Controlling Stock Volume in Uncertain Times
As Featured in BII News Magazine (UPDATED 11/05/2021)
Predicting the right levels of stock volume, as pubs, restaurants and cafes prepare themselves for reopening indoors, is going to be a mind numbing exercise for many. There are still so many unknowns, as well as tight restrictions on number of guests allowed inside. It’s not often that a business has to restock like it would have done upon first opening to the public. It’s why getting it right is more important than ever. Setting the precedent in your business of well-managed stockholding as you start again, will save you hassle in the future, but also ensure you control those all important costs when you need to most.
Well performing pubs have traditionally excelled at forecasting for the upcoming season. Where typically stock orders would be based on the evaluations of previous years of success, this year’s predictions will have to account for a host of different scenarios.
The challenges of forecasting
‘Death by Cashflow’ can be the slowest and most painful end to a business. It is by far the overriding concern for operators at the moment. Whilst controlling costs is key, cash flow is seen by many as a higher priority than profit. Operators need to safeguard their businesses by holding more money in the bank. A key part of this is keeping less money tied up in stock, or seeing it wasted by poor stock management.
Revenue figures for reopened businesses so far have been relatively encouraging, but they are not guaranteed to remain stable post COVID-19. The worry is, that if ordering isn’t controlled properly, the revenue made now, may not meet supplier invoices that are due for payment in 60 days’ time.
A practical solution that some sites have introduced, is to offer a reduced menu or offering. But this too brings its own challenges. There is a very fine line between running a site at minimal stock levels, whilst ensuring it doesn’t run out of products for customers.
Maintaining a reasonable selection of choices is a must. Most customers are flexible, meaning that if their first selection isn’t available, they may opt for a proposed alternative without begrudging having to do so. However, when restricting your offering too much, a customer may become frustrated if no appropriate alternatives are available once products do go out of stock.
Tips on forecasting stock volume for spring and beyond
So what should pub operators consider when forecasting for the spring and summer of 2021?
Sales turnover in past years will be almost impossible to use as a gauge for this year. Instead the demand seen over the most recent months of trading will be a much better indicator for forecasting. Establishments that are perceived to be well managed, clean and safe will help relax guests, reassure them about their spending decision and encourage return visits. Ensuring a good level of communication and signage in regard to the safety measures in place is crucial. This will help towards sustaining a certain base of return customers in the run up to key events and, if well monitored, can be of great help in predicting demand for future events.
Monitoring bookings and maintaining a deposit ledger will be equally important to help you anticipate stock requirements. Since party bookings will most likely be made closer to the time that restrictions lift, it is all the more important to delay ordering products. At the same time, establishing clear guidelines regarding deposit terms and advertising these early will encourage customers to book sooner rather than later. If refunds are guaranteed when restrictions don’t get lifted on the announced dates, then it is also imperative that you are able to honour these without hesitation. So don’t be too hasty to spend large on deposit ledgers and ensure monies are available for refund at all times.
It is widely reported that in a recession or any period of socioeconomic restriction, consumers will purchase less often, but will trade up in quality of offer. Therefore, don’t be tempted into heavy discounting or lowering the quality of products you’d normally serve. Whilst venturing out less often for low spend social occasions and restricted by the ‘6 maximum’ rule, customers will continue to celebrate birthdays and events as much as they can. The consumer will take less risk and seek a quality step up from their normal.
Ultimately, the cornerstones of good stock level planning still remain, but they may need to be re-visited. In particular, operators should:
- re-visit par stock holding levels
- review their management of petty cash spending and delivery frequency
- re-check security of exterior stores
- check ‘use by’ dates of seasonal stock orders and maintain a constant eye on local trends, national news and virus developments.
- maintain excellent service and professional, safe management. Stock control is much easier if you know customers are coming back.
If you need help with forecasting stock volume and you’re interested in a quote for our stocktaking services, then fill in the form on this page.