting your loan approved increase with a higher credit score. A score of 700 or more is considered to be good. Even if your score is in the 600–700 range, you have a chance of getting your loan sanctioned. However, a lower score will require you to put in a greater degree of effort to convince the lender about your creditworthiness. Find here what determines a good credit score.

Need to improve your business credit? Learn here the 3 Steps to improve your business credit

3. What will you use the loan amount for?

This is of great concern to the lender. It is vital that you are in a position to explain to the lender the purpose for which you are taking the loan.

The money that you borrow must be used within the business: equipment, tableware, even a marketing campaign that requires additional funds. Consider the benefits that your business will derive after the investment and prepare the relevant details to be shown to the banker. If you need some inspiration, read here the perks of getting a small business loan.

4. Use this strategy to get your loan approved

It can be difficult to get a restaurant business loan since lenders are aware that a large percentage of restaurants fail.

However, the reason for the failure of so many restaurants is not the lack of customers or profits, but the lack of cash flow. Whether you are considering applying for a loan or not, your cash flow should be always in good health. To know more about this, learn here the keys to optimize the cash flow of your business.

Banks need to know that your business will succeed. One way to do this is is to tell them the amount of the investment that you have made out of your own funds. The higher your own stake, the greater is the likelihood of getting your loan.

For example, if you are buying restaurant equipment, you could put up, say, 30% to 40% of its cost. Most lenders would be willing to finance the remaining amount. If you ask for 100% financing, your request will have a higher probability of being denied.

To sum up, a restaurant loan is a great way to start up, maintain, or upgrade your restaurant business. But it’s also a risky and complicated process. Don’t be discouraged, and, as a first step, make sure you gather all the tools you’ll need.

Remember that at Camino Financial we are here to help you. Many of our clients are business owners: we are familiar with the singularities of your business, we understand your needs and your challenges like no other lender. Our small business loan application is simpler and shorter than in a bank. Contrary to some of the bank requirements explained in this post, the only documents we require are your financial records, and once you are approved you can receive your funds in just 24 hrs. Learn here about our small business loans.  If you want to receive an estimate of your loan cost, you just have to fill in a simple application. Or just contact us if you have questions! We want to hear from you.

How Much Does It Cost to Run a Restaurant? Breaking Down Restaurant Expenses

Sep 2017
Camino Financial Blog

How much does it cost to open a restaurant? A restaurant that attracts a steady stream of customers and gains a reputation for high-quality food at reasonable prices can be a source of great satisfaction to its owner. This success is the result of careful planning, hard work, and the ability to pay attention to every small detail.

But high sales volumes do not necessarily guarantee an adequate level of profit. If your business is not making as much money as you think it should, it may be time to study your restaurant expenses. How much are you spending on food purchases? Are your labor costs at par with other similar restaurants? Are you overspending on some items?

Here we will address those questions.

Remember that if you need to improve your restaurant’s cash flow, a small business loan could be exactly what you’re looking for.

Apply For A Business Loan!


Restaurant Expenses Breakdown

Restaurant expenses on food

Every restaurant owner should keep a close watch on food purchase expenses. As a general rule, your food costs should not exceed 28% to 32% of total food sales. If you are spending more than this percentage, you need to reconsider your purchase practices.

You may want to renegotiate prices or look for an alternate supplier. An excellent tool is the food cost formula. It’s the best way to keep your expenses under control and to know how much you should spend on food.

Restaurant expenses on labor

After food, your next most significant expense would be the payment that you make to your workers. For most restaurants, total payroll costs should not exceed 25% to 30% of food sales. A restaurant that spends more on its workers regularly could find it challenging to make a profit.

Restaurant expenses on equipment

When you ask the question “How much does it cost to open a restaurant?”, you should know that equipment costs are likely to eat up a big chunk of your budget. You have to be prepared to spend on various gadgets like stoves, steamers, fryers, and freezers. You’ll also need dishwashers, a coffee machine, and cooking utensils. Don’t forget about plates, spoons, knives, and furniture. In fact, the list is almost endless.

A mistake that many entrepreneurs who are in the restaurant business make is to overspend on equipment. They think that nothing but the best will do. Their line of reasoning is that it’s okay to choose the most expensive options as everything they buy is going to last for years. However, this is the wrong attitude. Instead of splurging on equipment, it’s advisable to conserve your funds.

How can you cut down on equipment costs? Explore the possibility of buying second-hand items. You can look for bargains with a simple Google search. Additionally, you don’t have to buy the most expensive item in each category.

Happy young restaurant owner standing at kitchen counter looking away and smiling. Caucasian businessman in commercial kitchen. concept: restaurant expenses

Find out how to buy cheaper and better kitchen equipment

Restaurant expenses on repair and maintenance

Although buying equipment is a one-time expense, you will have to consider repair costs when you calculate your restaurant’s profits.

You must maintain your restaurant’s equipment in good condition. This will ensure that your appliances perform efficiently. Preventive maintenance will also help to extend the life of your equipment. You will have to make replacements less often.

It’s advisable to set some money aside to take care of unexpected repair expenses. If a freezer stops functioning, you may have to pay a significant amount to get it into running condition again.

How much should you budget for repairs and maintenance? About 1% to 3% of sales are usually considered sufficient.

Restaurant expenses on rent

There’s an oft-repeated quotation in real estate circles — “There are three things that matter in property: location, location, location.” The same could be true about restaurants. If yours is located at a place that has higher footfalls, your chances of success are much greater.

But prime locations command more rent. Entrepreneurs have to achieve a balance between finding a suitable place and paying the least possible rent for it when analyzing how much does it cost to open a restaurant.

How much should you pay for rent? That depends upon your luck in finding the right place and your negotiating skills. However, the conventional wisdom is that rent should not exceed 6% of sales. If you include property-related expenses like real estate taxes, common area maintenance, and occupancy expenses, the figure can go up. Still, it should not be allowed to be more than 10%.

Restaurant expenses on utilities

Electricity costs, phone bills, and internet expenses can eat into your restaurant’s profits. As the owner of the restaurant, you should set an example and try and minimize these expenses. Switch off the lights when you don’t need them. Change over to energy-saving light bulbs if that’s possible.

For most restaurants, utility costs add up to about 5% of sales or a little less.

confident young cafe owner taking notes and working with laptop. concept: restaurant expenses

Costs Can Vary With the Type of Restaurant

Keep in mind that it’s challenging to generalize restaurant costs when calculating how much does it cost to open a restaurant. Every different type of establishment will have a unique cost structure. For example, a food truck would usually have relatively low worker costs. On the other hand, if you run an establishment that offers table service, you should expect to have higher payroll expenses.

Regardless of the type of restaurant that you run, you must keep strict control over each of your expenses. Even seemingly insignificant sums can add up over a period. Cut down on unnecessary expenditure wherever possible. It will help you to compete with other restaurants in the area and ensure that you remain profitable.

How much am I Making and how much am I spending?

It’s essential to keep track of your profitability. The best way to do this is to add up your sales for a certain period, say, for a week or a month, and then deduct the expenses that are connected with those sales.

Consider this example:

 Restaurant expenses structure and estimated profit for one week of a restaurant’s operations $ Cost as a percentage of sales
Weekly sales $10,000 100%
Weekly food purchase cost $3,000 30%
Payroll for the week $2,500 25%
Gross margin $4,500 45%
Amount set aside or spent on repairs and maintenance $300 3%
Rent inclusive of property-related expenses $1,000 10%
Utilities $500 5%
The amount remaining for miscellaneous expenses and profits $2,700 27%

In this example, you can see that food and payroll expenses eat away, almost half the sales revenue. The restaurant owner makes a gross margin of $4,500 on sales of $10,000. As a percentage, the gross margin is 45%.

The table provided above also considers several other expenses — repairs and maintenance, rent and related costs, and utilities. After accounting for these, the amount that remains is $2,700. That’s 27% of sales revenue. This sum could be used to pay for miscellaneous expenses. The remaining amount will be profit.

If you want to increase your profitability, you can try to decrease food costs or reduce the amount that you spend on your workers, as these are major expenses. Cutting the other expenses is more complicated, and the impact on your profit will be relatively less.

Remember that if you have an insufficient gross margin, there will be little money left over to pay for other expenses. Consequently, your profits would fall. If expenses continue to mount, you could be looking at a situation where you would be making losses.

A business loan can help you improve your cash flow, invest in your business growth, and strengthen your finances.

Get Approved For A Loan Today


In the Bar/ Restaurant Waiter Takes Order From a Diverse Group of Friends. Beautiful People Drink Wine and Have Good Time in this Stylish Place. concept: restaurant expenses

Restaurant Expenses During the COVID-19 Pandemic

Coronavirus has been affecting millions of businesses in the US and the world. And even though, fortunately, restaurants have been able to stay open—only being able to offer takeout and delivery—they still are being affected financially.

While you won’t need to pay as many employees or as many hours as before, your sales will also go down, that’s why you need to cut down your restaurant expenses as much as you can (more on that further down).

You also need to make sure you’re prepared for when the economy starts reopening: customers will start going back to your restaurant, but the process will definitely be rather slow.

You can get ready to reopen your restaurant as smoothly as possible with this article.

As for your finances, if you haven’t already, we strongly recommend you apply for some financial aid programs (the government and the SBA have the PPP and the EIDL programs). Still, if you weren’t able to apply —because they are no longer taking applications or because you don’t have an SSN— you should consider getting external financing to be able to survive during the upcoming months.

How Can I Cut Down on my Restaurant Expenses?

Here are some ways to reduce expenses and improve profitability:

  • Are there any dishes returned by clients regularly? Maybe there is a problem with the preparation, but probably you just need to strike that dish off your menu. Learn here how to do a menu audit.
  • Are you making your food purchases in the right quantity? You need to buy enough to maximize the bulk discount, but you also need to ensure that food does not become stale.
  • It’s possible to learn how to reduce your production costs in any business. In the restaurant industry, even a small reduction in food costs can result in significant savings. That’s because your food purchases account for a large portion of your total budget.
  • Do your workers have enough to do? Consider giving them other tasks that are usually neglected during rush hour.
  • Focus on how to reduce your labor costs. It’s possible to save on the salaries and wages that you pay without compromising on the quality of service that you provide to your customers. Consider outsourcing some tasks. Is there any way that you can cut down on your overtime expenses?

Portrait Of Couple Running Organic Food Store Together. concept: restaurant expenses

A Business Loan Can Help You Face the Costs of Running Your Restaurant

Experienced restaurant owners know that having the ability to access funds when they are most needed can give their business a significant advantage. You may get a new opportunity to increase your level of operations. But this expansion could involve buying additional equipment or hiring more personnel. Or maybe your restaurant needs an urgent cash injection to purchase inventory or pay for the repair of your furniture.

Where will you turn to for cash?

At Camino Financial, we specialize in restaurant loans. Many of our members are restaurant owners, and we have a high degree of expertise in this segment. If you need money quickly, request a quote today for a business loan.

We can offer you the best financing solution for your needs. Our minimum requirements are easy to meet. Your restaurant should have been operating for at least nine months and generating sales of at least $30,000 annually. If you are eligible, we can provide funds in as little as two days.

Apply now!


We hope that this advice can help you track and control your restaurant’s expenses, increase your profit, and give you more confidence to operate your business.


How To Set Your Restaurant Apart

Oct 2017
Camino Financial Blog

Keeping up with the competition is one of the greatest challenges that restaurant owners have to face. There are tons of restaurants and fast food chains all around the country. Did you know that you can find more than a hundred food destinations close-by in most metropolitan areas? That’s why it is very important to set your restaurant apart in some way. But how can you make your food business unique? Read the following tips that will surely grab and keep, your customers’ attention.

4 Areas To Set Your Restaurant Apart

Tasteful Food and Unique Recipes

A significant way to set your restaurant apart is with food taste and unique dishes. If your food tastes better than your competitors, you will be well on your way to a successful business. Research some of your local competitors and see what their themes and dishes are. If you can provide a new point of view (that tastes good) you could get a leg up. Your customers simply have to get the tastiest thing they have ever eaten. 

Appropriate Entertainment

Another way to bring in more business is to offer entertainment during meals. Things like karaoke, trivia, comedy shows, and live music, give your customers something fun to do while eating. The kind of entertainment provided should match the feel and climate of your restaurant. If you are a fine dining establishment, you probably don’t want something wild like a comedy show or karaoke night. Background music, like smooth jazz, would be much better suited for that kind of atmosphere. On the flipside, if you are known as a fun local pub, it might be a good idea to have things like trivia or karaoke. Obviously, these things will cost money. Chances are though that they will pay off in the long run.

Excellent Service

The service customers receive will make or break any restaurant. You could have the most delicious food in 100 hundred miles, but if you have staff that is rude and ignores your guests, you won’t be getting many customers coming back. Having a friendly, personable staff, will do wonders for your business. It will ensure that guests are served promptly and efficiently. If something goes wrong in the kitchen, guests might be more forgiving if they like the service they have received. It also creates an overall friendly atmosphere, which tends to attract a majority of restaurant goers. Make sure to properly vet and keep an eye on your staff.

A Variety of Drinks

Unless you are specifically aiming to be a family-oriented restaurant, a bar, and good bartenders are great. A lot of people want to unwind after a stressful day of work with a beer or a glass of wine. This is why most restaurants tend to have a bar, or at least, serve alcohol. Ideally, your beer and wine list would be comprehensive and feature a variety of brands, but we understand that may be difficult due to the cost. Still, partnering with a local brewing company or winery could get you a few more customers and provide you a major boost in income.

Final Thoughts

Our advice to set your restaurant apart will help you out, but you have to prioritize on what your customer wants and work around that. Think about what you want out of your restaurant, what your community needs and wants, and which of the above factors fit your goals and vision. Give your customers a reason to come back, by offering them a unique and memorable experience. Think about what makes your business different, stand out from the competition, and emphasize that. 

The Best Practices to Do a Restaurant Inventory

Sep 2017
Camino Financial Blog

A restaurant inventory is crucial in any food business since a restaurant’s food budget can account for a significant portion of its total costs. Just think: most establishments spend about 30% of their total sales on food purchases.

If you are able to successfully bring down your food costs, it will have a direct impact on your profitability. One way to achieve this is to pay more attention to the manner in which you monitor your food and restaurant inventory.

Ask yourself the following: Do you throw away significant amounts of ingredients because the expiration date has passed? Are you constantly running short of certain items forcing you to make emergency purchases? Does your existing food inventory differ by a significant amount from your records?

If you have answered yes to any of these questions, it is probably time to review the process you use for monitoring your restaurant inventory. Just follow these simple tips.

4 Steps to Do Your Restaurant Inventory

1. Use the right amount of people

How many people should carry the task of doing your restaurant inventory? Two people can handle the task of monitoring your restaurant’s food inventory. When possible, the business owner or the manager should supervise the process.

Why two people? They can count the items separately and then you can see if they have obtained the same result. In the event of a difference, a recount should be done. If the manager or the business owner checks this practice every once in a while, it will ensure that the employees are doing a complete job.

In other words, allocating the work to two people instead of one will result in greater accuracy and will also reduce the chances of records being deliberately changed.

2. Use the first-in, first-out rule

How should the food items be used in the kitchen? When it comes to selecting a food item to be used or cooked in the kitchen, does your cook simply grab the first can or packet that comes to hand? If this is the case, it is likely that you will have large quantities of food inventory that will reach their expiration date.

To efficiently manage your restaurant inventory, you must follow a first-in, first-out (FIFO) policy. Your staff must be trained to store those items that were received earlier in the front. By doing this, they will be used before the fresh stock.

Here you can read more about this useful method and check an example.

3. Calculate your food cost

Monitoring and controlling your food cost is a key part to help you with your restaurant inventory. To achieve it successfully, you can use a food cost formula. A food cost formula is a simple and efficient way to keep an eye on your food expenses, prevent them from escalating, and thus help you do your restaurant inventory. Simply put, a certain percentage of your total restaurant expenses will go towards food purchases. Have in mind that this is usually in the region of 28% to 32% of your total food sales. The food cost formula goes like this:

FOOD COST PERCENTAGE =  beginning inventory 
+ food purchases
– ending inventory
÷ by food sales

Learn here all you need to know about the food cost formula.

4. Use these simple rules

Are there any other effective rules to follow? Sure! When it comes to optimizing your restaurant inventory a greater degree of efficiency and accuracy can be achieved if you follow these 3 rules:

  1. Don’t combine the process of receiving a new shipment and counting your existing food inventory. If you do this, it can lead to double counting and confusion. Inventory must be taken before a new shipment arrives
  2. If you take inventory every week, do it at the same time and on the same day on a regular basis. Following this practice will enable you to avoid fluctuations in weekly figures
  3. When there is wastage, the reason must be recorded

Monitoring your restaurant inventory on a consistent basis and then taking the necessary corrective action can yield positive results. For instance, you may notice that there is greater wastage of items sourced from a particular supplier. You could then discontinue or reduce purchases from that person or organization.

Well planned and effectively implemented food and restaurant inventory practices will result in lower wastage, a greater degree of cost-effectiveness, and higher profitability. Want more restaurant practices that will grow your business and your profits? Learn here how to grow your restaurant business.


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