Stocktaking forms part of the monitoring process of hospitality inventory management. A great stocktaking process is a leading indicator that a hospitality business is being run successfully.
What is Stocktaking?
Stocktaking in hospitality is the process of counting the stock you have on hand at any point in time (generally food and beverage), so you know both the quantity and the value of your food and beverage stock. When you compare this against your revenue, you can analyse your actual Cost of Goods (food or beverage costing) and, therefore, your actual Gross Profit in your food and beverage departments.
Stock Control and stocktaking are important processes for a thriving business in the hospitality industry. Many hospitality businesses only use stocktaking once a month or once a year to provide a stock value to their accountant. However, the real value in stocktaking comes when you introduce stocktaking software that allows you to stocktake rapidly and see which items in your business have significant wastage or shrinkage, so you and your front-of-house or kitchen team can then do something about resolving this. By conducting regular accurate stocktakes, you have real time cost of goods data and you can increase the accuracy of your reporting.
The reporting and analytics that inventory management software provides once you stocktake, can supercharge the performance and profitability of your food, beverage and entire hospitality business.
The Different Forms of Stocktaking?
Stocktaking for Financials
Generally, in hospitality, you want to complete a full stocktake for food and beverage items at least once a month, but ideally once a week. This allows you to get your stock on hand value and with this information, you will know your exact margins each week and month.
Regular accurate stocktakes can help you maximise profits overtime as you have tighter inventory control allowing you to determine what your actual food and beverage costs are and how to reduce waste. Data from your stocktakes allows you to plan for the future by forecasting stock levels and managing your cash flow, giving you more control over your financial performance and cash in the bank.
Stocktaking for Operations
If a full stocktake each week seems daunting, don’t stress, as cloud-based stocktaking software also allows you to only stocktake problem items or those that you are losing money on. This means for example you can simply start by stocktaking your high-moving expensive proteins in your kitchen and your tap beer and house wines in your bar.
Once you are stocktaking these regularly, you will start to get a pattern on whether wastage on a particular problem stock item is happening regularly or on a spasmodic basis and you can do something about it.
A real-world example below from Sophie Rattray, Head of Stocktake training at Loaded.
I used to run a busy high end steakhouse, which operated seven nights a week. We would stocktake all of our food items weekly and were constantly having issues with using a lot more beef than we were expecting to, based on the sales we had and the portion sizes in our recipes.
My assumption was that wastage would be occurring during our really busy dinner services on a Friday night, but I couldn’t spot anything obvious like a large number of drops or overcooks.
To drill into it a little more, we started doing a daily stocktake on our best selling item, the Bone In Ribeye, and quickly discovered that the wastage was actually occurring on a Tuesday and Wednesday.
We had a relatively new chef who had been incorrectly trained in portioning the 500gram cuts from the 4.5kg whole rack we ordered in. We rapidly had the Head Chef work with him to retrain him on this and two weeks later we were saving $500 per week on our cost of goods.
Mystery solved and margins increased thanks to an operational focus on stocktakes and making the most of a cloud based, flexible inventory management system.
Ideally, you want to have someone responsible for stocktaking within the business for the front of house and for the kitchen. This doesn't always need to be the head chef or the front-of-house manager, as they will often have a significant number of other tasks to complete at the end of each week, which will mean they don’t have the time to get a stocktake as accurate as they should.
Once you do have team members who are regularly responsible for stocktaking, you will want to have someone else independent of them run spot checks on the stock on hand to make sure they are not “smoothing” any numbers to reduce variances in the stocktake reporting. You won’t need to do this every week or on every item, but you do want the stocktaking team to see that their counts get spot checked on a regular basis, and that it could be on any item.
Is Stocktaking Important For the Hospitality Industry?
Stocktaking and stock control are very key parts of inventory monitoring and management in a food and beverage business. The best hospitality operators have ingrained systems and processes for stocktaking and have adopted cloud-based software to make it as easy and fast as possible for their team to continually have their finger on the pulse of any shrinkage, wastage or theft and then be able to monitor if the actions they have taken to resolve these issues are working. Stocktaking in a bar, restaurant or cafe is crucial for helping your operations run smoothly and ensuring your business is making a profit.
What does Stocktaking allow you to do:
- Measure your best-performing products from a margin and contribution perspective.
- Be more accurate with ordering and forecasting stock levels in your inventory management system
- Keep up to date with your current purchase prices and let you see when they are increasing.
- Uncover and eliminate theft within the business.
- Calculate how much your stock costs to buy, what price to sell it at, and how much stock you have on your site.
- Ascertain accurate gross profit margins for every product.
- Understand why you are not hitting your expected margins for a menu.
- Be on top of what stock you have in your venue and when it’s due to go out of date.
- Discover old stock: Seeing how long you’ve had particular products helps you to determine which items sell and which don’t.
Loaded software can help you make stocktaking a breeze.
Let us help you set up your inventory management software, create food costings and make it easier for you to analyse accurate gross profit margins. Loaded is designed with the features of flexible stocktaking to allow full stocktakes right down to single problem items. You can also add bulk recipes and individual stock areas to each stocktake whenever you need, giving you total accuracy.
Sign up with Loaded today! Get a free 30-day trial to see how we can help make stock control easy.
How Do I Do A Stocktake?
Check inventory and do a stocktake because it’s important for you, your team and your business. Here’s how…
- Plan ahead
- Use a stocktaking app like Loaded
- Set up your inventory in the software to reflect the correct measurement so that it’s quick and easy to add the count of stock as you go. Your cost of goods is then reflected accurately once this has been actioned.
- Get your stock organised
- Have a specific area for all of your stock, and only open boxes containing the stock when you have finished the previous box. Whole boxes are quicker to count and storage is tidier.
- Clearly label the area ensuing it's easy for anyone who's performing the count.
- Ensure the inwards goods count is accurate. If you are receiving stock, ensure your purchase order invoices match the quantity received.
- Stocktake weekly and stick to the schedule. If there are any discrepancies it's far easier to remember any issues that happened within the last 7 days so you can troubleshoot
- Be thorough. The stock count is a responsibility that should be taken seriously by your team. Ensure they count and recount again as human error can happen easily if your process for stocktaking is too loose.
- Have the same people responsible for stocktaking each week. This ensures they take responsibility for making the stock as easy to count as possible. They will then know the inventory management system like the back of their hand and be the advocate for best practices.
- Analyse the stocktake report and troubleshoot with the team.
- Once the first count is done the stocktaking app will highlight any variance in your count, however your stocktaking is only as good as the process you wrap around it. Ensure your team prioritise a recount of items where this variance occurs and they do a thorough investigation of where the issue may have occurred. By getting a second person to check will throw new eyes over the count.
- Create a checklist of exactly where to check for variations - did the PO match the inwards stock count, should there have been a right off that did not occur, is there stock hidden at the back of the store room?
What Are the Benefits of Efficient Stocktaking?
- Knowing the value of your stock on hand so your finance team can produce an accurate profit and loss.
- Knowing how much of each food and beverage item you used versus the amount you calculated you were going to use.
- Understanding in both quantity and dollar terms how much wastage or shrinkage you had.
- Allows you to see the items where you have the most wastage or shrinkage so you can create an action plan to resolve with your team.
- Allows you to see if your action plan above has resulted in less wastage or shrinkage so that you can measure if you are making improvements.
- Zero in on specific items and time periods particular team members are working on if you have a potential theft problem.
- Allows you to incentivise your team based on the gross profit they are achieving because once you are stocktaking, you are tracking your actual cost of goods rather than your expected cost of goods.
Hospitality Operations Made Smoother
Effective stocktaking can streamline the process for the back and front of the house. Everything is all in one place.
Talk to our team to see it in action.
Know Your Stock Levels With Real-Time Stock Tracking
Once you are stocktaking, you have an actual count of your stock on hand because a good inventory management system is integrated or linked to your point of sale system then it also knows how many of these items you are selling and how much stock you are receiving from suppliers, at any point in time you are able to run a stock on hand report to know exactly how much you have left of every piece of food and beverage in your outlet.
Reduce Costs With Improved Inventory Management
Menu and recipe management can help you improve your gross profit levels and ordering process. You are able to analyse your overall recipe margins, forecast the stock levels you will need for the week and to drill down to a single ingredient cost all in one place. The depth of insight you get with an intuitive system using the accurate data from your stock control process allows you to make better decisions around where to reduce cost.
Why Is Stocktaking Important for Hospitality Businesses?
The mere thought of stocktaking often induces an eye-twitch and elevated heart rate. Frustration and stocktaking feel mutually inclusive for many operators who have never perfected the art. There are four key areas in your bar, restaurant or cafe that can have a significant effect on your bottom line. Revenue, Cost of Goods - Stock, Cost of Sales - Labour, and Operating Expenses
Stocktaking is the key final step in tight inventory management that helps ensure full control of the Cost of Goods - Stock area.
The time investment is low, the importance to your bottom line is high.
Inventory control can help you by understanding:
Actual Stock Levels
- If there’s any missing, stolen, damaged or surplus stock
- If there are any discrepancies in your online stock compared to the physical stock – this is especially important for online retailers
- If any stock is due to go out of date if it’s perishable
- If any deadstock should be sold at a discounted price or given away
Cost Of Goods
- The value of your stock, which is needed when you file your tax return
- The actual margins being achieved as opposed to the margins you expect to achieve before accounting for wastage, shrinkage or discounting.
Having clear reporting and accurate stock holding value will help you increase the profitability of your business. You can analyse in depth your cost of goods sold and create plans around how to increase your profit. With good stocktaking practices you can see:
- Not just what is selling well but what is contributing most to the profitability of your business.
- What items constantly have wastage or shrinkage so you can create a plan with your team to resolve this.
Your Bottom Line
We all believe we have low wastage until we measure it; it’s called facing the brutal facts. You can’t control what you don’t measure, so ‘knowing’ is key. Trust me, this is less scary once you begin. Even if you start small by starting to stocktake a few of your top-selling food and beverage items.
How to Pick the Right Stocktaking Software?
Understand your hospitality business better with the right stocktaking software. Here's our guide to what you should look for and the key features we included in Loaded's inventory management system.
What Should Your Stocktaking Software Be Able to Do?
Conducting an accurate stocktake in the right inventory management system you will be provided with the information that allows you to:
- View actual cost of goods percentages in ‘real time’ - without having to wait for monthly financials.
- Accurately calculate COGS in your accounting software with an accurate open and close stock valuation.
- View stock variances on an item-by-item basis so that you can reduce wastage and save money.
- Stocktake recipes as well as stock items so that you allow for all of the stock you have on hand.
- Set up stocktake templates so you can count as many or as few items as you like and run rolling operational stocktakes.
- Allow the creation of stock areas so that if you restock a fridge with the same quantities every night, you can simply add the contents of the entire fridge to the stocktake rather than every individual item.
- Clear reporting, so it’s easy to understand if your team has made inwards goods errors or recipe setup areas.
- Where inwards goods or setup errors have been made, your system should allow you to resolve these and re-run these so you are always monitoring actual variances in your venue.
Do Stocktaking Right the First Time
Traditionally stocktaking has been completed in complicated error-prone spreadsheets or in the POS system where all of the inventory had to be entered manually, and any mistakes made in the setup could not be undone. Don’t get us started on how complex and inaccurate the reporting provided was!
Fortunately, with cloud-based inventory management software, the work of managing inventory and completing stocktaking and then getting value from these stocktakes has got significantly easier as there is far more configurability and flexibility to ensure you can implement stocktaking in a way that is best for the age and stage of your hospitality venue.
How Loaded Can Help You:
We know you would rather be creating magic not crunching numbers so get back to what you love doing with Loaded, the all-in-one hospitality management software.
Loaded has been designed by hospitality experts for hospitality leaders to save you time and money AND the stress of having to do it all yourself! We aim to help you increase profitability and reduce the manual, time-consuming work that takes you away from growing your restaurant, bar, or cafe.
Loaded will help you:
✔️ Manage your inventory
✔️ Order management from the kitchen to the supplier
✔️ Create staff rosters and schedules
✔️ Cashup & reconciliation
✔️ Analyse your business with simple dashboards, reporting & budgeting
✔️ And more
Find out how we can help you by booking a demo with our team. We set you up on a 30-day free trial, so you can see the value it will make to your business in real time.