The Spike Pub & Liquor Store - ABLE BC

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WOULD YOU CALL THIS THEFT by Ian Foster and Peter Nelson An industry that loses 20% of sales to “shrinkage” needs to confront theft problems head-on instead of avoiding the subject altogether. Theft is pretty clear. It is taking someone else’s property without permission. In the hospitality industry, however, the definition of theft seems to depend on who is doing the defining! Is it theft to over-pour in order to get a better tip What about over-pouring for visiting staff from other restaurants and bars, or giving them a free drink What about having a staff drink after close on an exceptionally busy night What about keeping any overages when counting the cash at the end of the night Use of “open keys” on the POS system to save time We seem to be afraid to talk about this problem. Most operators refuse to believe that their staff would steal. Yet we know that virtually every bar gives up more than 20% of their sales to illicit freebies, over-pouring, and, yes, theft. That fact alone suggests that a bar owner who doesn’t acknowledge a significant amount of theft is ignoring reality - and making a lot less money as a result. Part of the problem is that managers have been promoted from the same team they are now meant to supervise: in most establishments the staff and managers are all friends and socialize together. Moreover, most managers find it pretty difficult to discipline staff for doing something that the managers themselves used to do, before their promotion. Finally, unless the manager’s compensation is tied directly to alcohol losses, the manager has little, if any, motivation to “rock the boat” by vigilantly safeguarding the alcohol. Another contributing factor, like it or not, is that many owners often send the wrong message. This happens when the owner takes alcohol home from the bar or borrows $100 from the register. It happens when the owner takes a bottle of water or gives away a drink without having the bartender ring it up. Obviously, being the owner, you aren’t stealing, but you are sending the wrong message to your staff. And, just like children, bartenders and servers pay more attention to your example than your policies. However, the biggest reason that theft is ubiquitous is that most owners don’t think their staff would steal and they don’t have the data to know it is happening. Most operators take a quick look at their pour cost to determine how their bar is performing. If it is not out-of-line they think everything is fine. But “out-of-line” simply means comparing it with previous month’s costs. What they don’t consider is the possibility that their bar has been plagued with theft and over-pouring problems all along - and that their pour cost should always have been two or three points lower than it has been. The holy grail is establishing a culture of honesty in your establishment. Dishonesty is contagious, but if employees know that their colleagues are honest, because the alcohol is regularly audited and compared to sales, they will buy into the culture of honesty and accountability. Ian Foster is with Bevinco and their analysts are dedicated to improving their clients’ profitability. Call 1-888-Bevinco for more information. Peter Nelson is the Managing Director for Bevinco New Zealand. He can be reached at peter.nelson@bevinco.co.nz. Theft Prevention Checklist Acceptance - The industry attitude of adding employee theft losses into the operating cost of running the bar must stop. Our industry has losses far higher than any other industry, and yet they are accepted as a cost of doing business. Acceptance of internal theft as an operations cost is crazy. Stop making excuses and stamp it out! Written Policy - Employees must have a clear and written policy within their manuals relating to employee theft. This policy must be set in stone and followed to the letter. Don’t be afraid to use words like “terminated,” “arrested, “or “prosecuted”. Criminal Background Checks - These are inexpensive and have the potential to save you thousands of dollars. Cameras - Catch them in the act and, most importantly, have the evidence on tape. POS System - A good POS system will detail every drink sold and give you a full record. If you aren’t able to track sales properly, a determined thief will know that and have a field day. Independent Audits - Employ a professional independent audit company to carry out weekly alcohol audits. Correctly and independently done, these will show just where and to what extent losses are occurring and expert advice on eliminating losses. Incentives - Management compensation should be tied closely to alcohol losses. Bonus your managers based on how close their pour cost matches their ideal pour cost. Zero Tolerance - If an employee is caught stealing, owners must have a set plan and be ready to stick to it. Have this zero tolerance policy written for employees to read. Have the policy outline steps for management to follow. Prosecute - If you have the evidence, then get the police involved. If the person has a conviction, then any future employer can see that and be warned. We have an industry that has two temptations for any dishonest person - cash and alcohol. Don’t be one of the operators that discovers he has a problem when he has already lost thousands of dollars. Be proactive and prevent the problem. 28 The Publican 28 The Publican
Liquor Policy and Business Review by Dennis P. Coates Maximizing LRS Values and Bankability The separation of LRS and LP licenses in December has created great opportunities to maximize LRS values and make them more bankable. It is essential that Third Party Use Agreeements, as they relate to LRSs, be replaced with a transfer of the LRS license. If both licenses are operated by the same company, one should be transferred into a new company. The accountants need to be involved to deal with valuation, capital gains, and timing. Subleases, where they exist in connection with the LRS Third Party Use agreement, should be replaced by head leases. The intent is that all aspects of the two operations should be entirely separate, including bank accounts, employees and all contractual obligations or guarantees. Banking should be separated out for the two entities. “… all aspects of the two operations should be entirely separate…” These steps will ensure that when one of the businesses is sold, family, estate, or tax planning and management can be done with fewer complications. It may take one or two fiscal year-ends to accomplish all the steps, but the benefits are there to be had. The valuation of the two entities continues to be an inexact science. The multiples of net income for valuation will fluctuate based on geographical location, level of gross income, competition from either public or private stores, margins, and trends. There are many examples of liquor store pricing in certain municipalities that result in low income levels and increased expenses, which again affects the valuation formula. The current trend seems to be that LP operations with a high dependence on food attract less interest from buyers and banks, and as a result, don’t sell at a multiplier much more than three to four times net income. Licensing Audits It is recommended that every year a checklist of items be reviewed to ensure that issues don't arise that could affect your license and your business. The matters that should be on the list include license renewal, ensuring that any ownership changes have been reported to the LCLB, checking that any facility changes have been reported to the LCLB, reviewing employee contracts and details including WCB matters, ensuring that staff training and notification systems are reviewed and updated, and noting that matters such as incident logs are standardized. Third Party Use Agreements The separation of LP and LRS licenses has eliminated the necessity of Third Party Use Agreements to a great extent. As a result of a legal dispute involving some of the Liquor Depot Stores, there is currently a cloud of uncertainty over the agreements that are used. The issue is the meaning of the term “business”. The Act requires that a licensee must be fit and proper, have an interest in the property or premises by way of lease or ownership, and own the business. Another section anticipates allowing someone to use your license as long as the arrangement is approved by the Branch. In the past, this has been interpreted as meaning that the licensee would retain the interest in the property and retain ownership of the license. There is currently uncertainty over what else must be retained, or what kinds of financial arrangements are acceptable. It may be the safe course of action to submit the actual agreement to the Branch for their approval. The Publican 29
Page 1 and 2: the Publican The Alliance of Bevera
Page 3 and 4: On the Cover The Spike Pub & Liquor
Page 5 and 6: Executive Director's Report by Kim
Page 7 and 8: BC HOSPITALITY & Conference INDUSTR
Page 9 and 10: open at night, right That means you
Page 11 and 12: Digital Signage by Best Buy Take yo
Page 13 and 14: Human Resources by go2 Getting New
Page 15 and 16: When retail guru Robert Spector sha
Page 17 and 18: Cultivate the Purchase Experience E
Page 19 and 20: PERIOD 02 SALES - UNAUDITED Sales f
Page 21 and 22: " Superior food service in pubs is
Page 23 and 24: Controlling food cost has never bee
Page 25 and 26: What's New by Debbie Minke RTDs Can
Page 27: your operation and the community, a
Page 31 and 32: TECH TRENDS What’s Out There, Wha
Page 33 and 34: In addition to Irish cream liqueurs
Page 35 and 36: Personal Best - Record the highest
Page 37 and 38: Marketplace Advertisers the Publica
Page 39: Rolling out our newest Racer! NEW!

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