Stock issues

Stock Reports And Stock Selection

It is important for all clubs to be aware of the importance of accurate and regular stocktakes. If there is a problem with the bar takings or bar products then it is a stocktake that will bring any discrepancies to light. Many clubs seem to believe that the objective of having a stocktake is to reveal to the committee whether the steward has provided a surplus or a deficit. However, experience has shown us that there is far more in the stock report of importance and it needs much closer scrutiny.

The Committee must consider the current allowances for line cleaning allowances, are the allowances reasonable or do they need to be increased or decreased. Fewer fonts will result in fewer allowances whilst more fonts will result in increased allowances. The Committee should be aware of waste figures and to make sure that the level of waste claims are acceptable and that they have been properly authorised by the relevant person.

The level of the stock being held by the club should also be considered. Since most suppliers provide weekly deliveries, then the amount of stock held should not be greater than seven average days sales and increased only for special occasions and events (New Year’s Eve for example).

Clubs should seek to obtain a gross profit percentage for bar sales which is at least 52% – 56%, the average achieved for S Wales clubs, with an adequate return being made on each product sold. Without this level of return, any club will find it difficult to turn a profit. If the gross profit is more or less than 52% – 56% then the Committee will have to consider the reasons for this and if changes need to be made to the pricing structure. The Committee should also periodically review the products which are sold in the club. What lines derive the most profits and should therefore be exploited, can the number of products be increased or reduced and are there any current trends which the club is not following (seasonal beverages in the winter for example) which may have a greater gross profit margin than other products.

The club should also review the product range, the percentage of each product which is being sold and make sure that you are not missing out on any major product areas. It is therefore important to compare your sales breakdown to the average mix in your own area, a great deal of information can be gained by reviewing the product mix. The average for S Wales clubs is:

Category Average
Draught 67.9%
Spirit 13.0%
Bottles/Cans 10.1%
Mins./Cordial 6.5%
Wine 1.6%
Snacks 0.3%
Other 0.6%
TOTAL 100.0%

The above chart can be used to help pinpoint any specific products which are under represented by the club. For example, with the new range of products on the market spirit sales are increasing, if the club’s spirit percentage is low is it due to:

  • Membership – male only club with no entertainment.
  • Steward selling own stock, in which case a computerised tilling system should be recommended.
  • Members bringing in their own spirits, in which case the committee and members need to be more vigilant.
  • Are members happy with the offerings in the spirit and bottles categories.

Bottles and can sales have increased significantly in recent years which can have both positive and negative consequences for clubs. Clubs should not try to stock cans and bottles which directly compete with and cannibalise their draught sales and also, in some instances, provide a smaller profit margin per sale. Bottles which attract a premium price or offer experiences not available through draught products should be considered as they will hopefully complement the club’s existing draught offering. Innovations within this category such as beer with tequila or flavoured ciders can prove key profit drivers. Stocking new products can help differentiate the club from the off trade and other local pubs and clubs. Bottles, spirits and wine are also attractive to female consumers who may not wish to drink pints and also go well with food offerings.

Clubs should not be afraid to trial new products but equally unafraid to remove products which are not proving cost effective. The club’s bar space and fridge space are premium areas and the products stocked should maximise the revenue which can be created by these areas. Clubs can make drinking a premium experience by increasing the number of Premium Spirits and World Lagers stocked with corresponding higher price points. This is known as ‘trading up’ and can be popular with the right products coupled with the right price points. People like experimenting and discovering new concepts and favours and clubs should make sure that their drink offering represents something different to products which are easily obtained in the supermarket or in other local licensed establishments.

For almost all clubs mainstream beer, lager and cider are still the most important product drivers but even mainstream products have to be served and presented to give the impression of value for money. 44% of all beer and 27% of cider is still consumed in licensed establishments but a premium experience should be offered to differentiate the experience from home.