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Business Sense

5 Tips for Curbing Employee Theft at Restaurants

While we'd like to think that our employees are honest, that’s just not always the case. Some employees will pilfer food, alcohol or other items from restaurants while others will go for cold hard cash.

In one extreme case of employee theft, federal authorities said, “Pancake houses were turned into crime dens.” Federal authorities indicted 18 people in Ohio last year in a series of criminal charges, including money laundering, insurance fraud and identity theft, which led to a national restaurant chain losing about $3 million.

While that number is remarkably high, employee theft in restaurants is a broad problem that can drain already lean budgets. Analysts estimate employee theft losses at one percent of revenue, which may seem low, but restaurant profit margins are typically only two to five percent.

According to the Association of Certified Fraud Examiners (ACFE), small businesses are particularly vulnerable to fraud because they may lack the resources and internal controls for financial matters. The ACFE reports that the five most common fraud schemes for organizations with fewer than 100 employees are:

  • Billing fraud
  • Corruption
  • Check tampering
  • Skimming
  • Expense reimbursement fraud

So how do you keep your employees honest and your bottom line healthy? Here are five tips to help you get started:

  1. Keep a close eye on food and beverage costs: Have your food and pour costs increased while your sales have remained the same? Good record keeping can help you determine when your purchases and sales don’t add up—and may indicate a deeper problem.
  2. Watch the till: If you’re noticing that your cash register is consistently over and/or under, it may be a sign that someone is skimming from the register or purposefully not ringing items and taking the wrong amount from the till.
  3. Listen: Often, your employees and customers will see things that you can’t. If you start to hear rumblings around the restaurant, there’s no need to go on a witch-hunt, but it may be time to take extra precautions to protect yourself.
  4. Trust your gut: If someone or something doesn’t feel right, it probably isn’t. Take some time to talk to employees who are acting strange or suspicious to make sure everything’s all right. You may be surprised at what you find.
  5. Know your team. It’s easier for an employee to steal from someone they don’t know. Take a personal interest in your employees and talk openly about theft and its consequences.

With luck, your employees do the right thing. But just in case they don’t, an Ultrapack Plusâ„  policy from Erie Insurance covers you for up to $10,000 in employee dishonesty. It provides protection against the dishonest acts of your employees and covers loss of your money, merchandise and any other real or personal property.

Erie Insurance is committed to selling insurance through local independent Agents and providing insurance solutions for small businesses. Learn more at erieinsurance.com.

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