Sorting out cashflow problems at a restaurant

August 25, 2015


The restaurant started trading and employed fifteen members of staff.

The owners did lots of marketing which attracted a good flow of customers throughout the initial period of trade. The director was confident that trade would further increase once word of mouth began to spread throughout the local area.

The problems

Unfortunately, due to the Recession, sales began to decline as people were dining out less frequently and spending less money when they did.

The restaurant had further issues caused by a significant price increase on their food supplies. This put a further strain on the company and in their first accounting period they made a loss. Nevertheless, the director was confident this could be turned around.

To add to their difficulties, the restaurant was also faced with increased competition as other restaurants opened up in the area.

Just over a year after they opened the owners of the restaurant had run out of funds to invest in the company, and they had no solution as to how they could turn things around.

The solution

The restaurant owners discussed their situation with their Accountant and they recommended they came to us for our specialist advice.

Our senior partner met the owners for a (free) consultation where it was clear that the company was insolvent – i.e. it could not pay its bills when they fell due.

(Company directors are not allowed to trade a company knowing that it is insolvent.)

The people the company owed included suppliers, the bank, the council and HMRC – which is very typical for restaurants in this situation.

It was agreed that the best option was for the owners to instruct us to help them with a Creditors’ Voluntary Liquidation (CVL) to formally and legally close down the company.

The assets of the restaurant were valued by independent agents. There were fixtures and fittings worth several thousand pounds, along with some stock worth several hundred pounds.

New business starts up

The assets were of little value to anyone else, but a former employee of the restaurant was interested in purchasing them because they wanted to start a new restaurant, learning from their experiences.

So, they were allowed to purchase them at the value agreed by the independent agents and were then able to start up a new restaurant.

Do you want help with cashflow problems at your restaurant?

If you do, just contact us now on 0161 907 4044 or

We can help you deal with the financial problems that your restaurant is having.

Our initial advice is free.