Restaurant owners already have a lot on their plate without having to add fraud monitoring and theft protection to their daily operations. Fraud and theft in the hospitality industry are commonplace, and they account for a large portion of lost profits.
A fast-paced bar or restaurant is the perfect place for thieves and scammers to hide.
We’ve compiled seven easy and quick tips that will help you stop restaurant theft and Fraud before it spirals out of control.
What is restaurant fraud HTML0?
A restaurant fraud is when someone deliberately lies or presents false information in order to benefit from your business.
Restaurant fraud can be classified into two main types:
- External Fraud is committed not only by your employees but also by vendors, customers, suppliers, and anyone else.
- Employees commit internal Fraud. Turnover rates in restaurants are on the rise and have reached more than 50%. This creates a constant need for labor. The vetting of the trustworthiness and reliability of new employees may be rushed.
The fraudulent activities can range from employee theft of your personal information for credit card scams to identity theft.
A disgruntled worker could tap your accounting screen and swipe sensitive data they can use to create new credit lines in your name. You wouldn’t know about it until debt collectors start demanding payment.
What does restaurant theft mean?
Theft from a restaurant occurs when someone steals intentionally. Employees can steal food ch, earn friends less than they should, or take proprietary recipes and pocket cash payments.
- 95% of businesses have problems with employee theft.
- 75% of employees claim to have stolen at least one time from their employers.
- Over half ( 55 ) of all embezzlement occurs in small businesses with less than 100 employees.
- In the restaurant industry, internal employee theft is responsible for 75% of inventory losses.
- The theft of employee information in the restaurant sector costs businesses between $3 and $6 billion per year.
7 Best Practices to Catch Fraud & Theft in Your Restaurant
Stopping Fraud and theft in your restaurant is always the best way to stop it.
- Synchronize inventory and financial reports.
- Analyze void reports and comp reports.
- Average tab time
- Recorded security footage can be used to verify potential thefts.
- Close blinds
- Check employee time reports for theft.
- Sign up for identity theft and credit monitoring alerts.
Implement blind closures
A “blind closeout” is a protocol for reconciling cash at the end of a shift without employees knowing what they are expected to total.
It’s almost impossible for employees to remember their final total at the end of the shift if they are inflating or reducing sales artificially and pocketing the differences, skimming money from the register, canceling checks, etc.
Closeouts blind help you identify employees who have different totals between what they expected and what actually happened. It’s then up to the employee to explain.
Check employee time reports for theft.
Time theft is when an employee does not show up to work or is not productive during working hours.
Time theft can take many forms. Employees may clock in earlier or later than they are supposed to or use their phones when they should be working. In restaurants, “buddy punching” is common. This involves asking an employee to punch you in.
Synchronize inventory and financial reports.
Make proactive monitoring a habit. Inventory management systems for restaurants that are integrated with your POS software and accounting software can quickly identify discrepancies.
The platform should be able to:
- Product Reports allow you to see all of your orders, top-selling items, current stock, and information about costs and taxes.
- User reports and end-of-day reports. Check your cash drawer and sales activity. Check each transaction that your staff completes and the list of receipts with tip information for each user.
- Accounting Numbers. Do not spend hours manually calculating the numbers for your restaurant. Instead, have them automatically posted every day.
- Cash drawers recap. You can track all activity related to the transaction and get a detailed report.
When they think no one is watching or caring about them, employees feel empowered to steal. These daily audits show that you are managing and investing in their actions, adding accountability.
This information will help you to catch your employees.
- Eat or drink without paying.
- Over-pouring or giving away free food (to get higher tips)
- Taking food home after shifts
- Undercharging (i.e., ringing in a cheaper item at the POS and keeping the difference if a customer pays the higher price)
- Food waste is not reported.
- Too many voids and comps
Provide a meal for your staff and snacks in the break room to prevent food theft. Then, make sure your back-of-house doesn’t let employees graze during their shift.
Analyze void reports and comp reports.
Employees may fraudulently cancel an entire order or certain items in your POS when customers pay with cash. They can keep the money. In your POS, you can easily track and compare voids with your inventory.
Check your void report daily to determine which employees are voiding more than others. It’s important to keep an eye on your shift managers as well since many restaurants require that a manager sign off on void tabs.
Comps are harder to detect. It’s great customer service if you eat the charges if the customers are unhappy, or if the server entered the wrong items in the POS. A high number of comps could indicate a problematic employee.
Average tab time
The “wagon wheel” scam involves employees moving orders from one check into another in the POS and pocketing the cash once the customer has paid.
Imagine a situation where a customer pays in cash for your lunch special and then leaves. Instead of canceling the entire order, which could raise suspicion, the waiter moves the charge into a “ghost check” and keeps the money. The server can continue to spin the wheel for the remainder of their shift, assuming that there will be additional lunch special orders.
Watch how long tabs stay open on average. Also, check the tab averages for each server. Any bills older than a couple of hours should be viewed as suspicious.
Verify possible thefts using recorded security footage.
Robberies and burglaries can be recorded using automated video surveillance systems. They can also be used to catch employees who are voiding checks or stealing inventory. Even when servers claim that customers left without paying (also known as the dine and dash), they can be helpful.
You should also check them regularly.
Register for identity theft and credit monitoring alerts.
It is easier to connect your POS software, inventory management, and accounting software. It also allows for shady employees to steal sensitive financial data.
Employees who are not trustworthy may be able to gain access to your accounting screens and copy the credit card numbers or bank account information. It’s almost certain that your managers will have access to this information every day. 85% of embezzlement was committed by employees at managerial levels or higher.