How to manage cash flow in a seasonal hospitality business

Why cash flow is such a challenge in hospitality

Cash flow refers to the movement of money in and out of your business. In hospitality, inflows are mainly daily sales, while outflows include wages, supplier bills, utilities, rent, and tax obligations. When you operate in a seasonal environment, this flow can become uneven.

For example:

• A seaside café might thrive in summer with tourists and locals flocking in, only to see revenue drop significantly in winter.
• A ski resort restaurant may earn most of its revenue in a three-month window, then operate on a shoestring during the rest of the year.
• Event-based venues often rely on festivals, functions, or public holidays for peak trade, then face long gaps in between.

These cycles make it difficult to cover fixed costs like rent or staff salaries when takings fall. Without careful planning, you can end up scrambling for short-term loans or falling behind on supplier payments.

Step 1: Forecast your seasonal patterns

The first step to gaining control is understanding your revenue patterns. I recommend reviewing at least two years of sales data to spot trends. Look for:

• Peak months and their drivers (holidays, weather, events).
• Quiet months where revenue consistently dips.
• Any external factors like public events, school terms, or weather shifts.

By mapping these patterns, you can build a cash flow forecast that anticipates inflows and outflows across the year. Forecasting gives you the visibility to make smarter decisions about staffing, stock, and marketing campaigns.

If you don’t have historical data, start tracking daily takings closely now. Even one year of accurate figures will give you a base to work with.

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Step 2: Separate fixed and variable costs

Understanding your costs is just as important as forecasting revenue. Hospitality businesses typically carry a mix of:

• Fixed costs: Rent, insurance, loan repayments, utilities, and in some cases, salaried staff. These don’t change much regardless of sales.
• Variable costs: Food and beverage supplies, casual wages, event marketing. These scale up and down depending on trade.

By separating these, you’ll know the minimum revenue you need to cover overheads during low-season months. For example, if your café’s fixed costs are £15,000 per month, you’ll need to ensure you have savings, credit, or alternative income streams to bridge quieter periods.

Step 3: Build a cash reserve during peak season

One of the most effective strategies for seasonal businesses is creating a buffer when times are good. Rather than letting profits from busy months disappear into new equipment or personal withdrawals, allocate a portion into a reserve account.

For example, if December is your bumper month due to Christmas parties, set aside 20–30% of net profit into a savings account. This reserve can then cover rent and wages in February, which is often quiet for hospitality.

Automating this process is powerful. I use tools that automatically sweep a set percentage of incoming revenue into separate accounts for tax, savings, and profit. That way, you don’t need to rely on discipline alone — the system does it for you.

Step 4: Negotiate with suppliers

Suppliers can be flexible if you build strong relationships. During low seasons, you might be able to:

• Ask for extended payment terms (e.g., 45 days instead of 30).
• Negotiate smaller, more frequent deliveries to reduce stock wastage.
• Arrange seasonal contracts for items you only need in busy months.

Even small adjustments can ease cash pressure. Remember that suppliers value your long-term business, so most are open to discussions.

Step 5: Manage staff costs smartly

Wages are usually the biggest expense in hospitality. Seasonal businesses need to be especially careful here. I’ve found a few approaches that help:

• Use casual or part-time staff to scale up during peak season and scale down during quiet periods.
• Roster based on forecast sales rather than guesswork. Matching staff hours to revenue ensures you don’t overspend.
• Cross-train staff so one person can cover multiple roles, reducing the need for a large team during off-peak times.

Modern rostering tools also integrate with POS and sales data, giving you real-time insights into whether labour costs are proportionate to takings.

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Step 6: Diversify your revenue streams

If your income depends heavily on walk-in trade during certain months, consider ways to generate revenue year-round:

• A seaside café could introduce delivery or catering services to reach locals in winter.
• A ski-resort restaurant could sell branded merchandise or partner with accommodation providers.
• A bar could host events, cooking classes, or online tasting sessions during off-season months.

Even a modest extra income stream can smooth out seasonal dips and keep cash flow positive.

Step 7: Monitor and cut unnecessary expenses

It’s easy to let costs creep up during busy periods. However, low seasons are the perfect time to review every expense line. Do you need three different music subscriptions? Are you over-insuring for equipment you no longer use? Could you renegotiate utility rates?

By trimming unnecessary costs, you reduce the pressure during slow months. I recommend reviewing supplier contracts and subscriptions at least once a year.

Step 8: Leverage financing carefully

Sometimes, even with great planning, you may need extra cash. Financing can help — but it must be used wisely. Options include:

• Overdraft facilities for short-term cash flow gaps.
• Invoice factoring if you run a catering business with outstanding invoices.
• Seasonal business loans specifically designed for industries like hospitality.

The key is to use credit as a tool, not a crutch. Always build repayment terms into your forecast and avoid taking on debt that isn’t necessary.

Step 9: Keep on top of tax obligations

One of the biggest traps I’ve seen hospitality owners fall into is forgetting about tax during peak season. When revenue is high, the temptation is to spend, but tax liabilities also increase.

I strongly suggest setting aside a portion of revenue for tax as you go. Automated accounting platforms can calculate GST, PAYG, and income tax obligations in real time, so you’re never caught short.

Failing to prepare for tax can turn a quiet month into a disaster if a large bill lands unexpectedly.

Step 10: Use automated tools to stay in control

Manual spreadsheets and guesswork don’t cut it when you’re dealing with fluctuating cash flow. This is where tools like Thriday can make a difference. Thriday automatically tracks income, allocates funds for tax and profit, and provides real-time cash flow insights.

As a hospitality owner, this means you can focus on running your venue rather than wrestling with paperwork. By having clear, automated reporting, you’ll always know if you’re on track or if you need to adjust.

Final thoughts

Managing cash flow in a seasonal hospitality business isn’t easy, but it’s absolutely possible with the right approach. By forecasting seasonal patterns, building reserves during peak months, negotiating with suppliers, and controlling staff costs, you can turn the challenge into an advantage.

Seasonality doesn’t have to be a weakness. In fact, it can make your business stronger by forcing you to plan smarter, diversify income, and build financial resilience. With the support of automated accounting tools like Thriday, you can move beyond survival mode and set your hospitality business up for sustainable growth — all year round.