Is there a shortfall? Is stock being wasted? Or, even worse, stolen?
David Jones, chairman of Association of Licensed Trade Accountants (ALTA) explains the wider role played by pub stocktakers and how it helps with running a successful pub business:
As a publican, you are dealing with three of the most attractive commodities known to man: cash, food and alcohol. There isn’t an experienced licensed retailer that hasn’t (at some point in their career) experienced dishonesty in one form or another, so employing a stock taker is a ‘must do’.
However, stocktaking is also about minimising ‘innocent’ drink wastage, and drawing attention to areas of your business operation that can be improved.
Getting maximum buck from your beer
The term ‘yield’ is often overlooked by pub businesses. Yield simply reflects whether or not you are actually receiving a sale for every purchase you have made. (Which would be 100% yield.)
Put another way, take a garage and its motor car sales. If a hundred cars are delivered in a three month period and only 99 have been sold and there aren’t any cars left, what would you say?
Should you expect any less running a pub outlet?
Many publicans do not achieve 100% yield. They cite things like line cleaning to explain the difference. But, when you consider the head on a pint (you certainly don’t get a flat pint ‘up north’!) and the surplus that you should make (in other words after you’ve sold 9 pints the next pint costs you nothing) this should easily cover any allowance like line cleaning.
In fact there is a regional brewer that operates all its outlets on a managed house basis and they will dismiss the manager if they do not exceed a yield of 103%!
Is it time to go back to beer school?
Remember that drip trays are for just that, the occasional drip from a tap! There should be no overspill from pouring a pint.
Food retailing is much more difficult to measure but when you are buying a unit of alcohol and selling a unit of alcohol this should be an exact science.
Tip: If you keep a wastage book; rename it a ‘loss of profits’ book – just to emphasise the point to staff!
Pricing advice and business insights
Good pub stocktakers bring many more benefits to a pub landlord than simply checking that you haven’t incurred a stock deficit.
They may advise you about adjusting your prices; after all there is no point in selling at less than the competition. Remember when you’re running a pub, you’re selling an experience (not a product) and the customer will always pay for that.
To get the best out of pub stocktakers you should have everything organised for them on the day, so that their job can be done efficiently.
They should then present you with a detailed report generated by their audit software and explain this to you in detail.
So, make sure you sit down with the stocktaker to review their feelings and take their advice.
Not only will you understand your business operation more, and be able to make decisions about slow moving lines, the stocktaker can also help you with pricing decisions.
Where there is price sensitivity it may be that a decision can be made to have one less expensive lager (and one less expensive beer) but all other products are in-line with the competition.
And when it comes to price increases, remember the supermarket principle – they never warn you a price is going up – it’s just up the next time you go in.
Why not take another leaf out of the supermarket’s book, they don’t sell things for four quid, they sell things for £3.99. The customer’s brain does not see the pence and this is especially important when selling food.
So when you work out the retail price to give you the margin you wish to achieve, ask yourself: can you then move that figure nearer to the next pound?
Appropriate levels of stock and other waste pitfalls
Another consideration is your levels of stock. For example you shouldn’t have more than 10 days’ supplies of draught products. If there’s a thousand pounds worth of stock in the cellar more than there should be, the one place that thousand pounds isn’t going to be, in is your bank account!
On the subject of allowances the three most frequent causes of problems with wastage and beer quality involve cellar temperature, regular weekly line cleaning and clean glasses. If there are issues here your wastage will be far more than it should be.
In summary the objective of pub stocktakers is three-fold:
1) To establish stock controls
2) To maximise profitability
3) To identify fraud
All members of ALTA provide stocktaking services.