Many of the biggest entities of today pertain to those that delve into the food industry. Think about it. How many bakeshops, patisseries, cafes and restaurants have sprung up in your area? We bet there’s a lot. You may have even noticed that a lot of them come and go and only a few are left standing mightily. That is because even with the food industry’s high demands and great market interests, not all of them can survive with the times. Do you want to know how to spot a restaurant that is on the brink of bankruptcy? If you are an owner, employee, supplier, business partner or a loyal customer, you might be interested on this list by AABRS.com.
Red Flag No. 1: Late or long outstanding payables – Missed payments for orders and other credit obligations are a huge tell tale sign that the restaurant is having trouble with its finances. Human error is rarely the case especially if it happens repeatedly. After all, no entrepreneur would want to miss payments due to the penalties that come with it.
Red Flag No. 2: Unpaid employee wages – operational expenses may also be unpaid such as employee salary and wages. This is also bad for the business as it can lose its team of talented crew and staff.
Red Flag No. 3: Increasing levels of interests – With unpaid credit and unmet obligations, comes a higher level of interest expense. Check your financial statements.
Red Flag No. 4: People packing bags – If you notice that employee turnover has become frequent and people are turning in their resignations, it could also be a sign that the restaurant isn’t doing well anymore or stable enough to hold jobs.
Red Flag No. 5: Customer bail outs – A decline in customers is something that no entrepreneur wants. Should there be a download slope, you have to get to the bottom of things because eventually, such can cause business demise.
Red Flag No. 6: Big ticket sales – When the restaurant starts selling off and disposing big ticket items, it can also mean financial stress but of course not all the time. Sometimes, entities do have to sell but should it happen abruptly or due to an unpaid debt, it is an obvious warning flag.
Red Flag No. 7: Abrupt cost cutting – Another red flag to restaurant bankruptcy according to AABRS.com is the sudden and huge cuts on the budget. This is oftentimes seen as a reduction in amenities and employee benefits.