Doing it yourself just doesn't measure up

I am often asked if the industry still needs traditional style stocktakers now that so many licensed businesses have moved over to a full-blown EPoS system.

The argument for it, and this is also one of the main sales pitches from EPoS salesmen, is that the stocktaking function can be undertaken in-house either by the owners, the manager or other staff, and that savings can be made by dispensing with an external stocktaker.

On the face of it I can see why companies would be tempted by this, especially when you consider that although these systems are not cheap, the savings made could be off-set against the costs of the installation.

The trouble is that so many people in this industry believe that the stocktaking process is relatively simple, and that almost anyone can do it. But can they really do it properly?

Professional stocktakers working for the leading companies, and many more who work for themselves, are highly trained and skilled at what they do.

They fully understand the stocktaking process; know all the things that need to be taken into account to produce an accurate and meaningful result, and most importantly, they know when something is wrong.

They also have great experience in interpreting stocktaking results and this can be crucial when poor or unusual results are produced.

Who'll do the job?

So who exactly is going to carry out the stocktaking, once the professional has been dispensed with?

The owner, the manager, the bar staff, the chef, they all have their own jobs to do but one of them will end up being a stocktaker as well. So where do they find the time?

Will there be a conflict of interests by having the person who is responsible for calculating the results, also supervising deliveries and working behind the bar, in the cellars or in the kitchen?

Who does checks?

What happens in the case of a very poor result, and who takes responsibility for it?

Who scrutinises the EPoS system for errors in selling prices, cost prices, recipes etc? Who checks to see if the post-mix products for instance have the correct settings and therefore the selling price correctly programmed? Who looks at where items, such as liqueur coffee that contain both liquor and food ingredients, are posted to ­ for example, liquor or food or is it split between the two.

You only have to think how many items in the modern pub could be classified as both liquor and food to see that there can be problems.

There are also items such as cocktails, which are very popular but use part measures of spirits, liqueurs, juice, coffee, milk and the like. The big question is will the person who takes on the extra responsibility be up to the task. Unless they have trained previously as a dedicated stocktaker, I think not.

You wouldn't ask a chauffeur to service your car just because he works with one, neither would you expect the shop sales person to be able to service the product that they have sold to you, so why would you ask someone unqualified to produce reports on which his own and the jobs of others may depend?

Free of conflict

The stocktake and audit function really needs to be free of the conflicts of self interest and this can only really be achieved by appointing a professional stocktaker or stocktaking company who will act responsibly in your interests and, be able to comment with some authority on the results that they produce.

It may cost a little more, but if it keeps you in control of your business and provides an early warning mechanism then it will be worthwhile and you will be able to sleep at night in the knowledge that if someone is planning on ripping you off then there is an above average chance of them being caught.

Questions

True cost of promos

QI am considering running a promotion in my pub, such as a loyalty system or two-for-one deal. What do you recommend?

A You do not say why you want to run promotions. If it is to shift slow-moving or short-dated stock then this is a good way. If, however, you want to use promotions to increase your overall trade then it may not be such a great idea. If you want to increase your overall trade then whatever promotion you run needs to be attractive enough to entice customers from other pubs into yours. It also needs to be a long-term commitment so it needs thinking about. One thing that is guaranteed when you run serious promotions is that your gross profit percentage will drop, purely because you are basically giving stock away. Other cost considerations are having fliers printed or advertising in the local paper to promote the deals. Obviously, these costs and the loss in profit have to be weighed against any increase in business. Only you can decide if it's worth it. Make sure that you control it properly through the tills, so that the stocktaker can make the necessary allowances.

Xmas didn't add up

QI own a pub and looking back over my last few stock results, I am still concerned about the gross profit on the Christmas stock period. Although the result was the surplus I expected, the gross profit dropped by 1.5% and as the stocks since then have shown the normal gross profit I feel that the stocktaker must have made an error on this stock.

ADo not be so quick to assume a stocktaker error. If the result is what you expected surely that rules out stocktaker error along with revenue, purchases and selling price. Any errors on cost prices could affect your GP%, but would have no effect at retail value. If there is an error it can only really be on individual product cost prices which should be easy to identify by examining the detailed stock reports. There are many things that affect the gross profit and some unusual instances can occur in one stock period especially over Christmas.

If you have done any cheap sales deals during the Christmas period, for example, letting some of your best customers have stock at cost, or free bottles that you may have given to your staff over the festive, period will also have an effect. The stocktaker will make an allowance at retail price for it, but obviously the cost price will be lost, hence lower gross profit.

Christmas brings a host of inclusive liquor and food packages and it is important that these are dealt with in the correct way. The revenue from packages should be split between liquor and food as appropriate so as not to distort the gross profit. It is always important that you make your stocktaker aware of how exactly you have dealt with these packages.

The sales mix often changes over the festive period with people selecting more expensive drinks that sometimes yield a lower gross profit.

Your stocktaker should have talked you through any drop in your gross profit at the time he produced the result for you. You need to make yourself available at the end of the stocktake, so that you have the chance to question him or her about things such as this, and satisfy yourself that it is correct.