When you’re considering closing, letting emotions take the lead tends to increase costs. To keep an exit open, organize the situation with numbers. Prioritize on-site variables such as bank balance, the rent due date, supplier payment dates for ingredients, and the card-sales deposit schedule.
The first thing to check is timing gaps in cash flow. Card payments customers make don’t arrive in the business account immediately. If card deposit dates and supplier payment dates are misaligned, you can have sales but still no usable cash in the account.
Second, evaluate fixed costs. Rent, labor, utilities and loan interest come out on the same day each month. Subtract these fixed amounts from monthly sales to calculate the actual free cash you have.
Third, look at variable costs and recovery potential. Adjusting food cost, delivery fees and waste rates can change immediate cash flow. But you must also consider large one-off outflows like compensation for key money or contract termination costs.
The checklist is simple. Write down your bank balance and the payment dates for fixed costs over the next two months. Then record the recent three-month average sales, average spend per customer, and customer count to estimate monthly cash flow.
If the calculations stay negative, estimate the cost of hanging on. Sum the additional cash you’ll need each month while you continue operating; that gives you the number of months you can last. The longer that period, the more you should compare it to the cost of closing out.
For example: a shop with monthly sales of 8 million won, food cost at 30%, labor of 2 million won, rent of 1.5 million won and a bank balance of 1.5 million won can be tripped up by delayed card deposits and supplier payment timing. Even with sales, if deposit dates don’t align you may be unable to cover next month’s fixed costs.
Make the items involved in winding down numeric as well. List the recoverable amount from selling inventory, likelihood of getting the security deposit back, lease termination penalties, and whether key money can be recovered. The sum of these figures will increase or decrease the cash available and affect the possibility of trying again.
Decide from a loss-minimization perspective. If the cost of hanging on is greater than the cost of closing, it’s usually better to close quickly. If closing costs are higher, first explore restructuring or menu reduction to free up cash.
On the ground, keep the numbers simple. Rather than complex spreadsheets, knowing your bank balance and the next three major payment dates is often enough to judge. Putting sales, variable costs and fixed costs on a single sheet helps prevent emotional decisions.
The bottom line is straightforward. The one thing to check at your store today is to write one line with your bank balance, rent due date, supplier payment date and card deposit date. Those numbers alone will outline whether you can continue or should close.
Frequently asked questions
Can I decide to close just by looking at the bank balance?
The bank balance is the starting point. Combined with the fixed-cost payment dates and the card-deposit cycle you can estimate how long you can last. For accuracy, also consider outside debts and expected proceeds from inventory disposal.
What is included in closing (wind-down) costs?
Closing costs include lease termination penalties, losses from unrecovered key money, inventory disposal costs, equipment disposal losses, and labor for storage and clearing. Add these numbers and compare them to the cost of continuing operations.
If I decide to hang on, what should I cut first?
Start with variable costs you can cut immediately—ingredient unit costs and waste rate. Next, reduce operating hours or adjust part-time staffing to manage labor costs. Note that if the underlying business structure isn’t fixed, these moves may have limited long-term effect.