Tuesday, October 2, 2012

4Q Consulting | Restaurant Consulting NYC | Restaurant Consultant | How Much of your Profits are Being Eaten by Employee Theft?

How Much of your Profits are Being Eaten by Employee Theft?
Four Basic Ways to Prevent Employee Theft in your Establishment

As profitable as restaurants can be, often restaurants are losing money due to employee theft.  Loss to theft can be overwhelming; if you are a smaller business owner, this difference can make or break your profit margins.  If you are a larger establishment, think of how much more profitable you would be if you could recover 5% of your bottom-line profits!
There is an entire field of study dedicated to loss prevention in restaurants. It has been estimated that in the US about $52 billion a year is lost due to employee theft and that approximately 95% of all businesses experience employee theft. 
So, what are what you doing to protect your business and your money? Here are 4 basic procedures that can help you limit employee theft in your establishment:

Pre-Employment Background Checks – Proper screening in the recruiting process can lower your risk of being subject to theft. A background check searches for criminal records, as well as verifying information on an application or resume. Studies show that theft is a pattern of behavior that is often repeated: If a candidate steals before they are hired, they are prone to steal (from you, other employees and even customers) once they are hired. The cost of these checks is relatively low compared to the potential loss due to theft in your establishment by hiring the wrong empoyee.

Strict Controls and Procedures – As discussed in our last blog on inventory controls and accountability, many employees steal because they can get away with it. There are countless methods and controls that can be enacted to curtail this: implement and hold employees accountable to, internal security measures such as strict cash controls, and inventory checks; maintain surveillance on the premises and limit employee access to the building to their scheduled work hours, through key and code authorizations.  Above all, make employees aware of the penalty of not adhering to procedures, as well as the likelihood and consequences of getting caught stealing.  Contact us today for more information on how to design and implement strict controls and procedures to protect your bottom line profits!

Time Clock Controls – An often-overlooked theft is time card fraud, when employees are not clocking actual hours worked.  First, ensure that you have clear, written clocking in and out procedures in your employee handbook or manual.  Secondly, have some form of time clock - whether an old-fashion punch type or a computerized POS System.  Hand-written time cards should be avoided, as they are not reliable and pose a liability in many states. Lastly, your clocking station should be under camera surveillance. This promotes accurate clock-in/out and prevents employees clocking in/out for their friends. Think about this: a $15/ hour employee that clocks in 20 minutes early and 20 minutes late on each shift in a week is earning an extra $50 per week or $2500 per year.  If all your employees are doing this, it starts to add up!

Secret or Mystery Shopper Programs –  Although you may normally think of mystery shoppers as focusing on customer service and food quality, shoppers can design programs to look at employee theft. Shoppers can observe employee adherence to policies (e.g. whether the sales are rung up properly or whether items are being given away).  You should have your establishment secretly shopped at least once per quarter.  Let your staff know that you use secret shoppers for this purpose, as this helps promote your culture of accountability. The reports can be a valuable tool in training staff, and rewarding employees who do uphold your policies.
These are just a few ways to start to ensure that you reduce theft in your establishment.

Remember the 4 basics: 
 1. Hire the right people;
 2. Hold your staff accountable through strict controls;
 3. Watch your payroll:
 4. Get an objective opinion from time to time. 

As an owner, you want to make sure that you do not have an environment where it is easy to be stolen from. These practices will discourage your employees from stealing.
Let 4Q help you get these procedures and practices into place
while helping you to grow your profits!

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