Top 3 Most Common Mistakes In Hospitality Businesses


In this blog we share with you the three most common mistakes businesses in the hospitality industry make and the “tried and tested” solutions.

Sky Accountants specialize in hospitality & tourism which, in Australia, is a $90 billion industry.

Hospitality & tourism includes the likes of gaming venues, clubs, pubs, bars, cafes, lounges, resorts, hotels, motels and restaurants. Working with businesses in the industry, we see the best and worst, the pain points, the workarounds and the super successful.

In our experience there are three common mistakes that hospitality businesses make that prevent them from achieving their potential. In this blog, we share those three mistakes and the “tried and tested” solutions.

No Stock Takes

I have lost count of how many times I have heard “we don’t do stock takes, they are a waste of time”.

Whilst stock takes are not much fun and can be time consuming, they really are essential.

The problem with not doing stock takes is that you simply don’t know what your true gross profit margin is. This in turn means that you don’t know if you have issues with pricing, wastage, etc. And if you don’t really know and understand your problem, how can you start fixing it?

Hospitality business operators need to have an intimate understanding of their gross profit margin and need to constantly monitor and manage it. To help the process we recommend hospitality operators use a proper Point Of Sale (POS) system – something like Vend or Kounta – that can track stock.

Businesses can do themselves a lot of good by speaking to companies like SMB Consultants who specialize in Cloud POS systems for the hospitality industry.

Whilst a good POS system is important, you still need to do a stock take to measure any variables between your POS system and the physical count. Eg variances caused by spoilage, waste, etc.

To properly monitor and manage your gross profit margin, you also need to know the benchmark you are striving for. This benchmark will vary depending on the type and nature of the business – a gaming venue, pub, café and restaurant will all have a different benchmark. Please contact our office if you need help to determine the benchmark for your business.

Accountants Ballarat & Bookkeepers Ballarat

Our goal is to empower you to become a better, more finance-focused and well-rounded entrepreneur. Contact us at or 1300 328 855

Wages Are Too High

Every industry has what we term a “choke point” – a blockage that stops them achieving success. In the hospitality industry the choke point is often the trade-off between good service and wage costs.

Next to stock purchases, payroll is the second biggest cost that needs to be managed. With penalty rates, super, workcover, payroll tax, etc nothing will send you broke quicker than not controlling your wages.

You need to identify the right wages to sales benchmark for the different areas of your business – kitchen, wait staff and gaming floor (if you have one). As above, contact us if you need help to identify the benchmark(s) applicable to your business.

One of the best ways to control and plan your wages is to “cost your roster”. This is done by working out the wages payable to the staff who are rostered on and then comparing that to your expected revenues for the period. If wages exceed the benchmark, you need to understand why and look at how they can be reduced.

In an established hospitality business, we have found that revenues are often quite predictable. Hence, costing your roster can be a very effective way to plan your staffing to achieve good profitability.


There are a number of software packages on the market that you can use to manage your roster. And with the rise of cloud technology, they are now very affordable. Deputy is a great example of an affordable package that will cost your roster.

Property Refurbishment & Fit-out

The third mistake many hospitality businesses make is not keeping their premises and fit-out up to date. In terms of customer satisfaction, research indicates that around 25% is attributable to the premises.

In our experience, business that invest in their premises tend to have greater revenues and profits than those that don’t.

Strategically, businesses should budget for a refurbishment & fit-out update every five to eight years. Given this, financial management to ensure the business can fund this is critical for long term success.

You can click here to speak to a businessaccounting and bookkeeping firm. We also offer hospitality business consultation and mortgage services. We will give you a call to know more about your needs. We will explain to you how we can improve your business.

Ballarat Accountants

Phone: 1300 328 855

Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia

Postal Address: PO Box 2234, Bakery Hill, Victoria 3354

Gisborne Accountants 

Phone: 03 97444522

Sunbury Office Address: Suite 13, 33-35 Macedon Street, Sunbury, Victoria 3429, Australia

Gisborne Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia

Postal Address: PO Box 270 Gisborne Victoria 3437