Meaning of CBD in F&B Business: Is It Suitable for Your Restaurant?

When you run a culinary business, you must have heard the term CBD, right? 

Outside the medical world, CBD has a very different meaning. In the business world, CBD stands for Cash Before Delivery. 

Simply put, this is a payment system that requires customers to complete payment first before goods or services are sent or processed. 

Well, this system is quite commonly used, including in the culinary industry. 

Especially for newly established restaurants or F&B businesses that often experience payment failures from partners or consumers. 

But, the question is, is this CBD payment system suitable for your restaurant? Come on, let's discuss it together!

What Is CBD? Let's understand first

Source: Freepik

Before we discuss whether or not it is suitable for your business, we must first know what CBD actually means and why this system is often used in various lines of business.

So, as mentioned earlier, CBD is a transaction method where buyers are required to make full payment up front. 

This means that the seller will not process or send the goods if they have not received funds from the buyer.

In the F&B world, the CBD payment system is a safe solution to keep cash flow healthy. 

Especially if you often deal with suppliers of food ingredients, cooking utensils or packaging.

Read Also: Cafe vs Bistro vs Eatery: Differences and Characteristics in F&B Business

The difference with other systems

Maybe you also often hear the terms COD (Cash On Delivery), Net Payment, or Term Payment. Well, each of these systems works very differently. 

The CBD payment system is that you ask for the money first, then the goods are sent, while COD is the opposite. 

The goods are sent first, then payment is made when the goods arrive. If you pay net, you usually give a time period, for example 7 or 14 days after delivery before you can pay. 

For small restaurants that need cash quickly, the CBD payment system is the safest.

Why is this system widely used in F&B?

In the food and beverage industry, which often travels very fast and needs daily cash, a payment system like CBD is a real lifesaver. Why?

1. Minimizing Receivables

With the CBD system, you don't need to worry about buyers or partners forgetting to pay. Because all transactions are completed up front, your finances are more orderly.

2. Keep Cash Flow Stable

In the F&B world, cash flow is like life. If payments are delayed, operations could be hampered. So, with this system, you can immediately use the money to buy materials, staff salaries and other needs.

3. Can be used for large orders

If you get a large order such as a catering package or hamper, the CBD system is a safe step so you don't lose out at the end.

Examples of CBD Applications in Restaurants

To better understand, let's look at several examples of the application of CBD in the food business:

1. Daily Catering

Many home and professional caterers implement CBD systems. Before the food is processed, customers must pay first. Because food ingredients are purchased according to order.

2. Pre-order Special Menu

When a restaurant has a special menu that must be ordered in advance, the CBD payment system is a solution so that production does not suffer losses.

3. Sales of Raw Materials from Suppliers

Usually large suppliers will also apply this system to small restaurants, especially those that are just starting out or don't have a good payment history.

How much CBD should you ideally have?

Source: Freepik

 

Many people ask, does the amount of CBD always have to be 100% at the start or can it be paid in installments? 

The answer depends on your business policies. Generally, the CBD payment system is a full payment. 

However, in some cases, you can ask for a down payment first, for example 50%, and the rest before delivery. 

The important thing is that everything is agreed clearly at the start. Including provisions for refunds or order cancellations.

Read Also: Understanding Scale Up: The Key to a Growing Business, Here's the Strategy!

Plus-Minus Sistem CBD

Let's also discuss the advantages and challenges of the CBD system for your restaurant.

Advantages:

1. The money comes straight in

Make cashflow safer and more stable every day.

2. Reduce the Risk of Missing Payments

Because there are no debts and receivables, you don't need to bother collecting debts.

3. Can Arrange Production More Efficiently

Because you know for sure which orders have been paid for and must be processed.

Disadvantages:

1. Make Customers Doubt

There are some customers who are hesitant to pay first, especially if they don't trust your restaurant 100%.

2. Need Strong Branding

So that customers trust you and want to pay first, you need a good reputation and convincing service.

Strategy to ensure that customers continue to like the CBD system

If you are interested in implementing this system, you also have to be smart in formulating communication strategies. So, here are the tips:

1. Transparent from the Start

Make sure information about CBD payments is clearly conveyed, for example in menu descriptions, invoices or social media banners.

2. Give Additional Benefits

For example, those who pay in advance can get discounts, free shipping, or additional menus.

3. Show Positive Reviews

So that customers believe, show testimonials from previous customers. Especially if you have a good rating on the review platform.

4. Use a Digital Payment System

Make the process fast and easy. Can be via QRIS, e-wallet, or payment gateway. Make sure this system is registered automatically.

Is CBD Safe and Legal?

Many are still confused and wondering, is the CBD system a legal system? The answer is yes, very legal.

In fact, this system is recommended in many business management training. Because it prevents potential losses due to customers who don't pay. 

The important thing is to make sure this policy is explained from the start so as not to cause misunderstandings.

So, is it okay not to make your restaurant?

If you are still in doubt, try considering the following things:

• Does your business often face late payments?
• Does your restaurant often get custom orders or pre-orders?
• Do your operations really depend on daily cash?

If yes, then the CBD system is the right choice for your business. However, if you are just starting out and need to build trust first, you can implement a mixed system first. 

For example, for regular menus use COD, but for large packages use the CBD payment system.

Conclusion

Now you know that CBD is a payment system that asks for money up front before the product is sent. For culinary businesses, this system can help maintain cash flow, avoid receivables, and manage production in a more focused manner.

However, don't just apply it. First study the character of your customers. Convey this system in a relaxed but clear way. And most importantly, make sure your transaction system uses a safe and integrated platform.

In fact, with Order Management System (OMS), you can track all orders from various channels, without needing to open multiple applications. This feature is very important for restaurants that have many outlets.

Well, or you can just accept orders from various platforms. Even cooler, you can create an online restaurant using ESB Order, and that can increase orders by up to 13.5%.