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Preventing Employee Theft Year-Round

Editor’s Note: This blog post originally appeared on the Restaurant HR Group blog, and is reprinted with permission. We’ve also added some additional advice at the bottom.

Employee theft can wreak irrevocable damage on a restaurant, not only in terms of morale but from a financial perspective too.

Considering that there are reports that 75 percent of all restaurant inventory shrinkage occurs as a result of employee theft, it’s a critical issue facing today’s restauranteurs. And since it’s not uncommon for an increase in employee theft — or theft in general — to occur around the holidays, now is a great time to double down on your prevention efforts.

Here are three ways that employee theft can occur and the best practices to prevent it year-round.

  1. Point-of-Sale Transactions

Theft occurring at point-of-sale (POS) terminals is extremely common in retail settings and restaurants are no different. Just think of this scenario and you can understand why: It’s the holiday season and you have an influx of patrons coming in to eat and drink. They may be using coupons or taking advantage of other holiday promotions, purchasing or redeeming gift cards, and don’t forget about the nightly holiday parties that the restaurant is hosting.

This hectic environment can make it difficult for a restaurant manager to keep an eye on every single employee. In turn, this may be a prime time for employees to “skim the drawer.”

There are all sorts of methods that ill-intentioned employees, and unfortunately, even managers may use including:

  • Charging a patron for a top-shelf vodka but ringing up and serving them the lower quality liquor and pocketing the difference in cash;
  • Ringing up a transaction as “no sale” and taking the patron’s cash anyways;
  • Voiding out a cash transaction at closeout and keeping the cash for themselves.

Prevention Tip: Track all food and beverage sales with a POS system. When an order is placed and sent to the kitchen or bar staff, it cannot be altered or changed without consent from management. Keep an eye out for an increasing number of “no sale” transactions when you review the sales records. An uptick in this number should warrant further investigation.

  1. Employees Stealing Food or Liquor

While the POS system can help cut down on employees stealing food or beverages for themselves or others, it doesn’t necessarily address the potential theft of ingredients. Items like canned goods, meats, or bottles of liquor are all susceptible and can add up very quickly.

Prevention Tip: At a minimum, install security cameras at all entrance and exit points, POS locations, and the office where the safe is located or where deposits are prepared. Make sure that your security system utilizes a digital video recorder (DVR) platform so that films are stored and can be reviewed days or weeks in the future as needed. Visible security cameras have the added benefit of being a deterrent for robbers as well.

If possible, integrate your security and POS systems for even greater protection. This can be a huge time-saver too because the sales transaction history can be searched and filtered by employee ID number, date, time, and even transaction type. And you’ll have a corresponding video image that links to the transaction as well.  

Of course, be dutiful about tracking inventory also. And if you allow your employees to take food home, make sure the policy is clearly stated and that all employees understand it. Implementing a manager sign-off for all food removed from the building can be a good tactic to keep things in check too.

  1. Money Missing From Safe

If you have money come up missing from the safe, there could be a combination of causes — many of them preventable by having solid precautions in place.   

Prevention Tip: Not everyone needs a key or code for the safe — choose wisely who gets access. Consider using a drop safe so that employees and managers can drop cash into the safe without opening it. Upon termination and perhaps as part of the employee exit interview, ensure that keys are retrieved and the employee’s safe code is inactivated.

Make sure you limit employees’ access to critical areas, such as the office where deposits are handled or stored, and that this area can be locked and secured. Ideally, you’ll already have cameras in place in these areas too which may provide yet another safeguard.

  1. Time and Wage Theft

Another way you may be losing money is through time theft, whether intentional or unintentional. Employees clocking in early or late, either at the ends of their shifts or from breaks, or even clocking in for each other by buddy punching. At Homebase, we see an average of $192 per month per location in unscheduled wages — in other words, $192 a month in labor costs that weren’t planned. It’s worth noting that this “theft” might not be entirely malicious. If you’ve got a great worker that happens to come in a bit early, and they’ll contribute positively to your business immediately, go ahead and allow them to clock in early. On the other hand, if they’re coming in early and enjoying a coffee break while on the clock before they start their shift, you probably want to prevent that.

Prevention Tip: The easiest option is to automate your employee scheduling. This will save you time and also prevent things like early clock-ins, as well as eliminating a lot of your paperwork. With a service like Homebase, you’ll be able to manage scheduling and set up automated clocking in rules when you use the scheduling in conjunction with the free time clock. You can customize your settings such that employees can’t clock in early.

Prevention is Key

As much as it pains me to say, there isn’t a 100 percent foolproof method for preventing all types of employee theft. Instead, it’s about prevention and having a basic system in place with multiple layers of security at each potential weak point.  

Follow me on Facebook, LinkedIn, Twitter, and Instagram for more HR and leadership insights. Or check out my company, Restaurant HR Group, to learn how we help restaurants manage their greatest assets.

Have you had theft occur at your restaurant? What safeguards have you taken to prevent employee theft? Please join the conversation below.

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