Imagine your restaurant’s patio with strings of white bulbs illuminating your business in the cooling evening air. Picture your guests talking and enjoying your food under blue umbrellas, backlit by the flickering yellow light from your outdoor heaters.
It’s the perfect summer scene, especially because this dream also comes with practical benefits for restaurant owners. The patio season can be one of the most profitable periods of the year for foodservice businesses.
But if you aren’t ready before the weather turns, you’ll miss the best part of the window. A restaurant business loan gives you the capital to prepare your eatery for outdoor service before the season starts.
Why You Should Invest in Your Patio
Outdoor dining can be a real revenue driver. Adding or expanding your patio seating can substantially increase your capacity during peak months. And serving more customers can translate directly into more revenue.
You may also attract more customers when your guests can eat outdoors. People walking by may notice your welcoming patio, smell the delicious food, and stop to check out your business. And because everyone from the corporate summer BBQ to the June bride wants to celebrate outside, a patio is also an opportunity to get more reservations for special events.
If you compete with multiple restaurants or generate most of your sales during the summer, investing in your patio can help you stand out from the competition and earn enough money to succeed in the off-season.
When to Apply for Restaurant Financing
Predicting when spring weather will arrive is always complicated. Some years, you can open your patio in March. The next, you may have to wait until June before guests want to eat outside. It’s anyone’s guess, and you may only have a few weeks’ notice. With such a short preparation window, it’s best to secure financing in advance.
Plan to apply around late January or mid-February. This window gives you time to build a detailed cost estimate, compare lenders, and receive funds in time to get your patio ready for guests.
Apply from a stable financial position with a strong business plan. Lenders will look more favorably on your application when you can show strong fall and winter revenue. They also love a specific plan to generate a return, such as opening your patio during spring and summer.
Preparing the picture-perfect patio often takes significant time. The restaurants that maximize patio season treat the lead-up to spring as a deliberate investment phase. They budget for costs, apply for financing early, and start preparing for opening weekend before the warm weather.
How to Finance Your Patio Season
Restaurant financing is a practical tool because investing in a patio costs more than many owners expect, especially the first time you open your outdoor seating area. Covering all your expenses with business loans in the short term means you can pay off the financing during the patio season and save your cash reserves for unexpected costs.
Prepare Your Space
Outdoor eating starts with the physical space. If you don’t have an existing patio or haven’t had your current outdoor area inspected, you may need significant structural work. From permits and asphalt repair to ADA-compliant ramps and outdoor bars, getting your patio ready can be a literal expansion project.
Then you need to furnish your patio. Everyone remembers the tables and chairs. You also need amenities that make eating outside comfortable, such as umbrellas, weatherproofing, heaters, fans, and outdoor lighting. Also consider investing in signs to attract foot traffic and decor to personalize your patio’s space.
These kinds of investments often lend themselves well to financing. The right loan depends on how much capital you need and how long you expect it to take to benefit financially from the improvements. A long-term loan can spread major construction costs over several years, helping keep monthly payments manageable. Equipment financing may also be worth considering for furniture, heaters, lighting, and other patio-related purchases.
However, you don’t have to tie yourself to years of debt or long-term interest. You could use working capital financing or a short-term loan with six to nine month terms if you expect significant profits from your patio season. Just as you tailor your patio to fit your space, it makes sense to match your financing term to the size and purpose of the investment.
Adjust Your Operations
Expanding your restaurant to the patio means scaling your operations. Most restaurants hire additional staff and train their existing team in outdoor service. Hiring new people costs money, and you can expect to pay overtime during the ramp-up period.
To serve more customers, you may need to scale your inventory as well. You can order more food and beverages from your vendors, modify your liquor license, and secure an outdoor service permit in advance so you can open your patio when spring arrives.
Also, consider whether your current systems can handle the expanded capacity. You may need to upgrade your scheduling system, purchase portable point-of-sale (POS) hardware, increase reservation capacity on your website, purchase additional kitchen equipment, and adjust your menu or hours to be successful.
Financing your operational adjustments often involves multiple steps. You can roll predictable expenses into your initial loan, finance appliances and hardware with equipment loans, and maintain a business line of credit for ongoing access to working capital. Some businesses also turn to same-day merchant cash advance (MCA) funding when unexpected expenses require immediate attention.
To power your restaurant through the entire patio season, prepare to use a mix of financing products and plan where to secure additional capital to handle the unexpected.
How to Choose the Right Restaurant Loan
One of the benefits of applying for loans early is having time to compare different products and lenders. When choosing where to apply, use the following questions to compare how the different loan providers and their restaurant financing measure up:
- Does the lender understand how to review restaurant financials?
- Does the loan company offer a variety of lending products?
- Can you apply quickly and secure funds on your timeline?
- Can the loan provider fund the amount you need to invest in your patio?
- Does the lender offer repayment schedules that fit your revenue cycle?
- Can you defer or ramp up payments to match the return on your investment?
- Does the loan provider charge origination, documentation, and prepayment fees?
- Does the lender clearly explain the borrowing costs and financing terms?
- Can you contact the loan provider easily and quickly?
Answering these questions should give you the information you need to choose your lender and loan. Remember that the right business financing is the one that fits your restaurant and your patio season plans.
Compound Your Success
Creating an inviting outdoor dining area involves more than setting out a few tables. Planning, financing, preparation, and day-to-day operations all play a role in how the space functions and how guests experience it. Using the right financing strategy can help you spread costs over time and make improvements that align with your goals.
A well-designed patio can create additional seating capacity and provide guests with another way to enjoy your restaurant. Over time, seasonal upgrades and operational adjustments may help you make better use of your outdoor space and adapt to changing customer demand.
