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Blog | Management

Keeping Your House In Check: How to Prevent Employee Theft in Your Restaurant

Employee theft is an unfortunate reality in the restaurant industry, you can cut down it with the right task management tools.

It’s 9 p.m. on a Monday at your deli, and you’re busy double-checking the receipts after your employees have left for the day. You remember selling out of certain meats during the day, so you check the receipts to make sure everything is still gravy. As you finish up, you come to a startling realization. Even though your restaurant sold out of the premium meats, you’re still out around $100 on the day. Where did that cash go? Your employees couldn’t possibly be stealing from your business, could they?

Who Steals From A Restaurant?

Unfortunately, theft is a sad reality in the restaurant industry. As a restaurant operator, you must be aware that you might have rogue employees who will act unprofessionally and steal from your business. According to the U.S. Chamber of Commerce, 75% of all employees will steal from their employer at least once.

Restaurant theft can occur anywhere, by anyone in your restaurant, including servers, bartenders, chefs, cooks, back office employees, managers and even owners and operators. These bad urges aren’t exclusive to one group of employees – they can come over anybody for any reason.

The Cost of Restaurant Theft

Loss prevention at a restaurant can get expensive. According to QSR magazine, employee theft accounts for 75% of restaurant industry losses, and these losses make up 4% ($36 billion!) of annual sales for quick service restaurants.

Theft can bleed into many other costs, too. If you don’t create a solid loss prevention plan, you could be exposed to higher food costs, a consistent loss of bar inventory, and lower quality food.

The cost of restaurant theft doesn’t just show up in your financial statements. A restaurant culture that’s rampant with theft can absolutely destroy employee morale, and damage your reputation in the industry, leaving you scrambling to find new talent, and new customers to boot.

Methods of Stealing Remain the Same

Restaurants are jumping on the high tech bandwagon all the time but the most common forms of restaurant theft remain the same. Employees can still be brazen enough to take money directly from the register. And maybe you’ve had instances where food, beverages, or even supplies are missing at the end of the night or early morning when you opened. The problem is, mischievous employees are getting more creative than ever about stealing from your restaurant.

How Servers Can Steal From You

Restaurant theft means more than an employee simply walking out with a wad of cash. You know that the industry is a tip-heavy business, which leaves you as an operator open to potential theft from immoral staffers.

It happens with bartenders looking to finagle an extra tip from a customer. They’ll overpour drinks, an “honest mistake” that will leave you high and dry on your liquor margins.

Maybe one night you notice that the ratio of premium liquor charged to actual premium liquor consumed seems to be a bit high. Bartenders sometimes pocket that cash difference, another small way they can steal from you that doesn’t show up in the end-of-night report.

Employees not aware of restaurant loss prevention practices can engage in a little pesky kitchen-related theft, too. That server who completely voided a customer’s dessert order to gain a little extra tip on the side is also stealing from the business. Same with the employee who grazes on food during his entire double shift.

We know your employees can be people pleasers – it’s the restaurant industry, after all! Unfortunately, comped meals always tend to blur the line between normal restaurant practice and theft. You’ll always have an employee who tends to be a little too trigger happy with the “free meal” option for friends and family. It might garner him plenty of tips, but you won’t like what shows up on your P&L at the end of the week.

Don’t Forget the Back Office

Speaking of cash, make sure the person balancing your budget is trustworthy. Plenty of owners are victimized by elaborate accounting schemes courtesy of back-office folks who get a little bit too creative in Excel – and sometimes you don’t even notice until the end of the year. Collins Street Bakery lost over $17 million in a 10-year period due to an employee manipulating the budget, leading to devastating consequences for the five-store historic Texas bakery once everything came to light. Make sure multiple higher-ups are double-and-triple checking your reports for any inaccuracies.

It’s Not Just About the Cash Register

Sure, more robust POS systems make it tougher for that rogue employee to take a $10 bill out of the register. But new technology is providing thieves with new ways to steal, and this time, your customers are affected.

According to U.S. Foods, restaurants reported losses of over $200 million from employees engaged in a practice called “skimming.” Somebody can swipe a credit card on the POS system, then swipe that same card on a skimming machine (that might be hidden in their pocket), which takes the customer data and feeds it to criminals.

Loyalty rewards and gift card programs are another major source of restaurant theft. Paper-based rewards cards are easily duplicated, with punches or stamps modified to fit the copy. One of your workers could keep a plastic rewards card near them at all times, and scan it every time a customer makes an order. This way, that worker will be the one getting the points, and passing it on to their friends and family, leaving your restaurant to eat the cost of food.

Spotting Theft Starts with You

It’s depressing to hear every which way a restaurant could be exposed to theft. We’ve established that any employee can steal, but why? Most who steal do it out of necessity, and because they can.

One of the biggest ways you can prevent theft is by putting the onus back on your employees, and incorporating theft prevention into your risk management program. It’s obvious to you, but your ethical employees might not know the best ways to spot theft, or how much it impacts your restaurant and, in turn, their jobs.

This program shouldn’t be a one-time thing, either. Consistent training is important so employees in your restaurant can keep restaurant loss prevention in the front of their minds. That training could range from helping employees to learn the right ways to fill out those end-of-shift reports, to teaching bartenders the right way to pour a beer.

Look to Tech Solutions to Prevent Theft

Low-tech solutions will only go so far in your restaurant. You need to get your business some high-powered help to start preventing employee theft.

Understand Your Numbers

If you use technology and run reports, you’ll be more equipped to notice exceptions. Now these exceptions may not always be theft. But if you’ve you’ve investigated all other possible reasons for discrepancies and you’re still seeing differences in your profit and loss, then theft might be the issue. It’s time to buckle down and take a deep dive into your restaurant’s data as part of your loss prevention program. You want to stop theft before it happens rather than playing Whack-A-Mole with every incident that arises.

Even if you’re running a multi-unit operation, restaurant loss prevention needs to start at the store level when it comes to your data. Professional thieves steal on a budget, which means it’s important for you to keep track of your reports on close to a daily basis. You should be creating transaction compliance and cash management reports to discover any inconsistencies in your data over the course of time.

You can set up loss prevention notifications within your restaurant’s POS to help track any inconsistencies with inventory, so you’ll get notifications to your phone if something is awry.

Use Video To Track Employee Theft In Real-Time

Sometimes a report doesn’t tell a whole story. Video helps to not only identify the culprit of your restaurant’s missing cash or inventory, but can be used to deter employees from stealing from your POS.

Many restaurant operators are tying in video surveillance to their POS and exception reports to catch employee theft in real-time. If there happens to be an abnormally high amount of voided transactions, or only one employee is in view of a cash register, a notification can be sent to a manager and they can watch the infraction unfold as it happens.

Keep A Logbook to Record Employee Infractions

You might have every loss prevention tactic in place, but if you have no way to log employee missteps, how can you key in on the perpetrators of theft at your restaurant? Task management tools like a digital or print logbook are crucial in these instances, increasing accountability among your staff. A restaurant logbook helps you keep track of all employee incidents that occur in your restaurant, and what corrective actions you may have taken after the fact.

Hotschedules task management solutions can help your restaurant not only track theft as it happens but prevent you from getting hit with an unlawful termination lawsuit. With the digital HotSchedules Logbook, you’re able to keep a time-bound, online log of everything, from who takes the cash deposits to the bank every day, to even the smallest instances of theft. This way, when an ex-employee claims he was fired without cause, you have a whole host of documentation to support your case. And with our print solution, The Manager’s Red Book, you can compile important information and task records in one place, so management is abreast of infractions or inconsistencies and able to take action.

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