Insight

Why you need stock control in pubs and clubs

February 21, 2020

Article by

Pitcher Partners Newcastle & Hunter

Let me tell you about a case I worked on recently. This particular hotel was down 2 kegs for the month and again the following month. This happened for several months. The owner was after an explanation and their peace of mind was compromised.

Somewhere along the line, something was being missed.

Pitcher Partners Newcastle and Hunter’s specialist Stock Control team was asked to help solve the mystery with an assurance that the owner had full confidence in their employees. There was no real suspicion of foul play but where was the count going wrong?

I’ve worked in the financial industry for more than 20 years and owned a hotel myself for a decade. It’s fair to say I’ve got runs on the board when it comes to understanding how the industry operates. But to be honest, I was shocked too when we uncovered the extent of what had been happening.

While I’m not going to give away how the perpetrator worked their deception or how our team identified what was going on, I can reveal this person was the manager of the hotel. Being duped by a favourite employee is a sucker punch for any business owner.

Once aware they’d been caught, this person walked into our meeting and admitted the theft, presenting a cheque to repay what had been stolen over a significant period of time.

This was not a small cheque.

It wasn’t until the owner watched the CCTV footage they were convinced what was going on.

“The perpetrator walked into the meeting with a cheque….it was not a small cheque”

I think a lot of hoteliers would be surprised at what’s going on that they don’t know about.

In the hotel business, we tend to be a trusting bunch and I’m certainly not suggesting that’s a bad thing — as long as we’re not also naive. Part of having a successful business is being surrounded by good people you can trust.

But the real peace of mind comes from also having the right systems and support in place to ensure there’s accountability, and your profits are being maximised. Effective stock control is a whole lot more than counting kegs and cash.

As a former hotel owner, I admit I was so naive then compared to what I know now.

Do you really need to bother outsourcing your stock control?

As one of Pitcher Partners Newcastle and Hunter’s specialist Stock Control team, I have the privilege of working with successful hotel owners across Sydney, Newcastle and all over regional New South Wales. And I’m proud to say we’re helping owners find genuine peace of mind about their business.

You simply can’t have your eyes on the business 100% of the time. But your systems and controls plus an independent set of eyes (expert ones) can do that for you.

Proper management of your stock can not only tighten your systems but dramatically improve your GP (gross profit). Consider the example of a 1% improvement to a $100K per month turnover. That’s pretty significant.

If you’re new to the industry, I can’t recommend highly enough the importance of getting the experts in right at the start. If you get it right initially, you WILL see the benefits in the long term to both your profits and peace of mind.

Sometimes your systems are to blame

Do you have complete faith in your system? It’s important to realise it’s not always something sinister that’s causing discrepancies.

In another recent case, our team looked into the systems of a suburban venue of significant size that was losing around 10 kegs every month. That’s a lot of profit down the drain.

Once again, the owner was adamant there was no theft and in this case they were right.

To find the cause of the variation, we analysed every link in the chain and found no evidence of foul play. However, we did identify a major flaw that was costing the business dearly.

The problem was wastage to the tune of 500 litres a month.

A staff training session turned that around the very next month. Tightening your systems can lead to a dramatic increase in gross profit.

A few facts about Pitcher Partners Newcastle and Hunter’s specialist Stock Control team

We’re very rarely in the office! We spend most of our time on-location at hotels and clubs all over the state, from coast to country. That’s why we can talk about our team’s superior industry insight with confidence.

On any given day, we work with owners from Sydney to Salamander Bay, Wisemans Ferry to Warrawong, Maitland to Merimbula, Bellambi to Yamba and a long list of places in between. Personally, I spend an average of 3 days a week working closely with clients in Sydney.

We’re not afraid to put in the miles. We see time spent on-premises as the only way to achieve truly effective stock control where the owner benefits from better profits and peace of mind. Don’t underestimate the peace of mind bit because breathing easy and sleeping better at night is what our clients tell us makes a big difference.

Stock control is a largely unheralded factor in any successful hospitality business. Those owners understand it’s not just a process you go through when the business changes hands or at the end of financial year.

If you’re in hospitality, investing in regular independent stock takes, random cash counts and system reviews in any venue (large or small) is an expense that’s well and truly justified by the rewards.