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The Top 5 Restaurant Theft Tactics & How to Counter Them

Posted by Brady Thomason, NetSuite Solution Manager, Restaurant & Hospitality

It’s one thing to report lackluster restaurant sales because of a slow economy or missed marketing opportunities. It’s another entirely to realize the people you’ve hired to work for you have been skimming off the top and stealing from the register.

Don’t think you have an employee theft problem? You’re probably wrong. Every year in the restaurant industry, employee theft accounts for $3 to $6 billion of missing income for high-volume restaurants across the country. And it’s likely that at least some of that missing income comes from servers at your restaurant, no matter how diligently you’ve screened your hires.

No owner wants to think their restaurant, their managers or their team members could commit employee theft. But successful restaurants know that even the most talented employees can sometimes be tempted and actively take steps to identify, solve and prevent sources of employee theft. If you’re ready to tighten up your finances and crack down on employee misbehavior, here’s what you can do to stamp out employee theft.

1. Identify common types of restaurant theft

You can’t stop behaviors if you don’t know to look for them. That’s why the first step in reducing or limiting employee theft is identifying what kind of theft is taking place in your restaurant. This can be challenging because employees prone to stealing can go to great lengths to hide their activities, such as varying the timing and frequency of the theft, and taking action when there’s no one around to report it, such as when a shift starts and ends.

Here’s a look at five of the most common types of employee theft:

  • Voiding cash checks – After accepting a cash payment from a customer, the employee edits the order to reflect a smaller balance due and pockets the difference.
  • Excessive loyalty card use - When a customer does not have a loyalty card, the employee uses their own loyalty card and pockets the benefits such as free food or discounts.
  • Free food and drinks - On breaks or before and after shifts, employees take food for themselves or others which can add up to more than what the restaurant offers as an employee perk.
  • Bogus dine and dash - An employee claims diners left without paying for their meal when in reality the customers left cash, and the employee didn’t ring it up.
  • Deceptive product - An employee brings in a food or drink item, such as a bottle of alcohol, and pockets the cash from selling it to customers.

2. Identify employee theft prevention strategies

Once you’re aware of different ways employees may be committing theft, you’ll want to take a look at preventative strategies to stop thefts from occurring. The most effective place to start is with your employee onboarding and training practices.

When employees first join your company, you have an excellent opportunity to set your expectations around employee theft and make clear that it’s not acceptable behavior. You also can explain how you approach employee theft and make it less appealing by explaining what kind of prevention practices you have in place, such as security cameras, reviewing receipts and management spot-checking.

For example, during training, you can let employees know loyalty cards are only for customer use and that it’s not acceptable for them to scan their own cards when employees make purchases. Then you can let them know that managers scan the daily reports to see how frequently loyalty cards are used. Employees will know this kind of theft isn’t acceptable and they won’t get away with it.

3. Invest in modern reporting technologies

Unfortunately, preventative strategies will only lower employee theft; they won’t eliminate it. That’s where your third and final strategy comes into play: regular reporting and monitoring of your point-of-sale (POS) system and any integrated

third-party systems, like guest loyalty and engagement software. Almost every form of employee theft can be addressed with careful reporting. The challenge is that legacy restaurant POS systems don’t have the custom reporting capability managers need to stop or prevent it. A modern system can track and flag activity that indicates employee theft.

For example, a POS system that tracks restaurant inventory can keep a detailed account of incoming food deliveries, alcoholic drinks and prepared foods. Plus, it can set a limit for how many comps or voids a bartender or manager is allowed to make. You also can make sure your third-party loyalty engagement software is robust enough to map the card numbers and timing of each purchase so it’s easier to detect patterns that might hint at less-than-ethical behavior on behalf of your staff.

At one point or another, any staff member could give in to the desire to make more money by committing employee theft. That’s why your restaurant leadership team needs to look out for these behaviors and put policies and practices in place that make it as difficult as possible to steal from the restaurant, thereby removing the opportunity from staff members who are tempted.