There is a common misconception amongst pubgoers in that it is generally thought that a publican gets an allowance for wasteage from the brewer. Nothing could be further from the truth for the majority of publicans, as the bulk of licencees in the UK are now self-employed businessmen and women who simply purchase produce from their suppliers. Any wasteage incurred is down to the publican – and this can represent a considerable loss of revenue. A publican will get a Credit Note when there is a fault with the product on delivery and occasionally he/she may get a credit from a brewery technical services engineer who has had to waste beer on his visit.

In the case of real ales, it is advisable for a licencee to routinely dip barrels as soon as they are spiled, as occasionally barrels are underfilled in error. I can recall dipping one particular 36 gallon barrel of ale that I found to contain just 20 gallons.

It is my opinion that a monthly stocktake of all products on sale in a pub is absolutely essential. Firstly, it tells the publican exactly how much gross profit he/she is making each week. Secondly, it evaluates ‘shrinkage’ – which is the difference between the total retail value of all of the produce that has gone out of the cellar and the figure that has actually been taken. Modern pub tills are especially useful in tracking wasteage, as a printout of individual sales of all products can be obtained at the time of a stocktake, thereby allowing the publican to calculate wasteage on each and every product – assuming that each product has a button on the till.

Common causes of ‘shrinkage’ are : short deliveries from suppliers (signed for by the publican without checking properly) ; excess wasteage of beer at the bar ; theft of cash and/or stock by employees ; beer given away to customers, etc.

Although a professionally qualified stocktaker can be employed, it is relatively straightforward for a publican to do his/her own stocks with the aid of a computer spreadsheet program. Each month I have a printout which details such information as : Average weekly takings ex VAT ; weekly profit ; cost of sales ; Gross Profit ex VAT ; percentage deficiency ; actual weekly deficiency in monetary terms. At the end of my financial year, my end-of-year stocktake gives me my ‘stock at cost’ figure, which is required by my accountants.

It is perhaps interesting to note that in the case of my own pub, nearly all of the wasteage is down to the real ales. There is comparatively little wasteage for lagers, smoothflow products, spirits, soft drinks, confectionary, etc. It is a fact that most pubs work on a lower margin for their real ales than they get on their lagers, so it would appear on the face of it that real ales are a bit of a dead loss ! However, a pub that keeps an excellent pint of real ale should get more customers over the doorstep, all things being equal.

A stocktaking program also tells a publican his profit margin on every product on sale. This feature is especially useful when a publican is faced with a price increase from a supplier, as it is imperative that he is able to quickly work out the new selling prices that will maintain his profit margin, taking VAT into account. For example, if a publican is paying £200 net for a barrel of ale (36 gallons) and he is faced with a 3.5p a pint increase from his supplier, which would be £10 on a barrel – if he were initially charging £1.90 a pint for the ale he/she would have to increase the price to £2 a pint to maintain the same margin.

It is interesting to note that while a publican is legally bound to sell all of his draught products in Imperial pints, his suppliers are legally bound to sell to him in metric ! This is as idiotic as purchasing litres of petroleum in amounts that always seem to end in 0.9 of a penny – which does not actually exist in our legal currency. Some brewers get round the metric anomaly by stating on their invoices that they are supplying 11, 22, 36, etc. without actually stating what these are units of, when in reality they are gallons.

It is the opinion of the writer that as 500ml is not that much short of an Imperial pint that we should have gone metric long ago … and the cusomers would, in theory, pay a little less for a metric ‘pint’ at time of the switch. No doubt when we eventually do switch to metric in pubs, there will be some profiteering done by some in the retail sector !
Hugh Price owns the Tynemouth Lodge Hotel and is a Fellow of the British Institute of Innkeeping.