Recognising & Rectifying Shrinkage In Your Business

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Shrinkage in hospitality is an allowance made for reduction in the takins of a business due to wastage, over-pouring, breakages and theft.

Losses can be damaging in any business so it’s vital that you have systems in place to identify, recognise and rectify these issues quickly before they become detrimental to your business.

We have identified some of the areas to help you reduce your risk of shrinkage.

Loss of Stock

The opportunity to lose money here can be huge. Over-pouring drinks, spillages, under-ringing, or overly-friendly bartenders who give away drinks in the hopes of enticing bigger tips from grateful customers are some of the many ways you can lose stock within your business. Weekly stock takes on the same day and at the same time quickly identify these ‘small problems’ allowing you tighten up and bring your losses back in line.


No business owner wants to think that someone within the business cannot be trusted but employee theft is more common than you think.

Let staff see that stock management is taken seriously. When they know it is important then they will work to ensure variances are minimised. To reduce the risk of cash theft conduct ‘spot check’s mid shift and swap the cash drawer to check randomly the cash totals to keep staff on their toes.

Don’t allow staff members to keep their coats and bags ‘behind the bar’ to reduce the temptation to pocket some cash and always ensure a manager watches the staff leave at the end of the evening, not taking any of your stock with them after their shift.

Ordering Error

When on a busy shift it is easy to ‘forget’ to make a drink order, to add a round of drinks for a table onto the bill or for the kitchen to make an incorrect dish that needs replacing quickly.  The priority for your business must be to implement strong procedures and ensure everything is always logged.  If you can’t measure it, you can’t manage it!

Allow staff drinks and promotional items for guests to be given away by a manager, as it’s a nice touch but ensure it’s always imputed in your EPoS system.

When a stock order arrives ensure the duty manager checks it off against the packing slip this should be followed through to the invoice stage and all discrepancies reported.


Ensure that all wastage is measured, at the beginning or end of a barrel of beer be sure you measure the amount of ‘waste’ you lose every time! Any items that have perished or damaged should be logged on your EPoS system, so you can analyse your overall stock wastage to ensure you’re not over-ordering on particular items.


How GS can help

GS work with you to really understand your business. We identify your wants and needs and have vast experience within the hospitality industry so that we can tailor our solutions accordingly. Over the years we have helped many businesses combat shrinkage by utilising both EPOS and procedures and in turn gauge a healthy shrinkage rate. A healthy average shrinkage rate is around about 16%, anything lower is great!

Cash & Stock Control

Track each sale against what should have been exchanged for cash. Through this method, you are able to quickly identify and reconcile problems daily.


Cards & E-Payments

Protect from cash losses by implementing a “Cards & E-Payments” solution. All transactions are secure and carried straight through to the bank, minimising the amount of cash left on the premises.


Staff Rotas

Accountability is key to managing your losses. With staff rotas, you are able to make your staff fully accountable during their shifts. This serves not only as an incentive to carry out procedures properly and efficiently but also diminishes any possibility of theft.


Recipe Management & Costing

Ensure consistency in meals and ingredient costs by monitoring both the price of ingredients and the correct quantities to use for each recipe. This not only improves your customer experience, but it ensures that your stock levels are all as they should be, and your supplier costs are correct.


Reports & Analytics

Real-time reporting offers an insight into what exactly has been taken and what for. This helps managers identify small problems before they spiral out of control.