Craig A. Whitfield, Author, “Guess Who’s Eating Your Profits…”
It goes without saying that the quickest way to a profitable business is to bank all of the day’s proceeds. However, the economic health and profitability in the food and beverage industry is continually under assault. Business environment unknowns, including fluctuating food costs, benefits, minimum wages issues, etc. continue to assault the industry’s bottom line.
Control the Controllables
One key controllable which is often overlooked or misidentified is employee theft. It is estimated by industry experts that restaurants and bars lose 4%-5% of sales every year to thieving employees. Theft in our industry is a serious problem. Controlling the problem allows bars and restaurants to realize all their profits without sharing with a “silent partner” – the restaurant and bar thief. Employee theft does not have to be a “cost of doing business.”
Careful examination of all the standard reports at your disposal such as inventory, sales, and sensitive transaction exception reports tell only part of the story. Digging a little deeper and analyzing the sales report of each employee can reap great rewards. Which employee is running ahead of the pack in voids, discounts, birthday desserts, and coupons? Don’t assume that it’s because they are working a few more hours, or perhaps they appear to be your best server or bartender. Look at those totals as a percentage of the server’s total sales. That removes the payroll hours from the equation and provides you with a clear picture of what’s going on. Dig deep, and keep an open mind. Then, and only then, will you be able to discover what lies beneath the surface.
But, knowing you have a thief in your midst is only half the answer. You need to know the extent of the losses, and more importantly, you need to know how to fix the problem. Moving forward with a quality investigation will increase your chances for a full recovery of losses, ensure a successful prosecution, and guarantee future profits.
Keep an Open Mind
One of the most important parts of the internal investigation is the manager’s mindset. Many restaurant and bar managers believe their staff is honest and would never steal from them. Unfortunately this is not true. When managers hold this belief the stage is set for huge losses. Restaurant and bar owners must believe that they have, or will have, a thief working for them at some point in time.
Many managers, upon learning of a thief working their craft in their establishment, fail to step back to fully analyze the situation. Many managers simply announce that they have uncovered a possible theft problem and are “watching it.” Others simply have an emotional confrontation with the suspect employee with little or no evidence to back up their suspicions. When this happens, you lose and so does your establishment. Your ability to conduct a quality investigation has been compromised which will have a negative impact on future profitability.
The Next Step
Instead, a different approach is in order. Step back, take a deep breath, and think about your next step. It’s time to do your homework prior to making your next move. Pull together all available information for review. Does the high void total point toward one particular individual? Are there problems with your inventory? Don’t dismiss the high food cost problem as improper recording of waste. Employee theft is often dismissed as an operational deficiency instead of for what it really is – theft.
A steady deliberate effort to get to the bottom of the issue may reap rewards. Sitting down and interviewing employees in a non-emotional manner will have a positive effect on the issue at hand. If you aren’t comfortable with conducting such interviews perhaps it’s time to contact an investigator with a concentration in restaurant and bar investigations. Another option is to contact local police to open a criminal investigation. This approach will require diligent management effort. Ensuring investigators have a solid understanding of the reports utilized every day in the food & beverage industry will lead to confessions, criminal charges, and restitution. I’ve seen a number of police investigators set up for failure because they did not fully understand the reports that are used daily by managers. Take the extra time to explain how they work and what information they provide. The confessions, and profits, will follow.
Prosecution = Future Profitability
Nothing speaks louder than having an employee escorted out in handcuffs. Not only will this result in restitution, but more importantly it will send a strong message to other employees that management has taken a strong stance on theft. Watch your profits grow overnight.
[Image courtesy of photostock at FreeDigitalPhotos.net]
About the Author
Upon graduating from Ball State University, Craig Whitfield begin working with the Mishawaka (IN) Police Department. He recently reentered law enforcement after previously retiring. Whitfield specializes in restaurant and bar fraud and theft investigation. He currently resides in Mishawaka, Indiana.