Restaurant operations have abundant opportunity for loss through theft and fraud, but leave comparatively few indicators to track. Most of the forensic and detection work focuses on monitoring the paperwork that is used to assess the operation and following the trail that is left by gaps or problems revealed by the paper flow analyses.
A secondary vulnerability is receiving door and ordered processes, which are prone to fraudulent actions.
Poor Yields Analyses
Your weekly inventory counts should include an analysis of ideal versus actual yields for every inventoried item, from salt to streak, serviettes to soap. While many instances of a poor yield on an item may be attributable to miscount or accidental misuse (or overuse), where several related items, such as the vegetable and starch that accompany a meat all have poor yields, or where one key item consistently has poor yields, you may be experiencing either theft of the primary item or fraud (improperly recorded sales, sweet-hearting, etc.). When an item or items show poor yields, consider conducting more frequent counts, to determine the shifts or days on which the shortages are occurring.
Preferential Suppliers
If your employees seem to have developed preferential suppliers, they may also have established a liaison with those suppliers that can lead to collusion, or that may enable the supplier to charge more than competitors. To ensure that you are maintaining the lowest cost per unit, you should always have multiple suppliers available for any inventoried item and routinely verify the lowest, best price.
Inconsistent Plating & Presentation Arrangement
Every meal, every time, should be precisely the same as every other. In a fast food outlet, for instance, a serving of fries that is supposed to be 4 ounces should always be four ounces, a piece of cod exactly the same weight for every customer and a six-ounce glass of wine always six ounces. Two problems arise if this standard is not maintained. First, the customer with the larger size will expect it every time, rather than being appreciative of the “accidental” larger portion. This affects your yields. Second, a lack of standards allows staff to “play favourites with certain customers, possibly in exchange for a financial kickback.
In one beverage room, the bartender always long-shotted some regular customers, receiving healthy tips in return. At the same time, he used watered drinks for others, to offset the inventory discrepancy.
Always scale and meter every item.
Failure to Use Perpetual Inventory Management
Perpetual inventory systems are effective tools in every business, but particularly important in restaurants. These computer programs require that you input purchases, wastage, returns, complimentary meals, staff meals and all sales. Using the proper portion and yields data for every sale item, you are able to see, at a glance, what your theoretical stock levels may be. In some software, you also can establish a mini/max ordering system that automatically triggers an order when stock reaches a certain level. Without this system, or if your staff fail to use it properly, you may experience shrinkage through inadvertent error or theft and fraud. Ensure that all staff are providing the proper inputs so that the perpetual inventory system accurately reflects your operation.
Low Supervisory Levels of Staff (Off-hours)
Low levels of supervision create opportunity for theft, fraud and carelessness. Check your line crew and supervisory staff regularly to ensure that they are providing proper supervision at all hours.
Sweet-hearting
Sweet-hearting is one of the most common problems in restaurants, particularly with younger staff. Friends and family often pressure staff to provide free meals or specials, free drinks and other perks. But sweet-hearting also occurs with regular customers, who may slip your employee extra money to provide free items. Watch for staff who are overly connected to specific customers, or customers who insist on being placed in a specific wait staffer’s area. Watch for over-portioning for customers.
Skip the Dishes or Uber Tracking
Most restaurants have a holding and receiving area where delivery drivers congregate. Make sure that no extra items or unregistered items are in this area. Maintain an accurate log of each transaction and have the driver sign for each pickup, where possible. Have only one staffer on shift responsible for all orders to avoid collusion. In some instances, staff have friends pick up orders under the guise of being Uber drivers.
Waste & Spoilage Records Not Up to date
Before any item or ingredient is discarded, it should be tracked on a detailed log sheet, with an employee initial. This includes rejected meals, poor quality returns, spoilage and trim of preparatory ingredients and the reasons the item is discarded. Where a restaurant does not tack and monitor such items, your inventory counts may reveal discrepancies in yields. Such logs also allow you to identify problem areas in preparation, handling and ordering that may have to be addressed. Take note if specific staff members seem to have high spoilage rates.
Lack of Control, Ordering & Receiving
Where you note that staff are not adhering to company directives on handling of incoming orders (including weighing, counting and evaluating condition), or where the person ordering seems to be ordering too much, not verifying best prices, not matching purchase order prices to bill of lading or packing slip prices, you may be encountering fraud and/or theft by that employee. If you do not have an established and monitored policy for ordering and receiving, you are providing opportunity for loss.
Dine & Dash
Dine and dash has become a common problem in restaurants. The experience is not limited to high end restaurants, although dine-in venues are almost always the victims. There are signs that a customer may be planning to dine and dash. These include ordering pricier items, ordering larger quantities than that size of group normally would do, paying little regard to price and ordering items that seem inconsistent with the customer demographic, ordering numerous drinks and/or desserts, and apparent payee leaving table to “go to washroom” at end of meal. There are many more indicators, but staff should alert supervisors to any of these situations.