People have been eating fast food for approximately 4,000 years. In Ancient Rome and Greece, people visited street stands called thermopoliums. The name means “a place where something hot is sold.” These early fast-food joints offered skewers of meat, fish, cheese, olives, bread, wine, and sweets. The first fast-food restaurant in the United States – a hot dog stand on Coney Island in New York—opened in 1867. Fast food grew in popularity in the 1950s, as Americans started their obsession with quick meals in packaged forms.
November 16, 2022 is National Fast Food Day. To celebrate, all you have to do is eat or drink at a fast-food restaurant. Participating is easy. More than 300,000 fast food restaurants dot the map across the U.S. You also won’t be alone. On a single day, an estimated 50 million Americans visit fast-food restaurants, spending approximately $200 billion a year. McDonald’s leads the pack with 36,000 stores across the world and $38.5 billion a year in sales. Starbucks is second ($19.7 billion). Subway, Taco Bell, and Chik-fil-A each average approximately $10 billion in sales a year.
Unfortunately, money coming in the door from sales doesn’t always make it into the bank. As a forensic accounting firm, SDC frequently investigates claims involving employee theft at fast-food restaurants—from stolen money to stolen inventory. Recently, a McDonald’s store manager was charged with stealing $10,500.00 in deposits. In another recent case, a Jimmy John’s franchise owner claimed employees pocketed $100,000.00 in cash from sales over a two-year period. According to Delaget, a restaurant data and analytics company, approximately 75% of restaurant losses are caused by employee theft. Delaget estimates that more than 3% of a restaurant’s annual revenue may be lost to dishonest workers.
The good news is that restaurant owners can take steps to create more effective loss prevention programs. The first step is education. Being aware of how employees may try to misappropriate money helps owners to stay one step ahead of the theft. Commonly used methods include:
- Deletions / Cancelled Orders
This type of theft occurs when a cashier enters the order in the POS system, serves the customer, and then deletes the order in the system. The cashier then misappropriates the cash from the customer.
POS systems often provide a variety of reports. Checking a report that tracks deleted items can provide information as to when the sale was deleted, who deleted it, and the cost of the item. Make sure to keep managers’ codes secure and to change them regularly.
- Discounts
According to Delaget, approximately 40% of employee meal discounts are fraudulent. Employees may be using discounts to feed themselves, friends, or family. Sometimes orders are entered and then a 100% discount is applied to them.
Showing managers and employees the reports that can be printed from POS terminals lets them know how items can be tracked. Video and surveillance can also help pinpoint thefts. If employees are aware that they might get caught, they may be less likely to steal.
- Over-rings / Voids
An over-ring can occur if an employee takes an order and tenders it for cash, but the guest changes their mind and wants to pay with a credit card. The employee re-enters the sale and tenders it to the credit card. This can also be used for customers’ mistakes and when customers change their minds. Sometimes employees may see this as a method to steal and will use it to pocket cash.
Over-ring / void receipts should be reconciled when the cashier’s register is reconciled. According to Delaget, every over-ring / void should include the original receipt, the void receipt, and the re-ring receipt (if applicable), with explanations and signatures by the cashier and manager. These should be verified when reviewing the day’s paperwork.
- Refunds
Fraud can occur when an employee refunds money to a friend or family member or performs a cash refund on a credit card purchase and pockets the cash.
Apply the same principles for over-rings and voids to refunds. Double-check that refunds were refunded to the purchasing credit card. POS data may show that certain employees issue more refunds than others, which can be a red flag.
Taking steps to prevent employee theft isn’t easy. It does take time, consistency, and effort. However, these small steps may help to protect against bigger losses in the future.
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Delaget. “4 Things to Look for to Reduce Employee Theft in Restaurants.” Delaget, January 2018. https://www.delaget.com/2018/01/employee-theft-restaurants. Last accessed October 17, 2022.
Holiday Insights. “National Fast-Food Day.” Holiday Insights, 2022. https://www.holidayinsights.com/moreholidays/november/national-fast-food-day.html. Last accessed October 17, 2022.
WAND. “McDonald’s Employee Accused of Stealing Thousands from Employer.” WAND, January 12, 2020. https://www.wandtv.com/news/champaign-mcdonalds-employee-accused-of-stealing-thousands-from-employer/article_b96eef42-357f-11ea-af7f-27632b5a37f2.html. Last accessed October 17, 2022.