Quarterly stocktakes are growing in popularity, even though monthly stocktakes have traditionally been seen as the cornerstone of inventory control for pubs, restaurants and hotels. In recent years many operators are purposefully choosing to extend their stock period, switching to quarterly, or, in some cases, half yearly counts instead.
Although stocktaking is mostly still seen as a crucial process for understanding stock usage, managing waste, and protecting profit margins, the increase in digital monitoring and control tools – and especially the use of EPoS – has made managing weekly and monthly counts in-house seemingly more achievable and beneficial. The ultimate aim for most operators, is of course, to continue operating profitably in the extremely challenging socio-economic environment the sector finds itself in.
But is it wise to follow this trend toward quarterly stocktakes? Or would it be wiser to buck the trend like a small number of other operators. Before making your decision it is worth your while to weigh up both the upsides and the hidden risks. While longer stock periods offer efficiencies, they also come with trade-offs. This post explores the pros and cons of longer stock cycles and how to maintain strong control over one of your most valuable assets: your stock.
Why Monthly Stocktakes Have Been the Norm
Regular stocktaking provides accurate data to calculate cost of goods sold (COGS), manage food cost percentages, support financial reporting and improve overall business performance.
According to Waste Managed the hospitality industry generates 920,000 tonnes of food waste annually (https://www.wastemanaged.co.uk/our-news/food-waste/food-waste-facts-statistics/ ), something that monthly food stocktakes help to combat by reducing waste and managing ordering errors.
Advantages of Extending Stock Periods to Quarterly
1. Reduced Immediate Costs
Monthly counts require time. Extending to quarterly stocktakes reduces labour, overtime, or reliance on external auditors, all of which can reduce the immediate costs incurred by a business.
2. Less Operational Disruption
In some cases operators prefer stocktakes to be carried out off-peak or in closed door operations. Simply doing them less frequently means less organisational hassle and disruption to an operation, plus it frees up time for other operational priorities.
3. Better Staff Morale & Focus
Fewer stocktakes mean less stress and fewer disruptions for busy front and back of house teams. This shift allows staff to concentrate on service, quality, and customer experience.
4. Cost Efficiencies with Tech Integration
Businesses using EPoS and integrated inventory systems can hold accurate data between fewer checks. Real time tracking tools, if used accurately, can reduce the need for manual counts and can reduce error rates.
Risks & Challenges of Quarterly Stocktaking
1. Fewer data points
With quarterly stocktakes, there are four data sets for the year, a third less than what a business obtains from monthly stocktakes. The more data points throughout a year, the better visibility a business has on trends, quiet and busy seasons, sales mix changes and what products are most consumed at different times of the year. More data points also allows for much more proactive planning to make the most of developing business trends.
2. Reduced analysis
Professional stocktaking companies and in-house stocktaking professionals often offer a broader range of data analysis and insights that goes far beyond just producing an accurate count. Unless a business is regularly spending time looking at variances, trends and margins, flagging issues and improving results over time, they will be missing out on key analysis and opportunities to improve. Extending stock periods can therefore negatively affect the value of analysis from key stocktaking data.
3. Less Visibility = Higher Risk
Longer gaps raise the risk of unnoticed shrinkage, spoilage, or theft as perishable items may expire or vanish long before a quarterly audit catches the problem. Other issues that can go unnoticed include selling prices generating low margins, staff overpouring or using the wrong recipe on spirits, draught fobbing issues, postmix consumption by staff, not recording transfers to the kitchen, and so forth.
4. Higher Likelihood of COGS Discrepancies
With fewer stocktakes, trends in stock discrepancies or inefficiencies may go undetected for months. Whereas monthly counts support accurate profit analysis, extending the cycle can muddy financial data, making it harder to spot cost overruns. This ultimately affects pricing, budgeting, and forecasting negatively. Reliable COGS tracking is critical in tight-margin hospitality to avoid cumulative losses.
5. Slow Response Halts Improvement
The longer a stock period, the longer an issue will continue before it is identified. Monthly stocktakes allow for swift corrective action. Quarterly stocktakes, however, may delay detection of production inefficiencies, sudden theft, or ordering errors.
6. Loss of staff accountability
The knowledge within a business that an auditor comes in on a regular basis is a strong deterrent against any staff issues. This is not just for malicious behaviour, but also to help keep staff accountable for the accurate recording of all transfers, wastage records, and any other paperwork that is needed to process a stocktake properly.
7. Perishables & Product Life
Extending the stock period without interim checks could significantly increase the risk of large amounts of unnoticed and out of date stock – resulting in losses. This is even more so the case with high-risk items like fresh produce, fish or premium alcohol, which need close monitoring. If expired products are all found in one go it will have a greater impact on margins, whereas if short dated items are noticed earlier they could still be sold off before going out of date.
8. Decreased Data Accuracy
Most businesses that move to quarterly stocktakes rely more heavily on the accuracy of their regular internal counts, which might take place weekly or monthly. This added pressure on staff, who are often trained to a minimum standard for the count and need to pack the task into their busy schedules, frequently results in stocktakes becoming mere tickbox exercises or being rushed through with little eye for detail. Critical checks that should be performed during the stocktakes, such as updating cost prices, are also often neglected.
9. Tech let-downs
An over-reliance on tech allows for an unhealthy build-up of inaccurate data and can create complacency. Most EPOS systems track sales, not wastage, theft, or operational errors. Plus if data is entered into the system incorrectly to begin with – such as wrong recipes, supplier weights, or delivery quantities – the outputs will be unreliable. Relying solely on tech also misses the physical realities of damaged stock, expired products, or incorrect deliveries.
So is it Beneficial to Move to Quarterly Stocktakes?
Well, this very much depends on the broader context of a business. The key to success lies in adapting your stock control strategy to your business size, complexity, and risk profile. Extending stock periods may work better for low-wastage operations with stable menus and high stock turnover. Businesses that use advanced inventory software may also be better positioned to stretch stock periods. However, moving to quarterly stocktakes comes with important caveats. Any business considering less frequent stocktakes must also invest in staff training, should properly manage and maintain their digital tools, and look to improve process visibility. For many operators, less frequent does not have to mean less control – provided that the right systems and habits are in place.
There are several useful ways to improve overall process visibility. One is to supplement longer formal stock periods with more frequent informal or “spot” stock checks. Another approach is to allow external auditors to remotely tap into the business EPoS and do a quick verification of the count accuracy following internal stocktakes, whilst providing additional insights to help the business maintain oversight of stock trends.
A business should never just assume that everything is fine because the dashboard looks good, unless they are confident that the aforementioned measures and controls are in place. The reality could be that stock control is slipping under the surface. If you’re looking to review your stock control strategy, get in touch — we’ll help you shape a solution that fits your business.”