Restaurant fraud is nothing new. The degree to which some employees will go to in order to steal is astonishing. Obviously, continuous fraud can severely impact restaurant profitability.
Here are a few interesting statistics to chew on:
- The restaurant industry has a 75% turnover rate
- 75% of your employees will steal from you and will do so repeatedly
- 1/3 of bankruptcies are due to employee theft
- 37% of total theft is by a manager
- 34% of employees who steal have a bachelor's degree
- 59.1% of those who steal are men, 40.9% are women
So Why Do They Steal and How do we Catch Them?
First and foremost, you must think like a thief: What items can I easily get my hands on? How can I keep customers from being suspicious? How do I keep management or other employees from detecting that something fishy is going on?
Many employees feel that the employer has wronged them and that they're under paid, under appreciated, or that it will just go unnoticed. Most employees, though, simply steal because they can. And so you have to find a remedy for the virus before it spreads, and quickly.
The Scams Go On and On
The most obvious is the employee who doesn't ring up the sale and pockets the cash. Said employee convinces the customer to pay with cash because there's a "faulty" credit card machine or it's just plain faster. Done.
They can also apply coupons to checks paid with cash, help themselves to gift certificates and gift cards, loot silverware and glassware, food and liquor. They recycle checks (use the same one for similar orders throughout the day), add in unearned tips, clock in early and clock out late.
Managers float cash from deposits or add discounts to checks at closing time --they feel they deserve a raise for working late. Managers can adjust a server's checks and split the difference with the employees. A collaborated effort.
Here are a few other creative ones:
They ate and ran!: The employee tells the manager that a table walked out without paying and have them void the check. This is easiest during a busy shift. Other variations of this scam are to-go orders that never showed up.
The generous hook up: The server "takes care" of Generous Tipper client and hooks him up with a little something extra, free of charge (this is easiest with soup or dessert or something else pre-made, that servers have access to without placing an order).
The entrepreneur: They start a business within your business by selling their own inventory! A bartender brings his/her own bottle of vodka to work and pours its contents instead of bar inventory. The bartender proceeds to sell orders (cash transactions) and pockets the profits. A variation of this is to under pour a set amount of drinks which then allows the bartender to have surplus inventory. The leftovers are sold as cash transactions and....you guessed it!
Staggering facts but these things happen daily in all restaurants from fast casual to fine dining, drastically affecting profit margins and restaurant operations.
The Right BI Solution
So how can we control all of these issues? How do we make sure that thieving actions don't affect our bottom line? We need to implement a thorough restaurant loss management campaign. The goal is to create a closed-loop system that can pinpoint fraud instantly and alert upper management with extremely granular details of the specifics.
We start by monitoring guest checks entered in the POS system and then routing all suspicious activity to the right sources. We need a system that will continue to track the trends (and include what exactly was done as a resolution) for continuous and thorough monitoring.
Once you create your reports to track exactly what you want to evaluate, you can sleep a little better knowing that your business is actually making you money. And who wouldn't want that?!
** Statistics Sources: US Chamber of Commerce, National Restaurant Association
What Are Your Thoughts?
Have you experienced restaurand fraud/theft before?
If so, how did you find out and how did you solve the issue?
Do you think there is loss that may go unfound?
Mirus provides decision makers across operations, finance and marketing with actionable intelligence. Our analytic software consolidates transactional information and a host of other data sources to measure and improve restaurant performance. Headquartered in Houston, Texas, Mirus is a recognized leader in restaurant business intelligence.
For more information, please visit www.mirus.com