March 2020. I'll never forget it. One week we were serving 200 people a night. The next week? Zero.
My restaurant had been my dream for five years. And in seven days, it became my nightmare.
I did what I had to do. I took out loans. $50,000 total across three different lenders. It was either that or close forever.
The Debt Stack
Here's what I was looking at when things started opening back up:
Loan 1: $20,000 at 8.5%, $415/month
Loan 2: $18,000 at 11.9%, $395/month
Loan 3: $12,000 at 14.9%, $285/month
Total monthly payments: $1,095. For 5 years. That's $65,700 total.
My restaurant was making $8,000 a month in profit when open. But I had $1,100 going out just in loan payments. Plus rent, payroll, supplies...
I needed a plan.
The Strategy
I used a loan calculator and played with every scenario I could think of.
Here's what I decided:
Avalanche method. Pay minimums on everything, throw every extra dollar at the highest interest loan first.
Loan 3 (14.9%) needed to die first.
I found $800 extra per month by cutting one staff position (I worked more hours), negotiating with suppliers, and raising menu prices by $1 on average.
The Payoff
Month 1-8: Paid $1,085/month on Loan 3. Paid it off in 8 months instead of 48.
Month 9-15: Took that $1,085 plus the $285 minimum and threw it at Loan 2. Paid off $18,000 in 7 months.
Month 16-18: All firepower on Loan 1. Done.
Total time: 18 months. Total interest paid: About $4,200 instead of $15,700.
I saved over $11,000 in interest.
And you know what? The restaurant is more profitable now than it was pre-pandemic. Because I learned to run it lean.
If you're staring at debt, don't just make minimum payments. Have a plan. The math works.