A focus on loss prevention for pubs is the key to turning revenues into profits. Many pubs control their cash tightly and stop there. Here at Venners we have found that loss prevention for pubs should be approached more holistically.
The golden rule
Our golden rule of loss prevention for pubs is that you should treat your stock as you would your cash. You wouldn’t give cash away to your customers. You wouldn’t pour cash down the sink. You wouldn’t let people walk out of your pub with your cash etc. etc. But that implies that we, as a sector, place a lot more emphasis on cash controls than we do stock, when in fact, it is more likely that on both counts, there is more that we could do in terms of loss prevention for pubs.
Both your pub’s stock and cash are susceptible to shrinkage. For each, there are a multitude of scams, steals, tricks and diddles, across a range of vulnerability points, that cause your profits to evaporate faster than you can say “quick-service dining”! Therefore one can never be too rigorous when implementing controls aimed at loss prevention for pubs.
So, what can be done to make loss prevention for pubs a priority? Firstly, appoint an independent, professional stocktaker. Periodic stocktaking reverses stock shrinkage by highlighting where those losses are occurring, whilst optimising your stock holding and maximising your yield. All of this has a positive impact on gross profit growth and ensures loss prevention for pubs’ operations is managed in that area.
What the data tells us
One recent study showed that a client of Venners had, over the last 5 months, seen an increase in average gross profit percentage (GP%) of 3.2% per pub across their estate. That’s an average of £3,110 extra profit per pub in just five months. Extrapolated over the course of a year, that figure could rise to around £8k!
Stocktaking can also tell you how much cash you are losing out of the till. It just won’t tell you how it’s happening, or more importantly, who’s doing it. Research suggests that up to 75% of shrinkage is due to insider theft and that between 2-6% of your pub’s transactions are fraudulent. These are scary numbers, but the scariest fact of all is that most staff theft goes undetected. Therefore, the statistics previously mentioned might well be higher. A loss prevention nightmare!
What can you do?
Finding out why your staff steal can provide a good starting point to address and prevent the theft, tackling loss prevention for pubs at its root. For example you could help your staff to understand the major knock-on effects of stealing, such as there being less money available for bonuses, or that jobs may be on the line. An employee who feels their job is under threat thanks to a colleague’s criminal behaviour may be more willing to report the transgressions of their peers.
But for situations where theft is already happening, the approach to loss prevention for pubs requires stronger means. Modern EPoS and CCTV systems can form partial evidence to catch a thief. But we’d suggest paring these with some form of third party investigator to provide the ‘hard’ evidence you require to take remedial action and remove the employees who are costing you, potentially five figure sums.
It’s important to remember that insider fraud affects not only businesses but consumers too, which was highlighted to me on a fairly unhappy trip to my local just last week! Having ordered a couple of drinks, I was handed a pre-printed receipt showing the total amount due and then prompted by the server to tap my card to pay. The card terminal’s contactless payment security kicked in and asked me to enter a PIN number. It was at this point I noted that £20 cashback had been applied to the transaction, which wasn’t displayed on the pre-transaction receipt! Had I not noticed, this employee would have been free to pocket £20 out of the cash box – crafty!
Contactless payments are on the rise yet are so open to abuse! To guard against cases like this, we’d advise careful checking of cash float discrepancies against cashback transactions. You could also ask your staff to acquire customer signatures on receipts for all cashback transactions. While a signature can also be written fraudulently, CCTV footage never lies.
Loss prevention for pubs
Shrinkage and theft can be fatally damaging to a pub’s business and reputation, and losses can run into the tens of thousands. The flip side being that strong ‘loss prevention’ measures become critical to a pub’s success. Therefore we’d like to suggest our new golden rule, our number one piece of advice on loss prevention for pubs – treat your stock, and cash, like gold dust!
You can set up a no obligation meeting with our loss prevention consultants by calling 01279 620873 or emailing firstname.lastname@example.org.