Taking over a pub: how the ingoing stocktake and stock at valuation actually work

When you take over a pub you buy the stock that's already in it, at a price set by a count you didn't do, on the busiest day of your life. That figure is called stock at valuation, and it's the one ingoing cost nobody can quote you in advance because it's whatever the last licensee left in the cellar. This is how the ingoing stocktake actually works, how the stock gets priced, the six places the number goes wrong, and how to turn the valuation sheet into an opening stock you can trust.

I'm a licensee in Washington, Tyne and Wear, and I've had five liquor audits in eight months, so I've spent a lot of time on the wrong side of a stocktaker's clipboard. The changeover count is different from all of them. There's no history behind it and no argument to be had after the fact. What's written on that sheet is what you pay. So it's worth understanding before the day, not after.

What stock at valuation actually is

Every pubco and brewery quotes you an ingoing figure. Robinsons publishes theirs as £12,000 to £100,000 excluding VAT, made up of the bond, stock at value, rent in advance, contractual charges and fixtures and fittings. Trust Inns lists stock and glassware as its own line in the ingoings alongside the fixtures, the bond and working capital. Hall & Woodhouse puts real numbers on most of it for a medium pub: £7,500 deposit, £10,000 working capital (up to £25,000 on some sites), roughly £50,000 for fixtures and fittings, £1,200 for training. Then it says you'll also buy the stock, and gives no figure.

That's not them being cagey. Nobody can give you the figure. The fixtures were valued weeks ago. The bond is a fixed sum. The stock is counted on the morning you walk in, and it's worth whatever the outgoing licensee chose to have delivered in their last fortnight.

Stock at valuation, or SAV, covers the loose trade inventory: the wet stock, the dry stock, the glassware and the small catering effects. A pub sales agent's definition is exactly that, wet and dry stock plus glassware plus small catering effects. The valuation is done by an independent trade valuer, who is normally appointed by the pubco. You pay the outgoing licensee for it, either outright on the day or, with some brewers, through a loan added to your ingoings.

It's a valuation, not a stocktake

This matters more than it sounds. A normal stocktake works out what you should have (opening stock plus deliveries minus sales) and compares it to what you've actually got. The gap is your variance. That's the number a stocktaker and a licensee argue about, and I've written about how to read that report and how I've got a chargeback reversed.

An ingoing count has none of that. No opening stock, no sales, no expected figure. It's just two things multiplied together: how much is there, and what each unit is worth. So there are only two places it can go wrong, the count and the price, and you should check both.

The price: what basis, and is it ex-VAT

The standard valuation basis is cost. The valuer matches each line to what was originally paid for it, from the outgoing licensee's invoices. Where there's no invoice, they fall back to the current market price for that product. Out-of-date stock and anything damaged or in poor condition is meant to be excluded. That's the published Christie & Co and Venners position on pub stock valuations.

In a tied pub the invoice price is the tied wholesale price, which is what you'll be paying next week anyway, so it's hard to argue with. In a free-of-tie pub it's worth asking whether the outgoing had deals with a wholesaler that you won't inherit. You're paying their price for stock you'll be replacing at yours.

Then ask the question that trips more new licensees than any other: is that figure ex-VAT or inc-VAT? A stock valuation should be ex-VAT. If the sheet quietly includes 20% and you're comparing it against a till that's showing gross takings, you'll think you own a fifth more stock than you do. If you're VAT-registered, ask for a proper VAT invoice from the outgoing for the stock purchase. Your accountant will want it. I've done a full guide on reading a stock valuation ex-VAT versus inc-VAT because it flatters or wrecks every number that follows.

The count: six places the money hides

1. Breached kegs and casks

The biggest line on a wet-led valuation and the easiest to get wrong. A keg that's been tapped is dipped or estimated, and a full-price fraction is applied. Christie & Co notes that buyers often ask for open bottles and breached kegs to be excluded from a valuation altogether, and I understand why. A cask that's been on stillage for four days is not worth 60% of its invoice price just because the dip says it's 60% full. It's been on air, it's conditioning, it might be a day from going off, and it's your name on the pump when it does. Ask for the date every container was tapped. Anything more than a couple of days into its life is a negotiation, not an asset. If you want to know why dip readings on part containers drift, the calibration guide covers it.

2. Opened spirits

Every open bottle on the back bar gets valued in tenths, by eye. The eye is always kind to whoever's holding the bottle. A bottle called at four tenths is often three. Across forty optics and a stock of open bottles behind them, that's real money moving in one direction. You can't stop the valuer eyeballing, but you can weigh every opened bottle yourself that afternoon. A kitchen scale and the empty and full weights gets you the actual millilitres. It takes about twenty seconds a bottle. More on that below, because those weights are worth more than the argument.

3. Best-before dates

Bottled beers, mixers, cordials, crisps, nuts. The rule is that out-of-date stock is excluded, so check the dates before the valuer does the fridges rather than after. A case of bottled lager two weeks from its date isn't out of date, but it isn't worth full cost to you either if the line does three bottles a week. Say so.

4. Dead stock at full cost

Eleven bottles of a liqueur that nobody's ordered since the Christmas before last are still valued at cost. You're buying someone else's ordering mistakes at the price they made them. Nobody in the supply chain will ever warn you about this. The rep who sold it in isn't going to mention it won't sell out. Go down the shelves before the count and flag anything that looks like it's been there longer than the outgoing licensee. Ask for it to be excluded or priced down. Worst case they say no, and you've lost nothing.

5. Glassware

Glassware is in the SAV. Chipped glasses aren't stock. And a lot of branded glassware turns up in pubs free, dropped off by the brewery rep with a new line. Ask whether the branded stuff was bought or given, because you shouldn't be paying cost price for something that arrived as a freebie. You won't always get a straight answer. Ask anyway.

6. Gas and consumables

CO2 and mixed gas cylinders are usually rented from the gas supplier, not owned by the pub, so you're paying for the contents at most, never the cylinder. Line-cleaning fluid, sanitiser, till rolls and the like are small catering effects and do get counted. Check they're not being valued as if they're full when they're not.

Who counts, and who pays for the counting

The valuer is normally appointed by the pubco or brewery and described as independent. They probably are, in the sense that they don't work for the outgoing licensee either. But they're doing one count, on a clock, and the outgoing licensee is standing next to them. You're allowed to be there too. Be there.

You can also bring your own stocktaker. A single independent wet-stock visit runs somewhere around £125 to £320 on published rate cards. On a purchase that could be a few thousand pounds, or more, that's cheap. If the two counts agree, you've bought peace of mind. If they don't, you've got a second sheet to negotiate from before you sign anything. Who pays the pubco's valuer is set by your agreement, so read it. Sometimes it's in your ingoing charges, sometimes it's shared with the outgoing. Ask before the day rather than finding it on an invoice after.

Turn the valuation into your opening stock, or your first stocktake is fiction

This is the bit nobody tells you and it's the reason I'd rather you read this than the pubco's leaflet.

The ingoing valuation sheet is your opening stock. It's the starting number for the first proper stocktake you ever do in that pub, and if you're in a tied estate that gets audited, it's the baseline the auditor's first result is built on. If the outgoing licensee's tenths were generous, or a breached cask went in at 60% when it was 40%, your first variance report will show a loss that never happened. You'll spend your first month chasing a leak that's actually a rounding error from the day you moved in. I know what an unexplained variance does to your head, because I've had one. Don't hand yourself one on day one.

So on the day, or the day after at the latest, do this properly. Get the valuation line by line, not just the total, and photograph every page before you sign it. Enter every line into whatever you're going to count with, whether that's a spreadsheet or an app, with the valuer's cost price against it. Then weigh the opened spirits yourself and dip the part containers yourself, and record what you actually found rather than what the sheet said. If there's a gap, that gap is either a negotiating point today or a note on your file that explains a chunk of your first variance. Either way you want it written down while the outgoing is still in the building.

Four weeks later, do your own full count. Because your opening number is real, your first variance will be real. And a real first variance is the only way to tell early whether the pub you've bought has a leak, or hasn't.

The changeover checklist

Can you refuse to buy the stock?

Under most pubco and brewery agreements, no. Buying the loose stock at valuation is part of the ingoing, the same way selling it on at valuation is part of your outgoing when you leave. What you can do is challenge the contents of it, line by line, on the grounds above. Out of date, damaged, breached and nearly done, given free, or plainly not stock. Valuers expect it. The outgoing licensee expects it too, because they did the same thing on the way in.

And remember the other end. One day you'll be the outgoing, standing next to a valuer while the new person asks when the cask was tapped. Keeping honest counts from day one means that when you leave, the sheet is on your side.