Liquor stocktakes have long been accepted as a vital business tool for anyone involved in the licensed drinks industry. And for good reason – the information compiled by your stocktaker during a liquor stocktake helps you to increase your gross profit and yield by reducing or eliminating shrinkage – all whilst uncovering stock throughput opportunities.
Shrinkage is the loss of your liquor from wastage, theft, spillage, write-offs and overpouring.
There are a lot of companies offering liquor stocktakes across the UK, including many one man bands and some small companies of stocktakers. There are franchise companies and there are a handful of large professional outfits. Although the base stocktaking rules always apply, such as the count and the results, not all stocktakes are created equal.
So how do you know what you should really expect to receive from your stocktaker in exchange for your hard earned cash?
Here’s a rundown of everything you will want from your liquor stocktakes: we hope it proves useful!
A fundamental part of any liquor stocktake is the count. Here’s a tip – if you’re paying your stocktaker to do the count, always make sure they are actually doing the count. You’d be surprised at the number of times we have taken over the stocktaking for a client because their previous stocktaker was simply turning up and copying the count from an internal source, normally an inexperienced assistant manager who had been duped into it. When training new staff, make sure they’re aware of your stocktakers responsibilities so they don’t fall into this trap.
Also, make sure that your stocktaker is accurate. You could, on occasion, do spot counts to reassure yourself that they are counting accurately. We always suggest using reputable stocktaking companies, like Venners, because we train our stocktakers to count using best practice techniques that ensure error-free results.
Spirit strength test
A liquor stocktake should always come with a spirit strength test. Routine inspections from trading standards can uncover whether your bar staff are watering down spirits, which can burden you with mammoth fines. Without regular spirit strength tests during your liquor stocktakes, you will find out far too late that one of your trusted bar staff is drinking your premium branded vodka and then pouring water back in to the bottle to fill it back up.
Spirit brand authentication
Similar to strength tests on spirits, you can land yourself with horrific penalties if your company is found to be passing off fake spirits. By conducting regular brand authentication tests on spirits, during your liquor stocktakes, means you uncover the misdeed much sooner. This allows you to take remedial action against any offenders and remove the illegal bottles from the bar before any legal action can be taken against your business. Tests also bring with them a very visual deterrent, meaning your staff are less likely to see passing off spirits as an opportunity.
Your liquor stocktake results should always include reports on days held, allowances, variances, estimated receipts, actual receipts, % surplus/deficits, yield, actual gross profit, gross profit % and gross profit/gross margin. Because of this, stocktake reports tend to generate a large amount of essential information about the control of stock margins, prices and money in the business.
Your liquor stocktake reports should be used to plan a course of management action designed to improve performance and rectify any problems. Whilst a good stocktaker will always find the time to explain key issues regarding results, you should take the opportunity each month to investigate the results yourself – do it line by line using your product variance report to help you.
Advice and action plan
You would think this one would be obvious right? Wrong. We hear so many times from people who have a stocktaker who just turns up, does the count, runs your report and then leaves. If this is you, stop! For you to get value out of your liquor stocktake, you need your stocktaker to sit down with you to explain what their count and subsequent report has uncovered. Can you reduce stockholding on certain lines, what stock is soon to be going out of date, why are there such big losses here and why aren’t you making target gross profit there.
Only through this vital step in the stocktake process will you reap all the benefits, because as you and your staff follow your stocktakers advice and guidance, you will start to see your gross profit and yield increase annually by far more than what it costs to have a liquor stocktakes. And then you’ll start to see liquor stocktaking as a vital business tool rather than as an expensive and unimportant service.