The publican and the peanuts – a modern parable
Working for that non-profit voluntary organisation I referred to a while back has been giving me some hassle recently. A bunch of us have been trying to sort out its finances, how much to sting the members for which services and so on. Everyone has their favourite aspect of the thing that they think should be supplied to the members at a cost to be subsidised by one of the parts that they don't specially care for. It all brought to mind a story I heard long ago - and not at business school I hasten to add.
Once upon a time there was a publican. He was one of the traditional sort and kept a good pub, with a friendly atmosphere, a choice of cask beers and locally grown food that was cooked without a microwave. He allowed dogs in the pub so long as they didn’t go in the kitchen, made parents keep their children in order and employed barmaids that men would travel miles to see. He also kept a bowl of free peanuts on the bar counter, reasoning that a) this was hospitable and b) the salt encouraged people to drink more beer. He carried on his trade happily and prosperously for many years, his only anxiety being the annual audit visit from his accountant.
His accountant was another of the old school and after they had worked through the books one year he said to the publican: ‘ I notice you keep a bowl of free peanuts on the bar. How do you account for the costs?’
‘Oh, it’s small beer really’, said the publican ‘ I just write it off to overheads’.
‘Quite right. Keep life simple I say’, said the auditor and they passed on to more important things.
The next year a different accountant turned up for the audit. He had a smart suit, expensive shoes and was quick to drop into the conversation that he had just finished his MBA. He spotted the peanuts straight away and made a note on his clipboard. When they sat down to discuss details he came straight to the point. ‘ I notice you keep a bowl of free peanuts on the bar. How do you account for the costs?’
‘Oh, it’s small beer really’, said the publican ‘ I just write it off to overheads’. The accountant looked shocked. ‘I don’t think you should do that’, he said ‘ you’ve an uncosted subsidy there, you need to apportion it to stock, beer sales, marketing . . . and then there’s the labour cost of someone keeping an eye on it to fetch more and refill the bowl when it’s getting empty.’
The publican was troubled. This sounded much too much like hard work for no reward – and what would his customers say if he stopped their little perk?
The accountant had the answer. ‘If I were you’, he said ‘I would just stop giving away the peanuts altogether. Apparently the average bowl of peanuts on a bar counter has traces of at least a dozen different people’s urine in it. If Health and Safety come round and take a sample they’ll close you down. Just blame it on them.’
Moral: the do-gooders and rule-sticklers usually manage to harm more people than they help. If you see them coming set the dog on them.