Restaurant Articles

Tips on Loss Prevention for Restaurants: More Employee-Caused Losses

By July 26, 2016 No Comments

In the first article of this series I shared common sources of employee-caused cash theft in restaurants. To continue sharing areas to watch for when it comes to loss prevention for restaurants, today I’m focusing on other areas of activities to consider:

Point of Sale (POS) system programming errors – Because they frequently impact the entire restaurant chain, errors in your POS system could lead to large losses. For example, a promotion intended to be set up with a limit of one per coupon for which the limit failed, can result in significant losses in a short period.

Some tips for avoiding these types of errors:

  • Assign a manager to test each new promotion at the POS during the first hour on the first day of the promotion.
  • Review the POS log regularly.

Employee meal abuse – This is a frequent drain on restaurant profits. Employee meal abuse includes giving the employee discount to friends, taking meals home for family and not paying for them, and paying the incorrect price for their own meals. To identify employee meal abuse, compare POS data to the number of cashiers on duty for the day. Too few meals may indicate they are eating and not paying for their meals, and too many meals may indicate they are applying the discount for family or friends.

Management meal and discount abuse – This is also a frequent cause of profit drain. Examples include a manager giving excessive discounts or free meals as a means of theft. Sometimes they are too liberal with this policy in correcting errors or building customer good will. They can also ring in free meals as a means to justify food cost figures. To identify management meal and discount abuse, compare the frequency and amount of discounts to other managers. A higher-than-average number might indicate abuse. Also, look at the time of day the transaction is rung. Transactions that take place very early or very late in the day may be an attempt to cover high food costs rather than actual meals consumed.

Poor cash handling procedures – A lack of, or poorly enforced, cash handling policies can lead to opportunities for both internal and external thieves. Whether a dishonest employee opens a cash drawer and removes money, a quick change artist confuses your cashier and walks away with money, or a robber displays a weapon and takes all the money from the till, it is a loss for the restaurant. A good cash handling policy should include:

  • Cash counts – verified by the cashier and the manager at the beginning and end of all shifts.
  • Single-drawer accountability – means one employee, one drawer. That way, if there is a problem when balancing the drawer at the end of the shift, there’s only one person responsible.
  • Cash drops – (deposits from the drawer) during a shift should be dictated so that there is never too much cash in the drawer at any given time.
  • Cash handling with customers – is equally important. Multiple transactions with the same person create confusion, which creates the opportunity for error or fraud.

An unprotected back door – The back door of a restaurant sees a lot of activity – from trash removal to vendor receiving. However, the back door is typically out of sight, making it a susceptible portal to crime. Managing the back door with the appropriate policies and procedures, aided by technology, you can help to protect your restaurants against theft of product by employees and robberies by unknown persons. An effective back door policy should include:

  • Times when the back door should not be opened at all – e.g. after dark or during peak hours.
  • Trash runs after dark should go through the lobby doors. The final trash run should occur before doors are locked at closing.
  • When (perhaps always) the back door is to be locked.
  • Who possesses the keys to the back door – i.e., who is allowed to open the back door.
  • Back door should never be propped open.

Now that you’re armed with lists of common sources of employee-caused losses, how do you address them in your QSR or fast casual restaurant? In my next article, I will review how video-driven business intelligence can help you identify, view, and address potential loss activity in your restaurant.