Cash FlowStaff

Steps to Take to Prevent Employee Theft at Your Restaurant

Swan Oyster Depot, an iconic restaurant that’s been in operation in San Francisco since 1912, recently installed a solid steel gate over its windows to prevent vandalism and theft. They told NBC that their windows were broken five times in 2022, the worst they’ve ever experienced in their 110 years of operation. 

Restaurants have also reported a rise in cooking oil theft as prices continue to increase. Ukraine is the largest exporter of sunflower oil in the world. However, their current crisis has diminished the supply of oil and pushed up prices. Soybean oil is also on the rise due to the drought in Brazil and the increasing costs of gasoline and diesel. 

Theft, unfortunately, doesn’t just occur from outside forces. Employee theft is particularly common in the restaurant industry. Approximately three out of four employees have stolen from their employers at least once, and this theft causes more than 30% of business bankruptcies. 

So, what can business operators do to help prevent theft? 

Know What to Look For

In the restaurant industry, most theft occurs from stolen inventory, merchandise, or cash. Examples include stealing liquor bottles, eating food without paying for it, giving food to friends, unauthorized discounts, credit card fraud, and stolen tips. 

The problem with many of these scenarios is that, to the acting person, they seem relatively harmless. “Is it so bad to give my friend one free meal? Especially when the manager treats me like a robot?” This way of thinking gives us a clue as to how to stop employee theft. It also illustrates how the slow, almost imperceptible loss of income, combined with the many other small acts of stealing, slowly eats away at profits. When major theft occurs, like taking inventory off delivery trucks, the delicate balancing scale slips further into reducing the already slim profit margins.

Second to food theft is POS theft. Unfortunately, this type of theft is too easy to pull off without the proper protocols in place. A common example is a bartender who rings up well drinks while charging the customer for premium and pocketing the difference. Do you notice changing employee behavior, such as an employee starting to act defensive or seemingly secretive when conducting transactions? If they seem to be living beyond their means and facing financial difficulty, more behavioral red flags begin to mount. 

Accounting fraud is insidious and potentially devastating. It includes skimming cash, canceling checks, underreporting earnings, and setting up fake accounts payable. This type of theft can lead to jail time for embezzlement. The most common employee embezzlement methods include billing fraud and cash on hand.

Take Action to Reduce Employee Theft

It may seem like an overwhelming task, but, fortunately, there are a few steps you can take to limit employee theft that can make a significant impact. 

  • Track Inventory: While this may seem like a no-brainer, it’s incredibly easy to let this painful task slip by when other seemingly more pressing issues arise from a restaurant operator’s never-ending to-do list. If that’s the case, consider an inventory management tool that does most of the work for you. These are integrated into the POS system, tracking items as they’re used and recommending purchases when stocks get low. This includes your liquid stock. 
  • Automated Technology: Today’s POS systems can trigger alerts in the case of certain events, like differences between what should be in the cash register and what’s actually there. Reports show cash-in and cash-out as well as inventory tracking, enabling you to see trends and activities that could otherwise go unnoticed. AI accounting software can detect fraud patterns.
  • Random Acts of Kindness: When employees are treated like family, they tend to be more protective. They’re more likely to alert managers and owners when they see abnormal activity from another team member. Research shows that motivation in the restaurant industry is a key factor in determining if an employee will steel. This includes feeling underpaid and overworked or unfairly treated by management or owners.

Consider your restaurant’s culture. Pay your staff a good living wage. Give them a decent meal before their shifts. Consider supplying some treats, so they grab those instead of cheese or chips from your inventory. One report found that almost one-third of restaurant workers experience food insecurity. Being surrounded by food and unable to adequately feed yourself or your family can be more than painful. 

If you need to raise prices to accomplish this, let your customers know that they’re seeing a slight uptick because you’re making every effort to give your staff a better quality of life. Most will be more than happy to pitch in. There’s nothing better than feeling like part of a larger solution. 

  • Post Lost Revenue: One study found that posting lost revenue in the employee breakroom discouraged employees from theft. When conducted at a drug store, there was an 82% drop in items stolen each week.

FAQS

How do restaurants prevent theft? 

One of the best ways to prevent theft is to create a culture where employees feel appreciated, and lines of communication are open. In this environment, an employee can talk to the owner or manager about any outside issues that would otherwise tempt them to steel in a less welcoming environment. Additionally, consider installing security cameras, limiting access to cash drawers, and using technology to create robust safety measures. 

How do servers steal from restaurants? 

Servers may adjust tips when customers pay with a credit card, changing numbers on signed receipts. They can charge a customer for their full order and then void items from the ticket and keep the difference. A good POS system can help detect these discrepancies, as well as managers that pay attention to voids, comps, and end-of-period sales. 

What factors cause employees to steel?

Many factors contribute to employee theft. Some employees may simply be opportunistic. Others feel wronged for various reasons and turn to theft in retaliation. Certain employees may be facing financial hardship or grabbing food due to food insecurities they face outside of work.

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