The £1,300 Sitting on Your Shelf, Gathering Dust
You could have £1,300 of your own cash sitting on a shelf right now, gathering dust. That figure came from one calculation, run on one bar. Try it on your own numbers, you might not like what you find.
Part One of this series covered how a variance report gets built, Part Two covered what normal looks like category by category, and Part Three covered where spirits and post-mix actually go wrong. This last part looks at two things that pull all of that together: how much cash is genuinely tied up in stock sitting on your shelves, and the number everything else in this series has really been building towards, GP.
Stockholding: Two Ways To Look At It
Look at stockholding two ways. The actual value sitting in stock, and how many days that value represents in terms of usage.
There's a real, direct correlation between sites with healthy stockholding figures, under 14 days for liquor, and sites that are generally well run. Keeping stockholding under that level takes active thought. Someone has to be thinking about how much stock they're carrying, how much they're actually using, and how much they'll need for the week ahead. If someone's on top of that, they're usually on top of their numbers everywhere else too.
Here's How That £1,300 Actually Gets Calculated
Bar doing £10,000 net a week
Using £2,850 in stock, at cost, to generate that - A GP of 71.5%
Stockholding sitting at £7,000
Daily usage at cost: £2,850 ÷ 7 = £407.14 a day
Days stockholding: £7,000 ÷ £407.14 = 17.2 days
Target is 14 days or below, at £407.14/day, that's £5,700
That's £1,300 sitting on a shelf instead of sitting in your bank account
Try that same calculation for every product on site, not just the bar as a whole.
It'll show you exactly where the cash is actually tied up, product by product, rather than just knowing the overall figure's too high without knowing why.
A high stockholding-days figure should stand out on a report immediately, like a sore thumb. Hone in on whatever's driving it. Those are almost always the items that don't sell well and that there's too much of sitting around. The action from there is straightforward: shift the stock before it goes off.
Functions get used as an excuse for high stockholding more often than they actually explain it. A wedding or a big event does genuinely push stockholding up for a period, that's real. But functions are plannable in a way random demand isn't, you know roughly what's needed in advance. Order properly around that known demand, and stockholding should still land at a reasonable level once the event's accounted for. If it doesn't, the function isn't the reason, the ordering is.
GP: Where Everything Comes Together
Everything in this series has been building towards this one number, because it's the figure that ultimately lands on your P&L.
Your variance report ties straight into your theoretical GP. Put simply, your cost variance is the stock that's missing, it's the gap between your actual GP and your theoretical GP.
For GP itself, look at your theoretical first. That figure is basically telling you what margin you'd be achieving if your stock came in exactly on the button, no overpouring, no waste, no loss, nothing going missing anywhere.
If the theoretical GP itself isn't where it needs to be, that's not a stock control problem, it's a pricing or offering problem. No amount of tightening up dispensing fixes a menu or drinks list that was never priced to hit the right margin in the first place. Look at your individual product GPs shown against line on your stock report to see exactly which items are dragging the overall figure down.
Where an individual product's GP is poor, there are really only three options:
Buy it cheaper - Sell it dearer - Or drop it.
Either the purchase price needs renegotiating down, the selling price needs to go up, or, if neither of those is realistic, the product needs removing from the offering altogether.
On diagnosing a real gap between actual and theoretical: if liquor GP is running more than 2 to 3 percentage points below budget, start with dispensing controls and EPOS mapping before assuming theft. In practice, operational errors, the kind covered across this whole series, account for a large share of GP loss, and they're usually far easier to fix than theft is to prove.
Where All Four Parts Land
Your overall GP is simply the combined result of every product you sell, plus the impact of every surplus and deficiency along the way. Stopping the flow of cash out the door through poor dispense, wastage, theft, and short deliveries is what brings GP back to where it should be. Looseness around any one of those opens the front door wide for your cash to escape.
That's the whole series in one line. A variance report is only as good as the till discipline behind it. Normal is a different number for every product, and every one of those numbers has a physical reason behind it. Spirits and post-mix fail for the same handful of causes, over and over. And every single one of those numbers, good or bad, rolls up into the one figure that actually matters.
Stock doesn't go missing by magic. Every variance has a cause, and once you understand the cause, you can usually fix the problem.
I'm David Holden. I've spent 30 years working across hospitality audit and operations, helping hotels, pubs, restaurants and bars identify where profit is being lost and put practical controls in place to stop it.
Everything in this series comes back to one principle: know what normal looks like, then investigate anything that isn't. When you understand the numbers, profit leakage stops being a mystery and becomes a problem you can solve. If you'd like an independent review of your stock controls, GP performance and operational processes, then click the link.
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