Stock discrepancies in hospitality: find the causes, value them and avoid them

The stocktake is counted, the list is closed, and still something doesn't add up: according to the till you should have ten bottles of gin in stock, but you counted eight and a half. Every venue knows these stock discrepancies. They become dangerous when nobody asks where they come from. Your cost of goods quietly creeps up, and at the end of the year all you know is that money is missing, not where it went.

In this article you'll learn what stock discrepancies are, how to calculate them for the bar and the kitchen, which causes are most common in hospitality and how to analyse them step by step. We also cover what the tax office looks at and concrete measures that make your discrepancies smaller from month to month.

1. What are stock discrepancies?

A stock discrepancy is the difference between the stock that should be there according to your records and the stock you actually count during the stocktake. Technically, this is the book stock or target stock on one side and the actual stock on the other, as described for example in Sage's guide to stock discrepancies (in German). You'll also hear the terms inventory variance or stock variance; they mean the same thing.

In hospitality, the target stock is made up of three building blocks: the stock from your last stocktake, all deliveries since then and the usage that results from your sales. Usage according to sales is called target usage. You calculate it by multiplying the dishes and drinks sold through the till by the quantities in your recipes. Whatever should be left after this calculation is your target stock. What is actually on the shelf is your actual stock.

It's important to separate this from related terms: shrinkage, breakage, spoilage and pouring loss are possible causes. The stock discrepancy is the measurable result in which all of these causes become visible together, including simple counting and booking errors. If you want to dig deeper into the individual types of loss, read Shrinkage and breakage in hospitality.

2. Calculating stock discrepancies: formula and worked example

You need three formulas. The first gives you the usage that actually took place according to the stocktake:

Actual usage = opening stock + deliveries − closing stock

The second gives you the usage that the till says should have taken place:

Target usage = quantity sold × recipe quantity

The third shows the discrepancy. You can calculate it via usage or via stock; the result is the same:

Stock discrepancy = actual stock − target stock, where target stock = opening stock + deliveries − target usage

Worked example, gin: Your bar starts the month with 8 bottles of London Dry gin at 0.7 l each. During the month, 12 bottles are delivered. The till shows 175 gin and tonics sold, and the recipe specifies 4 cl of gin per drink. Target usage is therefore 175 × 4 cl = 700 cl, i.e. 7.0 l or exactly 10 bottles. Target stock at the end of the month is 8 + 12 − 10 = 10 bottles. You counted 8.5 bottles. The stock discrepancy is −1.5 bottles. At a purchase price of 18.00 € per bottle, that's −27.00 €.

Converting this into drinks is often more revealing than the purchase value: 1.5 bottles equal 1.05 l of gin. At 4 cl per drink, that's just over 26 gin and tonics that were poured but never rung up, or disappeared in some other way. At a selling price of 9.50 €, you're missing almost 250 € in revenue, not just 27 € worth of stock.

If you do this for every item, you get a target vs. actual comparison like the one below. For the aperitif liqueur, an opening stock of 4 bottles, 6 bottles delivered and 80 drinks sold at 5 cl each give a target stock of 6 bottles; 5.5 were counted. For the prosecco, target and actual match. For the tonic water you count 42 instead of 40 bottles, a positive discrepancy of 2 bottles. Overall, the variance comes to −32.80 €.

3. The most common causes of stock discrepancies in hospitality

A discrepancy rarely has just one cause. In practice, it's almost always the same eight sources, which you can check one by one:

Counting errors during the stocktake: Open bottles estimated incorrectly, a crate in the cellar forgotten, or items counted in the wrong storage location. In bars with several hundred items, this is a frequent cause.

Missing or incorrectly recorded deliveries: A delivery was accepted but not booked, or a follow-up delivery is missing from the system. Your target stock is then too low and you suddenly see a positive discrepancy.

Errors at the till: A gin and tonic rung up as a vodka tonic, voids without a new booking, or bulk bookings on a "miscellaneous" button. The stock is gone, but booked against the wrong item.

Unrecorded give-aways: Staff drinks, invitations, tasting sips and free rounds that are never recorded anywhere.

Undocumented breakage and spoilage: The broken bottle or the expired product disappears without ending up on a breakage list.

Over-pouring and recipes that differ from practice: If the recipe says 4 cl but 5 cl ends up in the glass when free-pouring, every drink creates a small discrepancy that adds up over the month. How to quantify these losses is shown in Calculating pouring loss.

Wrong units and item assignments: A case of 6 bottles is booked as 1 bottle, or two similar items are mixed up. This typically creates a large positive discrepancy on one item and a negative one on the other.

Theft: It happens, but it belongs at the end of your checks. Before voicing any suspicion, check the other seven points first.

4. Interpreting positive and negative discrepancies correctly

A negative discrepancy means there is less stock than there should be. That's the classic case of shrinkage, over-pouring or drinks that weren't rung up, but it can also be a counting error. A positive discrepancy means there is more stock than there should be. Stock doesn't multiply by itself, so a positive figure almost always points to a booking error. Often a delivery note is missing, or an item was rung up at the till whose ingredients actually come from a different item.

That's why it pays to look beyond the total. In the example above, the plus on the tonic water offsets a small part of the minus, but the causes have nothing to do with each other. Netted discrepancies hide problems. It makes sense to evaluate per item, sorted by euro value. That way you immediately see which few items cause most of the variance.

There is no universal threshold for when a discrepancy is too high. Set your own tolerance for your business, for example a euro amount per item above which you recheck, and watch how your figures develop from stocktake to stocktake. A small, stable discrepancy is a different signal from an item that suddenly goes missing every month.

5. Analysing stock discrepancies: how to proceed

If a discrepancy is above your tolerance, a fixed four-step process helps. It stops people from looking for culprits too early and usually leads quickly to the real cause.

Step 1 – Recount: Count the conspicuous items again, ideally with a second person and in every storage location. Many discrepancies are resolved at this point.

Step 2 – Check the paperwork: Match the deliveries for the period against the delivery notes. If a delivery is missing or a quantity is wrong, correct the booking.

Step 3 – Check the till and recipes: Review voids and incorrect bookings and whether the recipe quantities match reality. If the recipe says 4 cl but the team pours 5 cl, the cause lies in the recipe or in training.

Step 4 – Decide on an action: Only once the discrepancy is explained or narrowed down do you decide what changes: a breakage list, a jigger at the station, a new rule for staff drinks. Write the action down and check at the next stocktake whether it works.

Briefly record the result of each analysis in writing: item, discrepancy, cause found, action taken. These notes are valuable not only for you but also for your accounts and for any later audit.

6. Stock discrepancies, accounting and the tax office

After the stocktake, the counted actual stock is what counts. The difference to book stock usually affects your cost of goods and is corrected accordingly in your accounts. How the booking looks in your specific chart of accounts is best agreed with your tax adviser. Either way, the basis is a clean stocktake as described in the stocktaking guide for hospitality.

For the tax office, stock discrepancies are mainly of interest when they are large and nobody can explain them. A cost of goods well above what your revenue would suggest raises questions. In Germany, if the accounts cannot be used as a basis, the tax authority may estimate the tax base under Section 162 of the Fiscal Code (AO) (in German). In Austria, Section 184 BAO (in German) governs estimation, among other things when books or records are factually incorrect or show formal defects.

The best protection is documentation: regular stocktakes, a breakage and loss list, recorded staff drinks and traceable notes on every larger discrepancy. What else is required during an audit is covered in Tax audits in hospitality.

7. Avoiding stock discrepancies: 8 everyday measures

1. Count more often: If you count monthly instead of yearly, you find discrepancies while the cause can still be traced. For expensive spirits, even a weekly check can make sense.

2. Book deliveries immediately: Every delivery is checked on arrival and recorded the same day. How this works in practice is explained in our article on goods receipt inspection.

3. Keep recipes up to date: Target usage is only as good as your recipes. If a preparation or glass size changes, update the recipe straight away.

4. Ring up staff drinks and invitations: Create dedicated till buttons so these give-aways show up in target usage instead of as a discrepancy.

5. Keep a breakage list: A simple list at the bar and in the kitchen with date, item, quantity and initials is enough.

6. Standardise pouring: Jiggers or pourers make sure practice and recipe match.

7. Count by area: Hotel bar, restaurant and banqueting are counted separately. That way you see in which area the discrepancy arises, instead of just one total for the whole business.

8. Discuss the results: Share the most important discrepancies with your team after every stocktake. People who know the figures are being looked at book more carefully.

8. Detecting stock discrepancies automatically with BarBrain

Calculating the target vs. actual comparison by hand is doable for 30 items. With 300 or more, it becomes a full day's work. This is exactly where BarBrain's POS integration with target vs. actual comparison comes in: the sales from your till are converted into ingredients via your recipes. This gives you target usage. Your stocktake provides actual usage. BarBrain compares the two and shows you the variance per item in quantity and in euros, just like in the gin example above, only for your entire range.

This is based on three building blocks that work together: with recipe management you store which ingredients go into each drink and dish, and in what quantity. With digital stocktaking you count your actual stock quickly and separately by area. And with the AI delivery note scanner, every delivery is recorded completely in the system so that your target stock is right. More than 1,000 venues in Germany, Austria and Switzerland already work with BarBrain, and more than 80,000 stocktakes have been carried out with it.

The biggest difference in day-to-day work: you no longer just find out that money is missing at the end of the month, but for which item, in what quantity and with what value. That means you can start the analysis from section 5 with the few items that really matter.

For hotels and groups: each outlet is its own account with its own areas. The outlets' stocktakes run separately, and in the admin overview you compare the outlets with each other, for example by cost of goods percentage and shrinkage. Find out more on the page for groups and hotels.

Want to see what the target vs. actual comparison looks like with your items? In a no-obligation demo, we'll show you the POS integration in practice. Book a demo now.

9. Frequently asked questions