Proactive publicans will often focus on reducing shrinkage from their pubs and bars, which is an excellent way of boosting profitability. But to really capitalise on the benefits of good stock control, professional stocktaking should be considered a must-have. And for good reason…
Understanding the problem
Shrinkage is defined as the loss of revenue from wastage, over-portioning, over-pouring, spillage, serving mistakes, line cleaning, write offs and pilferage. It stands to reason that the less shrinkage your business has to bear, the higher your Gross Profit % and Yield % and thus, your overall profit.
Identifying the problem
A professional stocktaker worth their salt will help you focus on Gross Profit and Yield as key business metrics. They are important because they highlight the amount of revenue and profit you are making from all areas of your business. Each individual line you stock will deliver its own level of GP, and so it is important to know the GP levels you are achieving across your stock range. This can be found in your stock results. Knowing what GP you should theoretically be making, and comparing it to your current GP figures is a great way to understand where improvements can be made.
Yield is a subject that is often overlooked despite being a key indicator for publicans. In a perfect world, you would be looking to achieve 100% yield on all lines. This would mean that all of your purchased stock has been sold at your planned level of revenue and profit, which is generally accepted to be a major factor in the successful running of any business. However, achieving a general 100% Yield is extremely rare, despite it being possible to achieve yields of 105% on draft beers.
Solving the problem
Your stocktaker will help you implement realistic GP and Yield goals for your business and then help you achieve them. Professional stocktaking may appear time consuming and expensive upon first consideration, but it is true that the benefits far outweigh the investment.
A good stocktaker helps by:
- Reducing your stockholding levels, increasing cash flow
- Identifying slow moving lines
- Enhancing the awareness of cost price increases
- Monitoring stock rotation and minimising losses of any kind e.g. theft, expiration, poor practice etc.
- Increasing employee understanding of best practice stock control measures
- Supporting supplier contract negotiations
- Minimising Waste
Stocktaking done regularly will have a positive effect on your pub. You’ll find it will lead to tidier cellars, more streamlined till systems, improved stock rotation, less wastage, decreased stockholding and bar and kitchen staff who have a better understanding of stock control practices.