Cooking the Books: Restaurant Theft

Bellagio chef busted for stealing $2K worth of lobster tails.

Waiter caught stealing customers’ credit cards, sentenced to 12 years.

Restaurant manager catches employee stealing from safe.

We all know employee theft happens in most industries. Restaurants are no different. Just take a look at the headlines pulled from the news. In fact, employee theft restaurant statistics are grim. According to the National Restaurant Association, 75% of inventory shortages and 7% of lost sales are due to employee theft. Employee theft also contributes to approximately 50% of small business failures within the first year.

Motive and Opportunity

Criminologists say theft occurs because of a combination of motivation, opportunity, and rationalization. Employee theft at restaurants may be prevalent for a number of reasons. To start, restaurant work is tough. It can mean long shifts and cranky customers. Staff members may be unhappy in their jobs or feel like they are being treated unfairly. Additionally, jobs in restaurants often don’t pay enough to make ends meet. Sometimes desperate times lead to desperate measures. One study found that nearly 30% of restaurant workers experience food insecurity. They’re not certain if they’ll be able to afford their next meal. Yet, these workers are surrounded by food all day. That’s motivation.

At most restaurants there is plenty of opportunity. Running a restaurant can involve managers, wait staff, counter help, cooks, and bartenders. And most of them have access to items of value—food, alcohol, inventory, products, cash, customer credit cards, and safes. Restaurant managers are often busy with a multitude of tasks. And internal controls sometimes take a back seat. A manager might not regularly run sales reports or do inventory counts. The combination or key to the safe might be kept in an unlocked drawer. That’s opportunity.

Most employee theft starts small. “The owner doesn’t care about me. I have bills to pay. The business won’t miss a $20.00 bill.” That’s rationalization.

Keeping a Watchful Eye

Hopefully, being a good employer is enough to prevent theft. But it’s also smart to be aware of weak spots. Here are five ways your staff could potentially steal—and ways to stop it.

1) Short Ringing

On a busy night at the bar, a customer orders a $15 martini and pays cash. The bartender takes the money for the cocktail and puts it in the cash register, but rings it into the POS as a $7 vodka drink. The customer is charged the appropriate amount, so they don’t know the difference. At the end of the night, the bartender pockets the difference between the cash drawer total and what the POS expects it to be.

The fix: implement a blind closeout process. Blind closeout requires employees to reconcile cash at the end of their shift without notifying them of the exact amount they are expected to return. They have to count the cash and report the total without knowing what it’s supposed to be.

2) Too Many Comps

If a staff member is giving away free drinks, appetizers, desserts, or discounts, it can negatively affect the bottom line in a significant way.

The fix: to keep better tabs on comped items, define and enforce a comp policy. Have your staff write down every comp with an explanation or assign a “surprise and delight” budget to each server for every shift.

3) Voids After Closeout

If a manager is looking to steal, they could easily void out cash transactions that occurred during the day, make it appear the books balance in the POS system, and then take some cash for themselves.

The fix: keep an eye on all voids, especially those made after close. Make sure you can check and track which manager is approving them.

4) Reusable Receipts

A customer comes to the bar and orders a Bud Light — a common bar order. The bartender prints the receipt and the customer pays in cash. Instead of closing out the tab, the bartender leaves it open. Ten minutes later, a different customer orders a Bud Light. Instead of entering it in the POS system as a separate check, the bartender reprints the first customer’s receipt from the still-open tab. When the second customer pays for their beer, the original check is closed, leaving the cash from that first order unaccounted for and in the hands of the bartender.

The fix: leverage the data in the POS to keep an eye on reprints. If there’s a trend in increased reprints from one server or bartender, approach them without accusations and see if there’s a good reason for the increase in reprints.

5) Register Skimming

Register skimming is when an employee takes a small amount of money from the cash register. Restaurant owners who don’t track their sales reports are much more susceptible to this.

The fix: modern restaurant tech will help make thefts more obvious. It will alert managers to mismatches between what’s supposed to be in the cash register and what’s actually there. Also, if employees know managers consistently track all sales, this type of theft is more avoidable.

Prevention

There are several steps restaurant owners and managers can implement to help mitigate or prevent employee theft. Fostering a cohesive team environment is a start.

  • Pay your employees well and provide any benefits you can. Employees may be less likely to end up in financial trouble and feel the temptation to steal from their workplace.
  • If paying staff more means raising menu prices, explain the price change with a note on the menu: “we’ve recently raised our prices to help give our staff a better quality of life.” That kind of positive change can also lead to customers being more loyal.
  • Maintain open communication.
  • Leslie-Ann Ciccone, owner of a dessert bar in St. Petersburg, Florida, prevents theft by being open with her staff, giving them food or drinks, and loaning equipment to staff members. “I tell them: ‘ask us if you want to borrow something, I’ll probably let you borrow it, or I might have something better in the warehouse if you want to have a party or something.” She tells her employees, “Know that everything here… I paid for, or we still owe on it. So just try to honor that, and just tell us what you need, and we can probably do it.”
  • Track sales and inventory.
  • Prevent food theft by closely monitoring orders, usage, and waste.
  • Keep alcohol under lock and key. Only the restaurant owner, manager, and bartender should have access to the supply.
  • A major liability of using a POS system as a credit card processor is that transactions are via the internet and could be hacked and your customers’ credit card information stolen. It is important to make sure your computer firewalls and other safety precautions are periodically updated.
  • Install security cameras. Be sure that any video surveillance adheres to laws and respects employees’ and customers’ privacy.
  • Limit access to cash drawers and the safe. Only the restaurant owner, manager, or head server during their shift should have access to the cash drawer, register, or safe. The fewer hands that touch the cash, the less chance of it being stolen.
  • Educate your staff as to how people steal, how it is detected, and the true costs associated with losses caused by theft. Training should be continual.
  • Investigate and resolve theft issues promptly and professionally.
  • Continue to keep reading about restaurant theft prevention and how to best protect the business.

No one wants to think about employees stealing from them. Taking proactive steps like monitoring inventory and sales can help deter potential theft by employees. And it will help give owners peace of mind about the business.

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