Seasonal changes, in particular, can influence any restaurant’s business, forcing the owner to improve

their marketing efforts, reduce employees, or even reduce stock. And during such circumstances,
seasonal fluctuations can significantly impact cash flow in the restaurant industry.

The business risk that the restaurant faces changes according to different seasonal scenarios. For
example, the holiday season, tourism, and climate conditions amongst others can significantly
influence the business of the restaurant causing fluctuations in cash flow. The scenarios that can
affect the restaurant’s cash flow can be categorized mainly into:

Peak season Non-peak season

Due to festivals or local events, the restaurant During slow seasons which may occur due to
may experience an influx of customers thus unfavorable weather or adverse economic
increasing sales and revenue. conditions, customer demand will be low thus
resulting in a decrease in sales and income.

In this case study, due to the cash flow issue under the influence of the seasonal scenarios, given that
there is only $15000 in the account as the restauranteur I would prioritize the payments as below:

NO PRIORITIES (high to low) ALLOCATED PAYMENTS

1 Outstanding payment to the main supplier (RM 9,500) 70% of the overdue i.e.,
$6500
Firstly, I would pay the main supplier as they supply daily the
fresh ingredients (such as vegetables, fruits, and other food
items) that are required for the restaurant to run. Defaulting
payment to the supplier would disrupt the supply chain and
impact the availability of fresh supplies hence impacting the
quality of the food served to the customers. This undoubtedly
will negatively affect the restaurant’s capacity to run and
generate revenue. Hence, I would explore ways to negotiate with
the supplier and at least make a partial payment (if not all) to
ensure the continuity of running the restaurant. Furthermore,
having a positive relationship with the supplier is one of the key
components in conducting any business activity, especially in the
restaurant or F&B industry.
2 Monthly Payroll overdue for 10 days (RM 17,000) 50% of the overdue i.e.,
$8500
It is vital to pay the employees salaries to ensure the workforce
remains the driving force of the restaurant. Untimely payroll
derails the employees’ motivation leading to low morale and
even violation of employment laws. It is also important to be
transparent with the staff about the delay and assure them that
their salaries will be paid as soon as possible.
3 Monthly rent unpaid for 3 months (RM 10,000) NIL

Thirdly I would communicate with the landlord to explain the

current cash flow constraints and seek to negotiate a feasible
repayment plan. Though rental is a fixed cost, it has been
overdue for 3 months and this may cause the landlord to resort
to legal consequences, such as eviction. Thus, it is important to
clarify and assure the landlord that the rental will be fully settled
upon addressing other critical payments with the supplier and
monthly payroll.
 4 Utility bill with the second warning (RM 3,500) NIL

Utilities such as electricity, gas, and water are of paramount

importance in maintaining the restaurant. Especially in this case
where the bill is served with a second warning emphasizes the
urgency of settling the overdue bill to avoid fines or service
disconnection. Thus, I would at least settle the arrears amount
but upon those abovementioned payments are at least partially
paid off first.

In view of the limited available funds as the restauranteur, I would strategically prioritize the
payments. To manage the cash flow challenges, I would at least partially settle those overdue in the
order of importance which is to firstly the supplier, then employees, landlord and, lastly the utility
service providers. These however must be done with clear and transparent open communication be
it the supplier, staff, or the landlord. These are key factors in any business operations hence these
relationships must be managed with viable solutions not to mention integrity.