Every hospitality operator knows that good stock control is vital, but even when reports arrive on time and look complete, the real issues can sit quietly between the lines. A few overlooked numbers, a mis-keyed code, or a sudden GP% drop can all signal problems that, left unchecked, eat straight into profit.
The truth is: stock reports don’t just show what you sold – they show what’s missing. The key is knowing what to look for.
At Capcon, we’ve reviewed thousands of reports across pubs, hotels, bars, and catering venues. And time and again, the same warning signs appear – often small enough to go unnoticed until they become expensive.
Here are five red flags in stock reports you should never ignore:
1. Sudden GP% Drop Without Explanation
When your gross profit percentage falls, your first instinct might be to blame external costs – supplier increases, rising utilities, or changing consumer habits. But more often, a sharp drop signals something else: leakage.
Possible causes include:
- Overpouring or generous measures on high-value lines
- Incorrect pricing or EPOS coding errors
- Staff meals and drinks not recorded correctly
- Wastage not captured accurately
To clarify, unrecorded wastage is not itself the cause of the drop — rather, it conceals the true extent of product loss. The missing stock still impacts GP%, but without proper wastage tracking, the root cause remains hidden.
What to do:
Track the variance by category – draught, spirits, food – to identify where the loss is coming from. Then match this against till data and physical counts. If one area’s performance suddenly shifts while others remain stable, it’s a sign the issue is operational, not economic.
As Capcon’s MD, Marcus Jones, explains:
“Every variance has a story. The trick is to find out what changed since last time – process, people, or pricing – and fix it before it repeats.”
2. Repeated Negative Variances on the Same Lines
When the same product consistently underperforms across multiple audits, it’s not a coincidence, it’s a pattern.
This often points to weak stock management at line level. Maybe a product is stored in multiple locations, or partial kegs aren’t being recorded properly. Sometimes it’s as simple as a forgotten recipe update in the system.
In many cases, these recurring negative variances stem from poor stock storage, where items are misplaced, left open, or stored in unsuitable conditions that lead to spoilage or wastage. Equally, malfunctioning equipment, such as poorly calibrated beer lines, leaking cellar systems, or faulty spirit measures, can cause consistent losses that remain hidden until they appear as a trend in audit data. Another common cause is incorrect or outdated recipes being used, meaning sites are serving portions larger or smaller than planned, leading to inaccurate yield calculations and unbalanced GPs.
Why it matters:
Repeated small variances are silent profit killers. One bottle here, one pint there – across dozens of SKUs and multiple sites, they can equate to thousands in lost GP every quarter.
What to do:
Look beyond the number – identify the why. Use consistent, data-led auditing to track whether corrective actions (like improved training or equipment checks) are actually working.
3. Mismatched Cost and Selling Prices
If your stock report shows static or inconsistent cost prices, it’s time to dig deeper.
Supplier pricing changes frequently, and outdated costs can make your GP figures appear stronger (or weaker) than reality.
Similarly, if your selling prices in the audit system don’t match the prices in your EPOS, your theoretical GP% will be inaccurate, masking the true picture.
The impact:
This can distort everything from ordering volumes to menu engineering, leaving you with misleading performance data.
What to do:
- Review and reconcile cost and retail prices monthly.
- Integrate purchasing data directly into your stock system where possible.
- Use systems like Nifty19, which automatically updates pricing information to keep GP% accurate timeously.
As Nick Gay from Capcon notes:
“You can’t manage what you’re measuring if the measurements are wrong. Keeping your data current is just as important as keeping your fridge cold.”
4. Overly Positive Results with No Supporting Data
Sometimes, the red flag is actually a green one – when results look too good to be true.
If your GP% suddenly spikes upwards or stock variances vanish overnight, that’s not necessarily cause for celebration.
A sudden improvement in performance can point to missing delivery information, where goods received haven’t yet been entered into the stock system. Without those costs recorded, margins appear stronger than they really are. Similarly, incorrectly coded revenue, such as sales recorded under the wrong department or event, can make one area look more profitable while hiding a shortfall elsewhere.
In some cases, a “too-good-to-be-true” result may be masking a deficit in another category. For example, a surplus from function wines, where guests haven’t used their full allocation, can artificially offset missing or unaccounted stock in draught, spirits, or food lines. On paper, the figures balance, but operationally, one category’s overage is concealing another’s loss. Without cross-checking supporting data such as delivery notes, function sheets, and departmental breakdowns, these imbalances can go unnoticed.
Why this matters:
An inflated GP may give the illusion of control, masking issues until they reappear later at greater scale.
What to do:
Always verify good news. Ask your auditor or manager to walk through what’s changed since the last report and confirm that all data inputs – deliveries, returns, and transfers – are accurate and complete.
5. Slow Reporting and Ignored Actions
Even accurate reports lose their value if they arrive too late—or if no one acts on them. A variance discovered three weeks after the fact is a missed opportunity. But more damaging still are the reports that are read and filed away, with the same recommendations appearing month after month.
As Steven Willey notes:
“The biggest issue isn’t always what’s in the report – it’s when venues do nothing with it. The same actions reappear month after month because they’re ignored the first, second, and third time.”
Why it matters:
Delayed reporting or inaction compounds losses. By the time an issue is noticed again, it may already have eroded weeks of profit.
What to do:
Real-time systems like Nifty19 give you the data on the day of the stocktake, allowing you to act immediately. More importantly, make reviewing and acting on those insights a non-negotiable part of site management.
Turning Red Flags into Results
Spotting problems is only step one. The real value lies in how you respond.
- Audit consistency: Regular, independent stocktakes provide the foundation for reliable data.
- Team accountability: Share results with site teams and use them as training tools, not punishments.
- Continuous review: Benchmark performance and track the impact of every operational change.
When auditing becomes part of your management rhythm, red flags turn into opportunities for improvement – and every month, your GP% gets a little stronger.
The Capcon Approach
At Capcon, we combine human expertise with digital tools to turn data into action. Our Nifty19 platform gives operators real-time visibility, so reports become roadmaps for improvement – not just paperwork.
From independent pubs to multi-site operators, our audits highlight the red flags that matter and provide the insights to fix them fast.
Because in hospitality, you don’t just need the numbers – you need to know what they’re telling you.
Find out how Capcon can help protect your margins and improve your GP%.
Visit nifty19.com or contact the Capcon team at [email protected]
