Stock Management, better your cash flow with the right amount of product at the right time

Sep 18, 2019

 

In order to succeed in the bar and restaurant business you need a detailed understanding of your food and beverage usage so as to implement controls that eliminate theft and waste in addition to tracking stock volumes.

 

Your stock is your money; and accurate tracking of profit margins and stock turnover is imperative. To put things in perspective, think of stock as money sitting on your shelves. The longer the product sits on the shelves or in the fridges / back stores the higher risk for employee theft and spoilage. Finding the balance between product, profit margins, and movement can help save you money and add to your bottom line.

 

For any bar or restaurant, the sweet spot on stock turns is between four and eight times a month. Clearly in the case of fresh perishable foods ordering more frequently than twice per week will be necessary but achieving eight turns a month (ordering twice a week) makes your venue extremely efficient. When helping a business getting the value of stock on its premises down – and cashflow up – we frequently look at their stock turnover ratio, essentially [usage ÷ average stock holding].

 

To great effect recently we worked with a customer in the west of Ireland with one large late-licenced venue containing 6 bars, 2 cold-rooms, 2 storerooms, and a sizable busy kitchen to reduce their stockholding. Using our bi-weekly stocktake data, our unique customised program for this particular premises, and the stock turnover ratio we were able to support them in bringing the value of stock held on the premises down by 26% over a 5 month period, reducing their SKU count from 375 down to 330 (-12%), all while growing average weekly sales by 11%.

 

Wages and product costs are typically the largest expenses for a bar or restaurant, and margins are always tight; therefore, having firm stock control policies and procedures in place can make a significant and immediate difference. If you feel your cashflow is not what it should be, and that too much stock is in your storerooms and fridges, talk to us today!