Outside Insights | June 2017

5 Key Steps to Managing Restaurant Theft and Fraud

Employee theft accounts for around 75 percent of restaurant losses. Are you prepared?
Numbers never lie. Find a way to track transactional data. Thinkstock
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As a restaurant operator, you must realize that your employees may be behind your recent food and beverage losses or the POS manipulation scheme you can't seem to pinpoint. They may think they aren’t harming anyone, you will never know, or the chance of getting caught was slim to none.

The National Restaurant Association estimates that employee theft accounts for around 75 percent of restaurant losses. Another important measure is theft equal to more than 3 percent of annual revenue. In this day and age, we can manage and prevent losses in ways our predecessors couldn't. Understanding that investigating every transaction can be difficult, if you have a comprehensive loss management system in place, there is a higher chance theft will be deterred and detected.

There are many solutions available for detecting possible fraud, but detection is only the start. You need to know if anything has been done about the items detected. Were the issues real, or was it a matter of training? You need to know if you are making progress toward reducing fraud. What is the trend line for the past six months by District?

Managing fraud is a continual process, and you need the tools to record events and the data to keep track of unresolved issues. But your day is already filled with too many responsibilities. So, the solution has to be highly automated to reduce the amount of time needed to stay on top of fraud. The solution should automatically route possible issues to the person most capable of investigating them. As they do the investigation, the system should allow them to record the resolution they feel is best for the situation. And the system should give you an up-to-the-minute account of where all the detected issues stand.

Here are five steps to manage restaurant losses for the restaurant manager:

Monitor

Numbers never lie. Find a way to track transactional data from your Point of Sale (POS) and Back-of-House (BOH) systems. Through ancient spreadsheet methods or with an external system that integrates data from all sources, you need to collect and monitor your data.

Detect

With your data, pinpoint odd situations. Let’s look at an employee that has a high percentage of voids on reopen checks, or excessive chargebacks. This information should be flagged because it's potentially problematic.

Route

Once you have detected a possible incident, depending upon your position, whether it’s a restaurant manager, district or regional manager, inform the appropriate management.

Resolve

Allow management to do their job. They must gauge the severity of the issue and resolve the problem how they see fit. For example, after management confronts the situation there are factors to consider. Did they implement disciplinary action, termination, employee training?

Measure

Track the incident for prevention and reference. Let's say an issue arose and it was dealt with. Can we set specific metrics to prevent a similar event? Such as setting allowable guidelines for discounts, thresholds for chargebacks, etc.

Don't be a restaurant that tolerates losses, create a plan to manage and prevent theft today.

With more than 30 years of experience in the restaurant and technology industries, Dave Bennett has steered Mirus through its formative years as well as into its current growth phase. Prior to joining Mirus in 2000, Dave delivered more than $500 million in large-scale information services contracts for IBM Global Services. In addition, he previously served as the vice president for information services for the now Dunkin’ Brands, where he managed the information strategies and policies of more than 5,000 Baskin-Robbins and Dunkin’ Donuts locations. Dave holds a B.S. in Business Administration and MBA from Northeastern University. With prior experience with Dunkin’ Brands and IBM Global Services, Bennett has led Mirus through its formative years and its current growth phase. He holds a B.S. in Business Administration and MBA from Northeastern University.