Thread: Making a profit in an army bar/shop.

I am trying to help a mate out, he is running a bar in Germany and has recently been told that it is making to much money because the bar is making more than 15% profit on the stock.

For example he sells 1000 Euro worth of stock for 1200 so has made a profit of 20%.

However when I used to run a bar over in Germany both the RAO and the QM calculated the profit after taking out expenses, such as buying a new fridge, TV even plastic glasses.

For example I sold 1000 Euro worth of stock for 1200 but also bought some pool cues for 50 euro so only made 15% overall.

Was the way I was doing it complying with army rules or were my officers turning a blind eye as the regiment was benefiting?

To my mind 'profit' is what you make AFTER expenses.... This used to be ploughed in to the PRI etc.

However, this may not be what is considered profit now adays.

I don't know the legalities, but, in the UK, GROSS profit is calculated as profit on RETURN. Therefore buying for £10 and selling for £12, the profit is £2 divided by £12 = approx. 16.5%. This profit margin is easy to calculate because a case of 12 cans bought for £1 each means the case costs £12, so the retail price is £1.20 per can.

Once all the overheads and wages, etc are taken out one has a NET profit.

There are rules for setting GPP on items sold - get someone to dig them out. You are only allowed a certain mark up and can't round it up to make things easy - I ran a service bar for 2 yrs and it was hell doing the books when prices fluctuated.

Originally Posted by Mr_C_Hinecap

There are rules for setting GPP on items sold - get someone to dig them out. You are only allowed a certain mark up and can't round it up to make things easy - I ran a service bar for 2 yrs and it was hell doing the books when prices fluctuated.

The rounding up was always a problem, after several mini riots my old regiment put all the prices of spirits at 50 cents a shot which in some cases was a 400% mark up so even selling everything else at cost price still put us over the limit which is why we bought so much new stuff.

The only rules I have seen are a very basic 10 to 15% mark up, I was hoping someone might know if its possible to take additional bar/club purchases into account.

A mate, in Germany, running a bar, would presumably mean some kind of Sqn Bar (or something such like), in which case, I am tcertain the profit/sales margins will be linked in some way to PAYD (Pay as You Dine)*/NAAFI - can't have you making too much money can they?

*or CRL (Catering, Retail and Leisure) for those who prefer this term (but all amounts to the same sh*t service)

Unless the rules have changed in the last 7 years the CO is the sole person who decides on any profit margin if it is a unit account we are talking about ( ex pay bloke )

Originally Posted by GrumpyGit

A mate, in Germany, running a bar, would presumably mean some kind of Sqn Bar (or something such like), in which case, I am tcertain the profit/sales margins will be linked in some way to PAYD (Pay as You Dine)*/NAAFI - can't have you making too much money can they?

*or CRL (Catering, Retail and Leisure) for those who prefer this term (but all amounts to the same sh*t service)

PAYD is currently being told to sod off so its not down to them.

Originally Posted by AB64PT2

Unless the rules have changed in the last 7 years the CO is the sole person who decides on any profit margin if it is a unit account we are talking about ( ex pay bloke )

I think its across the army that only 15% can be made (this would stop a CO from really cashing in on his soldiers). But I wondering how flexible this 15% is. (I think we are all aware the NAAFI are not bound by such restrictions)

It is completely down to the Commanding Officer for the percentage profit, however if it is excessive it will be noted on the comments during the annual audit.

All percentage profit for service funds is done after trading expenses and write offs are taken into account, but most places aim for 15-20%.

It is quite correct. CO's set profit levels and yes, running expenses such as purchase of optics, glasses, ice etc can be offset against the % profit to reduce it.

The unit accountant can do this quite simply using the new AFN 1514s which are spreadsheet based and do all of the sums for you.

Normally as part of a running audit the RAO or who ever does the Internal Audit will do a comparison of % profit during the accounting period, to ensure that price fluctuations are being dealt with so that they do not come up as an observation at closure of the account.

Details are in Service Fund Regulations viewable on the interanet on the DSPS(A) website.

I know in the sqn bar i ran it was decreed from above no more than 13% profit allowed

but now with PAYD it does seem to affect everything

The way I remember it when I ran a few sqn bars, was if there is any profit over and above input and output, then it gets given to the barman. Or have things changed?

Originally Posted by Ord_Sgt

The way I remember it when I ran a few sqn bars, was if there is any profit over and above input and output, then it gets given to the barman. Or have things changed?

That would never happen... All barmen are as honest as the day is long (which is why they work night)

I originally meant the profit the bar was officially making, I presume any thats made unofficially is given to the starving in Africa or something.

Having done the bar on numerous occasions, albeit some years ago, my memory seems to recall that profit margins were in those days dictated by Queens Regs, which were 'overseen/enforced' by the CO, but in reality the account holder.

If I remember rightly it was to keep the tax man happy, also to ensure that it remained to be a 'private members club' and not a going concern. I also remember on at least one occasion the prices going down following an audit, which highlighted that the profit margins were too high, which as you would expect was a big morale booster.

Some references (may be out of date now) and guidance from some Unit Operating Procedures I have to hand at home!

CHAP 1 SERVICE (NON-PUBLIC) FUNDS

References:

A. Service Fund Regulations.
B. Pamphlet Disposal of Non-Public Regimental Funds on Disbandment etc. (Code 10911).
C. Queen’s Regulations (QRs).
D. AGAI’s.

STOCK CONTROL

21. Stock Checks. Where a trading account is held a stock check is to be carried out monthly by the FM or a nominated delegate.

22. Pricing. In order to prevent under/over pricing of stock, the Regt Acct is to recommend selling prices for each trading account. Action is to be taken to adjust the selling price at a convenient stage of the account period, normally at the beginning of each month, if required. This constant re-assessment of prices will ensure that the profit margin dictated by the managing trustee is observed.

23. Profit Margin. Trading accounts should aim to achieve an overall percentage profit of between 10 - 15%. Any request to change the estimated profit margin is to be submitted in writing to the Managing Trustee.