In the past the typical tenant of a small pub may have been a retired serviceman with a military pension or factory worker who had invested a redundancy payment to buy and run their dream business. In both cases they expected to have a simple business they could run through into their sixties. At the time wet sales dominated and a customer in need of solid rather than liquid sustenance might be able to buy a ploughman’s lunch and a bag of crisps. There has been a large reduction in the number of wet led pubs over the last twenty years with the recent smoking ban being the final death knell for many. This has in turn resulted in more sophisticated offerings with food sales now dominating and driving the success of the remaining establishments.
Unfortunately although the businesses are now larger and more sophisticated in many cases the standard of bookkeeping would be familiar to anyone running a wet pub 50 or 60 years ago. Often cash records are hand written on a scrap of paper for the week and bundled up with any invoices and the bank statement to be sent to the accountant. The accountant then tries their best to reconcile the “paperwork” with a bank statement. Eventually a set of accounts is produced with sales split into “wet” and “dry” and a large number of suspense items due to enigmatic cash payments and missing invoices. As an outsider to the trade one might imagine that the process is designed to hide as much information as possible rather than determine the profitability of the business.
This needs to change for the following reasons:
1. Ever more complex POS/BOS systems to manage the sales, stock, staffing rotas, advance bookings etc. make it easier to produce accurate detailed accounts. This data can often be imported directly into the accountancy software.
2. “Wet” and “Dry” although still good broad measures of performance can now easily be broken down into Ales, Lagers, Ciders, Wines, Spirits, Menu, Specials etc. so that the pub operator can see exactly where their profit is coming from and optimise the offering.
3. Unless satisfactory accounts can be presented showing the performance of an establishment or across the estate it is not possible to raise finance. It is less and less likely that a retired seafarer or redundant factory worker will have a large cash investment available and the new style of operator will need to obtain a loan to invest in, and operate, their business. No accounts means no loan.
At the moment a large number of Cloud solutions are becoming available to handle all the functions of a pub-restaurant. Couple these with a Cloud accountancy package such as CV Retail’s CounterBooks and you have the perfect basis for managing a single pub or a large tenanted or franchised estate. The benefits are:
1. Initial capital expenditure is low as the most recent applications often run on a touch screen tablet (typically android of iPad) costing a few hundred pounds.
2. Monthly rentals are often less than for equivalent traditional equipment and services.
3. For the operator, they have access to up to date accurate accounts rather than waiting for weeks or months for their accountant to provide them with management reports.
4. For the estate, the head office can monitor the performance of each establishment and compare the overall performance of their territory managers.
5. Accurate transparent valuations of the financial performance allow operators to obtain loans for improvements and estates to generate funds for expansion.
6. Should a business need to be disposed of an accurate valuation will be easier to agree with any prospective buyer.