Why is my restaurant profitable on paper but short on cash?

Where the cash goes that the P&L doesn't show

Loan payments

Only the interest is an expense. The part of each payment that reduces the loan comes out of the bank without touching the P&L.

Equipment and renovations

A new walk-in or a patio build is paid for up front, but expensed over years as depreciation. The cash is gone this month; the profit barely moves.

Inventory

Stocking up on a good price, or before a busy season, uses cash now. It only becomes cost of goods when it's used.

Sales tax

Tax collected from guests sits in your account until it's due. If it's spent in the meantime, the filing deadline becomes a cash crunch.

Owner draws

Money taken out by owners isn't an expense on the P&L, but it's still money that left the bank.

Gift cards

December gift card cash gets spent in December. The meals are served, and paid for in food and labour, in the months after.

Payment timing

Payroll every two weeks, rent on the first, vendors on terms that keep getting shorter, and card and delivery deposits that lag sales by days. A profitable month can still have a week where everything is due at once.

How to see it coming

1. List what's coming in each week: expected sales deposits by channel, from your recent run rate.
2. List what's going out each week: payroll, rent, loan payments, vendor bills by due date, tax remittances, planned purchases.
3. Roll it forward week by week for the next few months, starting from today's bank balance.
4. Find the low point. That's the week to plan for, by moving a purchase, talking to a vendor or arranging credit early.
5. Set aside tax as it's collected, in a separate account if that's what it takes.