From chef to business owner: the financial skills nobody teaches you

Running a hospitality business demands more than culinary talent. For many operators, the financial side is learned the hard way. Here’s what industry experts say needs to change, and what you can do about it now.

There’s a fundamental disconnect at the heart of the hospitality industry that has nothing to do with recipes, suppliers or footfall. It’s about money – specifically, that most people who start a food and beverage (F&B) business are never taught how to manage the financial side of running one.

The structural failing of the hospitality industry

The route into hospitality – through colleges and kitchens, passion and craft, long hours and dedication – rarely involves meaningful financial or business education. Start your own business though, and you'll soon find out that good financial management is as critical as the food you serve.

Jane Pendlebury, CEO of the Hospitality Professionals Association (HOSPA), sees this scenario play out every day across the sector. “The biggest gap lies in the transition from operational craft to financial management,” she explains. Being passionate about food and dedicated to your craft is something to celebrate and encourage, but that ambition can be time-consuming – even all-consuming, which means many business owners struggle to find the time to focus on their financial skills.

Henry Poultney, Public Affairs Consultant at the Nationwide Caterers Association (NCASS) – the trade body for independent F&B businesses – backs up Pendlebury’s position. People enter the industry for their love of food and hospitality rather than balance sheets, which is exactly how it should be, yet “the confidence to do the financials is something that is a real gap,” he says. “If you’re not used to a budget-centred environment, it’s a challenge.”

A perfect storm – bad timing and a lack of training

The timing couldn’t be much worse. Pendlebury points to the “perfect storm” compounding cash flow pressures across the F&B sector. Rising food and energy costs alongside  falling consumer confidence. Spiking employment costs driven by National Minimum Wage and National Insurance increases that are squeezing profit margins and strangling the entry-level workforce pipeline that hospitality depends on.

What the research says

In response to rising costs, recent Zempler Bank research found that three quarters of small F&B businesses have raised prices and more than half have reduced staff hours. When cash flow gaps emerge, 55% of businesses commonly draw on overdrafts, 43% use credit cards, 42% use personal savings and 38% delay paying suppliers. A small but notable 10% have delayed staff payments. The data clearly shows that short term cash flow pressure is often absorbed by owners, employees and supply chains, rather than being managed through structured financial tools.

Each of these pressures is significant, if often navigable, in isolation, but cumulatively they’re compounding in ways many small businesses aren’t equipped to plan for or absorb. Pendlebury is unambiguous in her assessment: “Cash flow has become the primary battleground for survival across the sector.”

Yet only 31% of operators actively manage their cash flow or track it in a systematic way. Conversely, around 60% review it only periodically or when money starts to feel tight, and 71% forecast no more than a few weeks ahead, if at all.

Poultney points to a wider warning that only adds to the pressure: “When a café or pub closes, that is not just a business – it’s a lost part of the infrastructure of that place”.

The old assumption that hospitality is an industry where one business closes and another one takes its place no longer holds. For micro-operators like sole traders and family businesses there’s often no cash flow buffer, meaning their closures are losses to the community unlikely to be replaced in the current environment.

It’s a sobering and pressurised backdrop for anyone trying to make their numbers work. Yet two-thirds of operators in Zempler Bank’s research awarded themselves three or four out of five for their cash flow management skills. This suggests the challenge lies less in capability and more in the lack of time, tools and flexibility. And that’s something that can be addressed.

Top tips from the experts

There are real and immediate differences business owners can take to transform their financial management and aid their fortunes. And as the experts consistently point out, they’re more accessible than you might realise.

Pendlebury’s top advice is simple – check your financial position every single day. “You simply can’t afford to look away from the numbers, even for a day,” she says. Maintaining real-time awareness of your cash flow helps you prioritise effectively and make problems visible before they become critical. In other words, make daily financial vigilance a habit.

Stuart Dawson, director of partnerships at 365 Finance, which helps fund independent F&B businesses with merchant cash advances, sees the impact of poor financial habits up close. Owner-operators are doing everything themselves with no accountant or finance director to guide them: “A lot of our customers are small, owner-operated businesses. They have spent the day running their business, and then work late into the night doing their admin."

"His number one recommendation is to lean into modern technology and start using accounting software. Tools like QuickBooks, Xero and Sage work as well for smaller businesses as bigger businesses. They provide visibility and structure, do much of the heavy lifting, and make it easier to spot problems early.

Digital challenger banks are also shifting the landscape as they bring newer services tailored to better financial management. Budgeting tools and using a savings pot go some way towards serving the unmet need to coach operators on cash flow.

Financial confidence is a skill you can develop

Perhaps the most important shift in mindset is to recognise that managing finance is a skill you can learn. And there are plenty of tools available to help. 

HOSPA offers professional development courses in commercial restaurant management and finance designed specifically to bridge the craft-to-finance gap. Guides and advice cover everything from service charges and tipping, to joining buying consortiums that allow smaller businesses to access the kind of procurement leverage typically reserved for bigger businesses. NCASS also provides guidance and financial tools for its members.

Financial literacy is a critical asset. The businesses most at risk are those that don’t know what questions to ask and don’t invest the time in finding out. The businesses that thrive are those who treat financial management as a core part of their working day rather than an afterthought.

Zempler Bank works with hospitality businesses across the UK. We support restaurants, cafes, pubs, food trucks, and more. Our business accounts come with built in tools to help you stay on top of cash flow — from £0 per month.

What to do this month

1. Check your cash position today, and every day from here.
2. Review your full numbers at least once a week.
3. If you don’t have accounting software, choose one and set it up.
4. Lean into the tools and services available, and start getting the fundamentals right.