There aren’t many feelings more detrimental to operators and managers than being paranoid about team member theft. The betrayal of that suspicion having been justified is perhaps the only contender for worse feeling. Such thoughts and emotions distract ownership and management from other important operations issues.
Fred Langley, David Scott Peters’ partner at TheRestaurantExpert.com, tackled this sensitive and important topic at the 2018 Nightclub & Bar Show. Langley started in the restaurant business at age 12, working in the dish pit. Fifteen years later, at age 27, he not only became a restaurant owner, he became a multi-unit operator.
Langley has consulted on more than 100 units and worked with thousands. He also helped develop TheRestaurantExpert’s SMART Systems: Simple, Measurable, Applicable, Repeatable and Trainable. He can spot employee theft and knows the most effective preventive measures. Stealing will likely never be eradicated fully. The advantage of many of these tactics is identifying theft quickly to prevent further loss.
The subtitle of his Nightclub & Bar conference session, for better or worse, encapsulates an unfortunate truth of employee theft: “If you think they are stealing…they are!” Of course, this doesn’t justify micro-management, the assumption that most (if not all) team members are looking for the opportunity to steal, or polluting the business with the oppressive funk of constant suspicion.
However, operators and managers (and even other team members) should trust their instincts when the specter of theft appears. Some people, unfortunately, don’t want to believe it when a coworker or employee shows off their authentic self and they turn out to be untrustworthy.
Other common reactions to the suspicion of theft include denial, ignoring what has been seen, or keeping it to themselves for any number of reasons. Sometimes nothing is said because the witness, even if they’re the owner or a manager, may feel bad for confronting a thief. Owners and managers need to understand identifying theft and firing and/or prosecuting thieving employees is one of their responsibilities; if a person isn’t up for it, they should rethink their position.
Theft is a year-round threat to the profitability and longevity of a bar, nightclub or restaurant. And it can certainly impact staff morale negatively any day of the week. But the financial strain and pressure to provide during the holiday season can tempt employees who would normally never steal to make a bad choice.
To help operators and managers in their quest to mitigate employee theft, we’re going to look at the bar. Unfortunately, the bar presents more opportunities to steal than most other service positions. This past March, Langley shared common ways bartenders steal and tips for identifying bartender theft, along with ways to all but eliminate theft outright.
Common Bartender Theft Techniques
As Langley said in his conference session, bartenders can steal from the bar in multiple ways.
- Being messy behind the bar, obscuring what’s really happening from ownership and management.
- Hands moving from the cash drawer to the tip drawer.
- Ordering bottles of slow-moving products.
- A high cost of goods sold (COGS) percentage on beer, wine and spirits.
- High guest counts but low sales.
- Tallying bar tabs in their heads rather than using the POS system.
- Calls from people asking if a particular bartender is working. (Of course, this can also mean the bartender has developed a following for the right reasons, so this isn’t inherently a red flag.)
- The Unwritten Code of Bartending: Giving away free drinks, often excused as “just part of the job.”
- Sleight of Hand: Overpouring, collecting the correct amount for a tab but ringing up a lower amount, and or ringing up orders in incorrect categories.
- Ringing up cash transaction orders, selecting “No sale” to void the transaction, and give the correct change.
- Endless transfer: A guest pays a cash transaction for a certain item and another guest places the same order. Bartender transfers the item from the cash ticket before closing it out.
- Bottles Have Legs: Theft of product from the liquor room, wine cellar and/or walk-in.
- The Fox Guarding the Henhouse: Performing manager duties while also bartending. A bartender acting as a manager can use a code or card to void cash transactions.
- Phantom Ring: Call-out orders that will be “rung up later” but never are. Instead, they’re given away for a larger tip.
Some of the most common methods from that list are the Unwritten Code, Sleight of Hand, No Sale/Void, the Endless Transfer, Bottles Have Legs, the Fox Guarding the Henhouse, and “Phantom Rings.”
Theft Prevention Measures
Attention to detail and the clever use of technology along with common sense can identify and prevent bar theft. An operator can and should (and in some counties/cities/towns is required to) install cameras positioned over and around the bar and cash drawers. Some insurance companies also require (or strongly recommend) operators to install cameras, rewarding them with preferred rates. Operator should, however, try to refrain from habitual, obsessive monitoring of staff via the camera system.
Read this: Do You Need a Surveillance System?
Besides convenience, today’s improved POS systems can help operators uncover and stop theft from behind the bar. Reports, analysis of P&Ls, and customized POS interfaces are valuable prevention tools. Langley proposed specific measures for preventing the most common types of bartender theft.
The Unwritten Code: Ownership and/or management should teach employees that giving away free drinks is theft; implement a free drink policy; utilize comp sheets, spill/waste sheets, and key item reports; and abolish call-out orders (“No ticket, no drink”).
Sleight of Hand: The low-tech solutions are marking bottles and not allowing open liquor. The POS system can help ownership and management analyze sales mix to compare ideal usage versus actual usage and find instances of use and sales being far apart.
No Sale/Void: This solution is both reliant on tech and rather simple—remove the “No sale” button from the screen! The generation of a no sale report and daily review will also help identify this theft method.
Endless Transfer: Again, POS can shine here as the systems available today can generate all manner of reports. A daily review of the transfer report can clue ownership and management into problematic usage of transfers. And while it may be a bit inconvenient, implementing the rule that only manager swipes can transfer items to other tickets can combat this method of theft.
Bottles Have Legs: Langley recommends implementing a key item report, a perpetual inventory form in locked liquor rooms and wine cellars, and only stocking beer by the six-pack.
Fox Guarding the Henhouse: Simply put, don’t permit manager functions while an employee is tending bar. Communicate clearly that it’s unacceptable to break that room and doing so will result in termination. Operators who feel they simply can’t implement such a rule need to take advantage of their POS system functions and review void reports and comp reports every day.
Phantom Ring: Combatting this type of theft is as simple as implementing the aforementioned “No ticket, no drink” policy.
Implement these solutions today to end theft:
- Move the tip jar away from the cash drawer.
- Don’t keep keys in the cash drawer.
- Perform mid-shift drawer audits.
- Manager-only server report option.
- Manager-only cash drawer count at end of shift.
- Calculation of dollars per labor hour worked.
- Address the topic during a meeting with bar staff.
Theft is an ever-present theft in this industry. Some people are just thieves, plain and simple. Operators and managers need to become pros at identifying theft, mastering their POS systems, and leveraging every resource available to them to stop internal thieves. Word gets out when an owner, operator or manager makes it incredibly difficult to steal from their business and punishes thieves fully.