Industry News | March 19, 2013 | QSR Exclusive Brief

Brands Battle Theft, Buddy-Punching With Biometrics

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Employee theft may not be many brands’ No. 1 challenge in the ever-tenuous economic environment, but it’s a threat that exists in many forms. And quick serves across the industry are doing something about it, with the help of biometric point-of-sale systems.

For the last five years, healthy beverage brand Smoothie King has used a fingerprint scanner systemwide to help establish employee accountability and solid cash-handling practices, says David Tornabene, vice president of operations for the 600-plus-unit brand.

He says the fingerprint scanner helps remedy the risks that come with the access codes, employee IDs, or swipe cards traditionally used for many non-biometric POS systems.

“If someone just has an access code, that code can be given to other team members,” he says. “You could look over the shoulder and capture somebody else’s code and use their code not only for clock-ins, but to assign yourself to cash drawers and to do voids and refunds.”

The brand’s fingerprint scanner, however, provides definite identification and helps keep employees as honest as possible by eliminating the popular practice of buddy-punching—when an employee clocks in for a team member who isn’t in the store—Tornabene adds.

Because biometric POS systems help create greater employee accountability by tracking exactly who performs each transaction, he says they also help streamline operations.

“There’s less tracking and chasing a bunch of loose ends that you’d have to do a lot of investigatory work to really find out,” Tornabene says. “It means less time spent on the day-to-day minutia of having to go through a whole bunch of different reports and look at individual transactions.”

Though Popeyes isn’t experiencing any major issues with employee theft or time and attendance fraud, the chicken chain chose to proactively adopt a biometric POS system in November 2010.

“We were aware of all the potential issues that could be going on in our restaurants and thought it was a good time to put biometrics in because it closes the door on several potential areas of loss,” says David Reid, chief technology officer for the brand.

He says the chain uses its biometric POS platform in all company-owned units for two primary functions: employee clock-in and clock-out, and manager overrides for voids, refunds, and employee discounts.

Reid says loss due to the latter is the most dangerous function many traditional POS systems fail to protect against, as manager codes and swipe cards can easily be stolen or shared.

“There are cases where you could go into a restaurant and see the swipe card sitting right next to the terminal where the manager has just given it to the drive-thru cashier and said, ‘In case you need it, here’s the card,’” he says. “There’s obviously potential for abuse when that happens.”

And when abuse does occur—with an employee giving out “friends and family” discounts just once or twice a day, for example—the costs can quickly add up.

“Multiply that across the course of a year, and you could be talking tens of thousands of dollars that’s walking out the door,” Reid says.

In addition to saving money at the point of sale, biometric systems can reduce unnecessary payroll costs. Because time and attendance fraud can account for nearly 5 percent of overall payroll costs, according to the American Payroll Association, this ultimately results in a more profitable unit.

At Smoothie King, Tornabene says even the most experienced operators have seen improvements in labor costs since adopting biometric POS platforms.

One additional reason quick serves are adopting biometrics is simple: It’s convenient, says Jason McEachern, vice president of technology for Wingstop.

“You don’t have to remember an employee ID or an operator ID,” he says, adding that the systems are efficient “because it’s very quick to just swipe a fingerprint to log people into the sales system or start a cash drawer audit.”

Though Wingstop doesn’t biometric POS systems in its units at this time, McEachern says the benefits mean the brand will likely adopt it in the future.

But making the switch to these systems doesn’t come without its own set of challenges. Smoothie King’s Tornabene says there are installation and setup costs, as well as maintenance costs to ensure the scanners are clean and functioning correctly.

“But it’s a nominal extra expense per location relative to the amount of cash you’re handling and the potential for loss,” he says.

Tornabene adds that many Smoothie King franchisees were resistant to change from the old POS platform, but “once we got in there at the store level … to help demonstrate how the system could benefit them, the franchisees really bought into the program.”

To learn more about how brands across the industry are using biometric POS systems to cut down on loss and drive profitability—and how your brand can do the same—register for QSR’s upcoming webinar.

By Mary Avant