“Stocktakes should never be considered just a luxury or an unnecessary cost. They are a way of protecting margins and cash.
We want to help businesses understand the importance of stocktaking and explain why regular stocktakes are a worthwhile investment. If done properly, they will help your hospitality business achieve increased profit margins and better control; keeping your business safe and flourishing.”
– Scott Hulme, Managing Director, Venners
1. The importance of stocktaking
In hospitality venues the importance of stocktaking is often downgraded below other key operational priorities when things get really busy. So much so, that some managers have to place the business practice of stocktaking in the ‘nice-to-have’ category. That is typically why it is the first activity that becomes disposable as soon as your pub, restaurant, or hotel funds are running dry. The truth is, doing this could actually end up costing your business more money than you’re saving it in the long run.
Now if you have followed our previous blogs, you will already be familiar with what food and beverage stocktaking is and how regular stocktaking benefits your business. In this blog we will shed some light on why cutting stocktaking frequency, or the practice altogether, is actually counterproductive. We will do so by diving into the fundamentals of the importance of stocktaking and explaining why no hospitality business should do without it.
2. Why stocktake?
What makes a stocktake so special? Well, how else does a pub, restaurant, hotel or indeed any hospitality business, measure its operational performance and KPIs on a routine basis?
Stocktaking goes far beyond a simple count of products. The real value of stocktaking is in the reports that are deduced from the collected data. It is the stocktake results analysis that helps operators pinpoint key areas for improvement. The ultimate aim of the process is to ensure that profits are maximised and money tied up in stock is lessened. Operators can do this by:
1. Increasing margins
2. Improving yield
3. Enhancing control
4. Reducing stock shortages
5. Shrinking stockholding
This is where operators can start to really see the importance of stocktaking. Even in the best run operations you can always find something else to improve.
Without accurate data, or the expert to analyse the data, improving margins and profits becomes a very difficult task, especially when the life of an operator is already extraordinarily busy. That being said, we do need to point out at this stage that stocktakers are not the people who make the tangible difference. That is the operator. The stocktaker can merely give best practice advice and help to measure how well a business is succeeding.
3. The importance of a qualified stocktaker
It is poignant to note that the importance of stocktaking goes hand in hand with the importance of enlisting the help of a qualified stocktaker. Professional stocktakers provide the essential tools and support hospitality businesses need to run both efficiently and profitably.
Internal hospitality teams that are also lumbered with stoctaking responsibilities will never be able to deliver a service that truly reflects the importance of stocktaking. Professional stocktakers have vast and unrivalled experience in their field of expertise across a full range of local and (in some cases) national hospitality businesses. You can bet your bottom dollar that whatever problem a hospitality business is experiencing, a qualified stocktaker will have probably helped someone else to resolve a similar issue.
By outsourcing a stocktake you can be assured you are working with the most precise and accurate data, therefore protecting your business. A qualified stocktaker will have taken part in accredited training, gaining all the skills necessary to perform the job to the most exacting standard. Not only that, extensive grounding in stock related matters with insight to match uniquely equips a professional stocktaker to convey the importance of stocktaking to the operator.
4. The practice of stocktaking delivers ROI
So, why does spending more on stocktaking save you money in the long run?
The answer is simply that stocktaking as a practice is about policing performance and KPIs more vigorously. It’s about forcing operators to concentrate on gaining absolute control over profits and margins, even if only for a few hours per month. It also ensures that inefficient operational stock control practices, that could be losing your business profit every day, are nipped in the bud.
Despite all this, the importance of stocktaking is often diluted because it is seen as an expensive, mundane and time-consuming discipline in the running of a business. This is why many operators do not give the practice the attention it deserves, instead focusing their attention on other more seemingly time-sensitive tasks.
By failing to see the importance of stocktaking, they also rob themselves of the benefits it has to offer. Thereby losing out on a significant ROI for their business. It is therefore vital to re-prioritise the importance of stocktaking, especially at a time when cutbacks are the norm.
5. Regular stocktaking is key
As always actions speak louder than words. Even when operators fully appreciate the importance of stocktaking, if they don’t regularly implement it as a practice, they are still no better off than they were before.
What makes this tricky is: regularity is relative. When asked ‘how often should my stocktakes be done?’, we usually answer with a slightly unhelpful ‘it depends on your business’. For the purpose of giving some form of guidance, however, the frequency of stocktaking should be considered in direct correlation with risk.
Hospitality businesses with a large cash turnover, or those that see a particularly high number of transient staff, should have stocktakes at least once a month. This frequency should be increased when problems develop or when exposure is greatest.
For other businesses there is a sliding scale of optimal frequency which takes both risk and turnover into account. The difficulty with this is that risk too can be a rather subjective matter. It can be determined by factors such as: how trusting management is, or how they feel about the importance of stocktaking. On the whole the premise is simple but external guidance can be useful to make informed choices when choosing the frequency of stocktaking in your business.
6. Make stocktaking integral to your business
Recognising the importance of stocktaking is the first step to fully seeing the true benefits of this business practice. Without making stocktaking an integral part in the running of your hospitality business, you can never use it to its full advantage.
Investing in stocktaking is always worthwhile as it should be a mostly self-financing business exercise. It is an essential process for the collection of necessary performance data. With the right professional partners, operators can glean invaluable insight to reduce unnecessary losses, optimise margins and manage stock more effectively.
Do you want to make the most of stocktaking in your business? Contact us today for a no obligation chat about how we can help.