04 Sep, 2019
You're not selling bulldozers – make every small transaction profitable in hospitality
I spent over 12 years managing multiple hospitality venues around Australia in Perth, Broome and Brisbane, with a stint in London as well, before joining H&L as an Account Manager. One of the most important lessons I have learned in hospitality is that we not selling bulldozers so make each small transaction a profitable one.
Becoming mindful of each individual transaction makes a significant impact on a venue's bottom line at the end of the day. It comes down to staff training and having access to quality information.
The most common ways that venues lose bottom line profit
The most common is not maintaining control over their cost prices and not paying attention to small price increases. A lot of sites don’t even know the GP on a pint of beer or an entree. They focus on the sale price rather than the cost price and don’t realize that both need the same amount of attention.
It’s these little things make a difference to your profit. For example, prior to H&L, I worked as a pub manager for a group of hotels. When I started there, one of the first things I did was to check invoices for the cost of our liquor which were not being checked regularly. This simple exercise brought to light that the venues had not been receiving their discounts, which amounted to $100,000 per year. This was not deliberate on anyone’s behalf, it had just gone unnoticed because it was not being attended to, at a cost of $100K pa.
The other mistake venues make is not following stock control procedures by having a regular stocktake process. So managers don’t know what’s going on with their stock, for example, what’s selling, what’s not selling and what is being used more than it should. Staff may be overpouring regularly or theft may be occurring, all incrementally taking away from your bottom line. If you overpour just 3 mls on a spirit, you lose 10% of your product and therefore the profit.
The main reason venues are not paying attention to these profit-eating issues
It happens mainly due to the lack of information/reporting. A lot of venues don’t have technology in place that easily allows them to manage stock and purchase new stock based on the stock levels. They know they have to, but they simply do not have the process or the systems to track stock, and they have been doing it the same way for so many years they just continue to cope.
Once you have a new system that manages stock and purchases, you’ll wish you’d installed it sooner.
My top three recommendations for venues to increase profitability on each transaction
- Develop and adhere to a stocktake procedure. The frequency of your stocktake will depend on your venue and how much stock you have and turn over. Your H&L account manager will help you with devising a good stock control plan.
When you do the stocktake, make the result of the stocktake known throughout the business. When staff know you are fully across this, it makes them more accountable and they will think more about what they do with each transaction. Everyone responds when they know what they are dealing with.
- Ensure that staff are not overpouring by having a good stocktake procedure, this will tell you how much you’re selling versus how much you’re using. Maintain staff training and discuss the impact on the business with staff if they overpour and how it affects everyone negatively.
For example, when I was running a pub in Brisbane, we were losing several kegs every fortnight in overpouring. At my next staff meeting, I placed the same number of kegs in a pile behind me as I spoke to the staff to show them what we lost every fortnight. The visual impact was immediate and they understood. Overpouring dropped dramatically in the next few days. But I could only know this because I had the right systems in place and access to the right information.
- Purchasing effectively - buying in bulk on high volume items, and basically controlling the purchases of lower volume items. For example, one of our popular beers would sell over a pallet per week so we’d buy that one in bulk. For a particular sprit, we’d buy only a couple of bottles month instead of a carton. Yes, this would cost more but we didn’t have our cash tied up in slow-moving stock.
We have many customers that run an efficient stock control process. What makes them efficient?
The Grand Hotel Labrador use Sysnet for stock control and purchasing. They always know what stock is on hand. They use this information to produce purchase orders so they are purchasing the correct amount of stock-based on actual sales.
One of our other clients is an independent stock control/manager who visits pubs and advises them on their stock levels. He produces reports that help pubs stay on top of their stock and look after their bottom line profits.
He trusts the Sysnet system after having tried a few other products. He says Sysnet is easy to use and produces accurate data to work with.
Call H&L today and equip yourself with information to make profitable decisions
Call the H&L team today on 1800 778 340 to discuss how you can start using the right technology to make each transaction count for more. Remember, you are selling drinks and food, not high ticket items like bulldozers!