Industry sector:

Chinese catering: Cash sales


'Cash sales' means all income from your main business activity which you receive at the time of sale. Although some customers may pay you in cash, remember that Cash sales can also include:

  • debit and credit card payments
  • cheques if you accept them (although they're becoming much less commonplace)

To prepare your cash flow, you will need to estimate how much income you will receive over the next 12 months, including VAT. To do this you will have to estimate how many meals and drinks you are likely to sell, and at what price.

There are a number of things to consider when you make your estimates, depending on the type of business you are planning:

Type of business

  • will you open a take-away or a restaurant
  • if you're opening a restaurant, how many covers will it have
  • if you're opening a take-away, will you sign up to an online take-away ordering service such as Just-Eat
  • who will your customers be - think about whether you will target the after-pub trade, families, well-off customers looking for an upmarket and authentic dining experience, and so on
  • will you offer a home delivery service or possibly sign up to an online order and delivery service like Deliveroo
  • will you cater for private functions, banquets and buffets
  • will you open at lunch-time
  • will you open every day
  • what will your evening opening hours be - this will affect the number of sittings you can have
  • where will you find trained and skilled staff - you may have difficulty in bringing specialist chefs into the country
  • will you apply for a licence to sell alcohol

Your menu

  • will you offer a traditional range of Chinese meals, or will you offer 'fusion' cuisine, for example, Far Eastern meals alongside European dishes
  • if you're focusing on Chinese food, will you specialise in a particular regional cuisine - for example Cantonese, Fujian or Sichuan
  • who will plan your menus, decide on portion sizes and draw up recipes
  • will you make everything from scratch, or will you buy in sauces, ready made desserts and so on
  • will you have daily specials
  • will your menu change to take advantage of seasonal produce
  • how will you monitor which are popular/unpopular meals
  • how will you control and monitor wastage
  • what range of alcoholic drinks will you stock (if you decide to do so)

Pricing

  • what will your pricing policy be - will you target the cheaper after-pub end of the market or will you charge a higher price for your meals and aim to attract an up-market clientele
  • will you offer set meals for different numbers of diners
  • will you offer any discounts, free meals or drinks to any customers
  • if you do not have a licence, will you charge corkage
  • will your prices include a service charge
  • how often will you review your prices
  • what will your policy on staff tips be - for example, will tips be put into a central pool, or 'tronc', and distributed to staff by a 'troncmaster'? It's against the law to use tips and service charges to make up your employees' wages to the National Minimum Wage level

Competition

Competition for Chinese restaurants is intense and in recent years has led to pressure on prices, particularly for those establishments located near other Chinese restaurants in a 'Chinatown' district. Your competitors will include:

  • other Chinese restaurants in your area
  • all other catering outlets, including take-aways
  • pubs - look out in particular for Chinese-run pubs which serve Chinese and Oriental food

You also face competition from the huge range of Chinese home ready meals which are available from supermarkets, as well as prepared sauces and other ingredients which enable people to quickly prepare an authentic Chinese meal themselves.

This probably makes it essential that your proposed restaurant has a 'unique selling point' (USP) - in other words something special that will attract customers to your establishment rather than to your competitors.

To help with your decisions, click on the checkpoints for guidance. Once you have worked out a Cash sales figure add it to the relevant field in your cash flow forecast.