HOW TO CONTROL INTERNAL THEFT
Contrary to common belief that restaurant customers steal anything loose, in-depth research indicates employee theft surpasses everything consumers remove “inadvertently”.
Though each loss due to employee theft may be small, cumulatively it costs much more than financial damage incurred by guests.
Surprisingly, many owners and/or managers fail to take appropriate preventive measures. Some experts claim restaurants “inventory shrinkage” (a euphemistic term for theft) costs the industry billions of dollars annually.
White-collar employees can be as bad, and often worse than blue collar or service staff. Managers often discover restaurant property is removed and sold in the open market, or simply consumed on premises. In a few rare cases employees may even entertain unauthorized friends and relatives at their employer’s expense, and the list can be expanded to many more fraudulent practices.
Some purchasing directors and chefs may receive kickbacks from suppliers in form of weekly groceries delivered at home.
Some employees abuse their privileges by punching in for a fellow worker, or punch out for someone who left earlier during the day.
A security employee at the employee entrance can prevent such practice, but costs associated with this may exceed the benefits. It is best to have employees sign in and out at the department head’s logbook.
The higher the rank of an employee the more are the possibilities for dishonesty. Often owners/managers trust middle managers, implicitly failing to install checks and balances within the accounting, and/or other crucial departments.
Minimum-wage employees steal food, detergents, even toilet tissue, just to name a few items. All managers/owners must remember that anything in a restaurant, except major cooking equipment, can be used at home, and most happen to be everyday items in constant use.
A good inventory system can prevent food theft. Handling cash and accounts payable requires stringent controls. A few trusted employees along with controls of the accountant and/or manager must handle cash. All restaurant employees should be bonded and checked for criminal records before being hired.
Purchasing is a difficult department to control, but there are several ways to accomplish the task. Suppliers can be called anonymously for quotes, and prices compared to those paid. Daily newspapers publish produce-reports that can provide sufficient clues to initiate more detailed scrutiny of the purchasing agent.
Receiving requires very stringent controls since price and quality must be verified at the receiving dock. Once the invoice is signed and the title of the merchandise changes, legally any claim can be ignored by the supplier.
Receiving employees incapable of identifying quality and quantity can inflict more damage than some dishonest staffers.
Then of course you must watch for receiving clerks colluding with truck drivers. This is a venue often used, but practically never investigated by management. In many restaurants food inventories are taken monthly, and other equipment once or twice annually. Of late, large restaurant operations stopped taking monthly inventories and treat all purchases received as expense. This is wrong and may cost untold sums, although it may save a few thousand-payroll dollars. Taking inventories of all items from linen, -to paper supplies, to plumbing, spare parts, and detergents, will pay handsome dividends if results are properly evaluated.
Long distance and now e-mail “employer time” fraud can cost millions. How many hours of your time does one of your employees use on the computer checking his/her stock performance, or playing video games?
Accounts payable and receivable staffers must be very well controlled. Systems must be in place so as to avoid fraud.
Computer programmers must also be controlled. Imagine a program diverting from every deposited cheque one tenth of 1%. The bank may never alert you and the accounting authorities may cover up for the culprit.
Most importantly, check your servers and bartenders. Are they claiming many guest complaints about food quality, and cancelling entire tabs? Ask the chef to find out whether food quality has suffered lately, or better yet, spend time on the floor during lunch and/or dinner to verify the efficacy of your operations. Are your bartenders bringing in their own booze and selling it to their regulars at your expense?
Find out for yourself and see where your profits go.