Be Assured: Your Employees are Stealing From You

As profitable as a bar, nightclub or restaurant can be, unfortunately, employee theft is a common occurrence for most businesses in the hospitality industry. If you’re a small or independent business the loss can be overwhelming and contribute significantly to failure.

It’s estimated that 95% of all businesses experience theft at one point in time. The National Restaurant Association even estimates that “internal employee theft is responsible for 75% of inventory shortages-about four percent of total restaurant sales.” As an owner you need to continuously be monitoring your inventory and your employees; and yes, overages are just as much a sign of theft as shortages, so don’t be fooled.  

Employee theft comes in multiple forms; it’s not just classified as someone taking cash from the register. Can you tolerate the inventory shrinkage of food and spirits that are served to your customers that haven't been rung in as a sale? One of the most common theft schemes in the bar industry. Managers are in an even better position to steal by manipulating sales figures and cash deposits.

As an owner, you want to put faith in your employees and trust that they’re being honest. However, don’t ignore the signs. The longer you let an employee get away with theft the more frequent and widespread it will become.

Fortunately, there are steps you can take to control and prevent employee theft in your business. Clear, accountable cash management programs and inventory control systems are a step in the right direction; nonetheless we’ve provided 10 tips to help eliminate and prevent employee theft.

1. Loss Prevention Measures – It’s important to have a good tracking system for food and beverage sales. By installing a POS system you can cut down on the amount of “freebies” that staff might give out without your knowledge.

2. Clearly Defined Expectations - Job descriptions, policy and procedures, and employee manuals that clearly define the do’s and don’ts in handling sales and cash will reduce theft. 

3. Exception Reports and Audits – Loss prevention programs that include thorough follow-up of exception reports and audits indicating poor performance and non-compliance allow managers to track employees.  

4. Hiring and Training - Well trained managers know what theft looks like. When hiring you need to do your best to bring in ethical and truthful people and keep them ethical through continuous training of best practices. The more an owner is present in the operation, the less likely an incident will occur.

5. Inventory Reports - Monitoring and tracking inventory information every day is a must. Keeping consistent and accurate food, beverage and supply records will immediately identify any inconsistencies.

6. Storage - The best way to keep employees from stealing food or alcohol is to keep it locked up, properly stored and labeled correctly.

7. PCI Standards - PCI stands for payment card industry data security standards. If you're using a POS system as a credit card processor, make sure to update your firewalls and software agents regularly.

8. Install Security Cameras – Installing cameras inside and outside your venue can help ward off potential theft as well as record an incident that occurs.

9. Cash Control – Limiting access to the cash drawer, register or safe is one of the simplest ways to cut down on theft. Ultimately the less hands that touch the cash, the less change of someone taking what’s not theirs.

10. Involve and Empower Employees – The more you offer your employees a chance to take on responsibility, chances are they will feel more empowered to do so. Trusted employees can keep your restaurant safe by keeping an eye out for strange behavior.

Remember employees steal cash, food, liquor, equipment, supplies, retail items and time.  If you know you have problem, hiring a mystery shopping company that specializes in observing and recording servers and bartenders isn’t a bad idea. If theft is observed by the outside investigator, you’ll have third party evidence and avoid a false accusation or jumping to unjustified conclusions.

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