The Stocktaking Question You SHOULD Be Asking

It was the most common question our team heard last year: How often should I stocktake?

But 15 years of hospitality management experience tell me this is the wrong place to start.

Stocktaking is painful. It sucks. So before we talk about frequency, ask yourself this (because you’ll find profit magic dust in the answer): 

‍Why are we even bothering to put our precious time and energy into stocktaking?

‍And that question is best answered with a story. Got your cup of coffee ready? Ok, settle in.

I was once the proud owner of a few gourmet burger outlets. One of my business partners (also the General Manager) spent a lot of time on site, and is probably the most obsessive person I’ve met in terms of hunting out a good price on his lettuce and tomatoes. That was great, because we always knew we were buying our stock at a good price.

But it was also a problem. Because he was on site so much, he was 100% convinced that he knew there was almost zero difference between the amount of stock we thought we should be going through based on our portion sizes and recipes (which he’d built himself) vs how much we were actually going through when the team made the burgers and sold them to customers.

Our experience before getting into the burger game was owning large format pubs and restaurants, and that taught us to always believe you’re probably going through more stock than you should be. That, plus the fact we were busy building out our stock management system that would eventually become a key part of the Loaded hub, led us to asking our GM to humor us and start doing a bit of stocktaking.

It turned out that by counting his 10 most used stock items by value each week - things like beef patties, burger buns, bacon etc. - he quickly discovered that only some items were being sold exactly as they should be. Some of those top 10 were slightly out of whack and costing us money. And one of them was costing us a lot.

That experience is fondly known between us as The Great Bacon Escape.‍

Why? While serving up one burger bun per burger is pretty easy for a team to follow, it turned out that it was just too tempting for our crew to add an extra rasher of bacon to our bacon-included burgers to make them look more awesome. This [completely well meaning!] act meant we were going through around 40 kilos of bacon per store per week, when we should have only been going through around 30 kilos. That 25% extra was costing us about $190 per week, per store. Across three stores this meant we were losing $570 per week, and just a shade under $30k per year. FROM ONE STOCK ITEM. They say pigs can’t fly, but try telling that to the tens of thousands of bacon dollars flying out of our bank account every year.

So how did we stop the bacon escaping?

Going back to the original question, we now had a compelling ‘why’ for stocktaking. It was time for ‘how often’. And with our why in place, that almost answered itself. We knew we didn’t need to count our burger patties and burger buns more than once a week (we weren’t losing any money there), but we really needed to get a handle on the bacon situation. 

We decided on a DAILY stocktake for bacon. This was a five minute process where the manager at the start of each shift (easier to count stock at 11am than 2am) would count the bacon and enter how much we had. Our man on the ground could then run a report each day to see how much bacon we should have gone through (based on the number of burgers we had sold) vs what we actually used.

What did we learn?

The wastage stayed pretty consistent, day to day, meaning that all our staff were slightly off track. So we sat down with anyone who worked the grill and went back through the portioning. Not just what it should be, but why it should be. They made the point that a couple of our burgers were underwhelming with only one rasher of bacon, and you know what? They were right. So we updated the recipes to include more bacon and updated the sales prices to make sure our margin was where it should be. We all then agreed to stick to the exact recipe to measure the impact, and bring the flying bacon firmly back to the ground.

We didn’t have to wait long for the results to start showing - they were obvious the very next day. Our bacon variance immediately dropped to almost zero. We reported the results in our Facebook Group as we went, and the team felt great that they were part of the solution (not to mention stoked that we directed some of the profit increase to a doubling of the next team party budget).

So, with your coffee almost gone, let’s go back to the original question: How often should I stocktake?

And instead ask…What are you stocktaking, and why?‍

Start there, and the when will make itself clear.

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FREQUENTLY ASKED QUESTIONS

‍What are the best practices for implementing a daily stocktake process?

To implement a daily stocktake process effectively, you need to integrate it seamlessly into your daily operations (which basically means: it's manageable for your team, and doesn't disrupt service). This involves training staff on the importance of accuracy and consistency, and potentially dedicating specific times of day for stocktakes to minimise impact on service.

How can technology improve the stocktaking process?

Technology plays a crucial role in streamlining stocktaking, offering solutions for real-time inventory tracking, automated ordering, and data analysis. These systems can reduce manual errors, provide actionable insights, and ultimately save time and money by optimising stock levels and reducing waste.

What are the challenges of adjusting product recipes and prices, and how can they be overcome?

Adjusting product recipes and prices comes with challenges, including maintaining quality and customer satisfaction. Transparent communication with customers about changes, ensuring adjustments actually enhance the product value, and carefully monitoring the impact on sales and customer feedback are key. Leveraging customer feedback for continuous improvement ensures that any changes you make align with customer expectations.

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