Cash Flow
How do you calculate restaurant cash runway?
Direct answer
When a restaurant has sustained negative net cash flow, cash runway equals available unrestricted cash divided by average net cash burn per week or month. If cash flow is positive, a burn-based runway is not meaningful.
Key points
- Cash Runway = Available Unrestricted Cash / Average Net Cash Burn.
- Use a normalized burn period and the same weekly or monthly unit.
- Exclude restricted tax, payroll, deposit, or lender-controlled funds.
What to do next
- 1Define unrestricted cash actually available for operations.
- 2Calculate normalized net cash outflow over representative periods.
- 3Divide cash by burn and model a downside case for sales, payroll, repairs, and settlement timing.
Worked example
With $60,000 unrestricted cash and average net burn of $10,000 per month, estimated runway is 60,000 / 10,000 = 6 months.