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All businesses that deal with physical products have to keep tabs on their stock levels. The hospitality industry makes up 3.7% of all UK businesses and is known to be a fast paced and highly pressured environment to work in.
Customers expect great service and hospitality staff need to have menu items available at any time, so they can satisfy the orders that they take. Not having the correct number of products in stock will have an impact on customer satisfaction and increase workplace stress.
It is very important to know exactly what stock you have in so you do not run out of anything during busy periods, are not creating any excessive wastage and are maximising your profits at all times. Regular, accurate stocktaking will help to ensure that service runs smoothly, orders are fulfilled and everyone has the tools they require to do their job.
What is stocktaking?
Stocktaking is a process where you count, check and record the stock levels that you have in. It is vital for managers to know what stock they have on the premises, the condition of it and any items that are running low so they can order the correct items to be used.
The way a stocktake is done varies between businesses. Often, it involves physically counting products and marking the stock levels onto a piece of paper or entering them into a spreadsheet or table on a computer.
Some businesses use stock control or stock management software. Using software can produce instant results and help to improve a business’s profit margins as they can quickly and easily monitor profit/loss levels and track the performance of their venue.
Using software for stocktaking can be especially helpful in identifying any problems within your supply chain and is significantly easier than trying to check items on shelves against each delivery note, particularly if you have multiple suppliers.
As a manager in the hospitality industry, you may not have the time to perform a stocktake of every department, especially if the scope of your operation is large or over multiple locations. You may ask your trusted HODs to do a stocktake in their respected departments periodically and email you the results for you to then consolidate in a monthly or quarterly report.
In this instance, it may be wise to undertake spot checks so you can assess whether the results of these stocktakes are being reported accurately to you.
Whether you are delegating the task of stocktaking or doing the task yourself, try to:
- Schedule the stocktake at a sensible time, for example a quiet day and not at the end of a busy shift when staff are tired or stressed.
- Make sure stockrooms are clean and tidy and products are easily accessible – this will make it quicker, easier and safer to count everything accurately.
- Have all the tools you require on hand such as clipboard, pen, stock sheet and calculator for a manual check. Scanners or tablets/mobile devices for an electronic check.
- Make sure the inventory list you are using is current and up to date.
- Use the correct price lists to value your stock – check them regularly as they might change.
- Be organised and check that any staff who are assisting understand their roles and responsibilities.
The purpose of stocktaking
For most hospitality businesses, the main goal of stocktaking (or inventory control as it is sometimes known) is to create maximum profit from the lowest investment in products, whilst keeping their customers (and staff) happy.
Accurate stocktaking can help with:
- Profit/loss calculations.
- Identifying popular items or those that are not selling and may need replacing/discontinuing.
- Calculating wastage/breakages.
- Preventing or spotting thefts.
- Checking sell-by dates.
- Seeing how efficiently staff are using products.
- Ensuring products are used appropriately.
- Identifying any supply chain issues/problems with quality control.
Once you have completed your stocktake and are checking the information against your previous records and other paperwork, you may find discrepancies; although this could identify a problem such as theft or breakage, it may be down to miscounting, mislabelling or stock being stored in the wrong place. Any missing or unexpected stock items should be highlighted by a thorough stocktake; you will then be able to investigate further.
Types of stocktaking
Stocktaking can be done manually, by hand, or electronically, using different types of software.
Stocktaking by hand usually involves using printed sheets with lists of products on that you count and then write down the corresponding amounts on the list.
Once you have finished filling in the paperwork, some managers like to transfer the data to a spreadsheet using a program such as Excel. This is a tried and tested method that has worked for businesses for decades, though it is time consuming and leaves room for human error.
In a small business, using a manual method may be an efficient way to perform a stocktake, but in a larger organisation, especially one that requires communication across a number of departments, an automated software package can help to save time and increase accuracy.
Stock control software is becoming increasingly popular as more businesses begin to automate parts of their day-to-day running.
There are many different types of stock control and stock management software available. Some are more suited to the hospitality business than others. You can compare the performance of 315 different brands of inventory management software and read user reviews.
Other points to consider to help you in choosing the right software for your hospitality business include:
- Size of business – You will require a software that matches how big the company is and in how many locations it operates. There is no point purchasing something that doesn’t fit your needs or overcomplicates matters.
- Technical knowledge – Try to select a software that is easy to use and with good customer support, especially if you know some of the end-users are not tech savvy.
- Software needs – Some software will just perform stocktakes that check the stock levels. Larger businesses may need something that offers greater capabilities and communication, such as supply chain management or in-depth reports.
- Cloud based systems – These are a great choice for smaller businesses which don’t have a dedicated IT department, and they usually require less up-front costs and can be implemented fairly quickly.
- Apps/mobile functions – It is now possible to get stock control apps on mobile devices such as smartphones or tablets. This can be helpful in the hospitality industry where time can be of the essence and stock may be stored in multiple parts of the building for different departments such as the bar, restaurant, housekeeping, linen store etc.
As well as giving instant results regarding current stock levels, sales, profits and losses, another benefit of using a stock control software is its forecasting capabilities. Although it is possible to make forecasts without being a software user, technology makes it easier and less time consuming (and is likely to be more accurate).
To make forecasts it is necessary to understand current market trends, the figures for your sales for the same time period the previous year, upcoming events and current promotions and this year’s growth rate.
It would also be helpful to think about your budget for marketing and advertising. Having accurate forecasts and being able to predict demand will complement your precise stocktaking and can improve stock control.
Different kinds of stocktaking may require different levels of accuracy; for example, during some stocktakes the number of items may just be estimated, whilst other times items may need to be counted exactly and even weighed.
Some examples of items that are vital in the hospitality industry that will need to be counted, checked and replenished as required:
- Food and drink items from the menu, including fresh, dried and frozen products.
- Cleaning products and cloths.
- Linen and towels in accommodation providers.
- Soaps, sanitisers and toilet roll.
If stock of these items becomes dangerously low or runs out, it will have an impact on the business which could range from being a minor inconvenience to a serious incident. For example, a bar that runs out of their best-selling wine may have some disappointed customers, but if staff handle it well it should not be too much of an issue.
If they have great upselling skills it could even result in increased profits. However, imagine a hotel that runs out of sheets – they will have to turn their guests away as they cannot check anyone into rooms that do not have the beds made up. This will lead to financial losses, poor reviews and potentially damage the reputation of the business.
Other items, such as cleaning products and toilet roll, are vital from a health and hygiene perspective. Operating a hospitality business without these items is simply not viable.
Some items of stock will need to be checked more regularly than others. Most businesses will perform stocktakes at regular intervals, either weekly or monthly. The type of hospitality business that you manage and how busy it is and the size of the operation might inform how exactly you do your stocktakes. Items such a fresh food need to be checked and replaced more often than non-perishables. In busy hotels, linen needs to be counted and ordered regularly, probably at least twice a week. In a small B&B, there might be enough stock on the shelves to last a month, depending on the storage space available.
The stock levels of some items in bars, hotels and restaurants are more likely to stay consistent, for example crockery, vacuum cleaners, mop buckets, trollies, hairdryers and cots – these will most likely only need to be counted once or twice a year. Food/beverage items, cleaning supplies and linen will need to be checked and refreshed far more frequently.
Advantages of stocktaking
Stocktaking well can help to ensure accurate orders are made and items do not become unavailable during busy times and customers are not disappointed. It also helps with staff morale as employees feel confident that items that they require will be available to them.
It can also help to keep stock at sensible levels so they do not build up which can lead to problems with storage and poor housekeeping. When the amount of stock that is kept in-house is proportionate to what is being used/likely to be used, it is easier to store and back of house areas can be kept organised and tidy. Knowing exactly where to locate items and finding them arranged neatly on shelves and in cupboards, helps staff to be more organised, efficient and less stressed.
Having sensible levels of stock that can be stored neatly in the correct areas also helps to ensure compliance with health and safety and fire safety.
Assessing your stock regularly will help to identify trends which can help you to see what items get used more regularly and what ones do not. You may realise from checking stock levels that you need a rethink on some menu items and this can help to keep offerings fresh and relevant.
Stocktaking can also help you as a manager to check that staff are using products efficiently and appropriately. For example, if you are counting duvet covers in the linen store and you see only four are left on the shelves but you know you had fifty delivered and only ten rooms were checkouts, you would question your staff about where the rest are.
They may tell you that they had a lot of rejections, where stock was not up to a useable standard, therefore you can bring this up with your linen supplier and request a refund for these items. If you had not done a stocktake this could have gone unnoticed and this would have wasted money.
Similarly, if you find a large amount of drink items have remained in the cellar since your last stocktake, it may be that your bar staff are not stocking the fridge properly or failing to advertise certain items well. Regular stocktakes might also help you to identify when you have had your best salespeople on shift or those that need some support or retraining.
Poor or irregular stocktaking can result in:
- Over-ordering or under-ordering of products.
- A hectic working environment.
- A stressed workforce.
- Unhappy customers.
- Disorganised storage areas.
- Health and safety concerns.
- Excessive wastage.
- Negative impact on profits.
Food wastage is a big problem in the UK hospitality industry with restaurants contributing around 200,000 tonnes of waste food each year, at an estimated cost of £682 million. Charities like WRAP are working with the hospitality and food service sectors to try to reduce this figure. By doing a regular, thorough stocktake you can help the business that you manage not only to be more profitable, but also less wasteful.
Too much stock, or the wrong stock, means items are inevitably thrown away; there is also the issue of the disposal of packaging (particularly plastic), and unnecessary deliveries mean a higher carbon footprint. By committing to reduce waste, hospitality businesses can work towards a more sustainable future for the industry.
By implementing effective methods for stocktaking in your hospitality business you are helping to maximise profits, mitigate losses and ensure the efficient running of day-to-day operations.
There has never been a more challenging time to be a manager in the hospitality industry. You can see our knowledge base for general advice on looking after your mental health in hospitality.