Business Advice: An eye on the health of your business

Nothing prompts a careful (re)assessment of business operations and costs like a recession.

Sadly some businesses leave such assessment until it is too late; others however, are able to successfully re-position themselves for both short and long-term success.

Pub increases gross profit by 15 per cent inside two months

While recently carrying out the first stock result for a new client, we produced a food gross profit well below expectations.

During discussions it became apparent that the menu had never been "costed" and that prices were based on the prices charged by competing pubs nearby.

On the surface this might seem to make some sense but the problem was neglecting the fact that he was using high quality, local and relatively expensive ingredients. Furthermore, he had not portion "costed" any of the dishes and his wastage was quite high.

We urgently recommended and assisted him in calculating his portion costs and in renegotiating his prices with suppliers. As he wanted to stick with high quality local ingredients we advised him to price the dishes accordingly and to advertise the quality and local sourcing of ingredients throughout his pub and menu.

Upon following our advice he found that he only had to increase his selling prices by around 10 per cent and because the food and his reputation was good no business was lost. As a result his gross profit has since risen from 50 per cent to over 65 per cent.

Under-ringing

Investigating a poor stock result recently, it was apparent from the PLU Variance analysis that one draught beer product was causing a large proportion of the shortage.

The manager had checked the product deliveries and pump and no problem was found. As the product was priced at a convenient £3 a pint I suggested that perhaps it was being used to under-ring the itemised till system and that, in fact, loss of cash was the problem - not loss of this particular stock.

I suggested carrying out till checks during sessions to check. Lo and behold these showed till shortages and a member of staff was caught stealing cash from the till. Itemised tills and EPoS systems do not stop under-ringing. But random till checks and avoiding round prices that make calculations more difficult will help deter such theft.

Business stimulus

The best idea to improve business that I have seen in the last month is well trained, motivated and attentive barstaff.

A friend and I dropped into one of my locals recently with every intention of having one quick pint together. We were warmly greeted and our drinks were served with a sincere smile.

As our empty glasses hit the bar the staff were on hand asking if we would like the same again. With such fine hospitality on offer we were easily persuaded and ended up grabbing a bite to eat as well.

I observed the staff generating lots of additional sales that night and was reminded that investment in good staff, training and motivation can be the most cost efficient, profitable, non stop promotion of all.

For more information regarding: Stocktaking; Inventory and valuation; Health and safety; Food safety; Fire safety; Pub Tenancy Support; Compliance Audit; Event Profit and Control​

Email: radhvevrf@iraaref.pb.hx​

Phone: 01279 620 820

Website: www.venners.com​