We’d all like to believe our workforce is as honest, reliable and trustworthy as they present themselves to be, but unfortunately this isn’t always the case. According to the University of Florida, employee theft accounts for 43% of all theft in hospitality businesses, representing millions in lost revenue. Statistically, as a business owner it’s likely you’ve either been stung or know someone who has. Employee theft comes in many forms and some employees may not even consider their actions as theft. Awareness of what your staff are stealing and how their stealing it will help you reduce the opportunity for theft in your business. The remainder of this article will highlight ways in which stealing is orchestrated specifically in the hospitality industry
Discounts, voids and refunds
BII Business Doctor Trevor Brown notes “80% of theft will occur somewhere around the till”. Increased use and sophistication of EPOS systems have largely eliminated employees being able to skim cash directly from the till. However, phoney discounts, voids and refunds are all ways to take money from an EPOS system without disrupting the end of day reports, meaning theft can go unnoticed. The best defence against this is to restrict these functions to senior staff. This ensures floor staff have to go through the correct escalation procedures when removing incorrect items from the bill or refunding a customer. Managers and supervisors must sign off these actions, meaning they will have to shoulder the responsibility of a refund. Not only will this minimise the number of refunds issued, it restricts the number of staff that have the capacity to legitimately deduct revenue from your business. These permissions safeguard your business against the excessive or fraudulent use of void functions by unscrupulous staff.
Unfortunately, with increased responsibility comes increased opportunity for theft, and senior staff choosing to steal from your business have a good insight into how to cover their tracks. By the very nature of their role, these staff will work alone, unsupervised after hours, ensuring they meet little resistance if they choose to void a number of the day’s transactions and pocket the cash. Langley’s back office interface provides extensive records of what voids are made, allowing you to see what products were removed from which bills, at which time and who authorised them. Keeping a close eye on this data will allow you to see any excessive or out of hours voids on a specific account.
Food and drink ‘On the house’
Whether it’s a few cheeky freebies for mates at the bar, palming off an unsatisfied customer with “free” dessert, or snacking on the complimentary bread rolls, it’s theft. The term ‘on the house’ only applies to the owner of the house! You wouldn’t invite your employees around to pilfer from your bread bin or eat your chocolate mints at home, so why stand for it in your business?
Inventory management is your biggest defence against this crime. It’s unlikely you’re going to catch staff in the act. Unlike the less obvious forms of theft, this is tantamount to taking cash out of the till and staff know it’s wrong. The data afforded by your EPOS system acts as proof. You may not be able to point the finger directly at certain staff members but knowledge is power, and if they know you can see stock depletion with no discernible incoming revenue, they will be less inclined to take the risk of being caught.
Hospitality customer Curtis Rowling lamented his poor stock control prior to his systems installation, “I had no idea how much stock I was missing until I did a stocktake and realised I had thousands of pounds less than I was expecting.” Research has shown that shrinkage losses can be as great as 0.89% of the sector’s turnover. This seemingly small percentage adds up to £3.1 billion lost in the UK alone. This could be the difference between a profit and a loss for your business at the end of the year.
We all know accidents happen and some degree of wastage is to be expected. It’s important to keep an accurate record of wastage for stock management purposes and to try and streamline procedures so the mistakes aren’t commonplace. Some restaurateurs take a root of charging staff for mistakes, whether out of their pay packet or their tips. This heavy-handed approach, while an option, may result in some employees not owning up to their mistakes due to embarrassment or fear of reprisal.
Acknowledging mistakes are made and explaining to staff while the situation is far from perfect, knowing about the issue will allow you to correct the stock inventory on the system, essentially clearing anyone of any wrongdoing. You could even offer your staff incentives, such as a group day out for months showing no stock discrepancies or minimum wastage. This should encourage staff to less careless, reducing mis-pours, dropped food and discourage potential theft.
Intelligent stock management systems provide detailed data reports allowing you to track trends, including wastage. You can track the data for any time period, hourly, monthly or annually. This insight reveals telling correlations; increased levels of wastage when certain staff members are in may suggest they have training needs or highlight potential theft. Alternatively, increased wastage of certain products may suggest inefficiencies in the kitchen or unpopular items on the menu.
Perhaps the least obvious form of theft is self-imposed breaks. No one begrudges their employees a moment to catch their breath after a busy service or a scheduled food break in a long shift, but excessive self-imposed breaks disrupt the flow of service and this lack of productivity costs. Even in slow periods the bar manager’s favourite adage “time to lean, to clean” should apply. There’s never “nothing to do” in hospitality; restock, cleaning and service prep often get overlooked, and where it maybe be more desirable to have a chat with the wait staff about their post-work plans or watch cute puppy videos on Facebook, this isn’t what you’re paying employees for.
Mobile phones are often the biggest culprit when narrowing down sources of distraction. Recruiting agent, CareerBuilder, found that 50% of UK bosses consider mobile phone use the biggest productivity killers in the workplace. Not only are phones a source of distraction to staff, front of house employees seen candy crushing behind the bar can have a negative impact on your reputation. Is there anything more unprofessional?
Having set policies to deal with these issues will reduce the opportunity and temptation for self-imposed breaks. Implementing a mobile phone ban during service will increase productivity. Consider having lockers where staff can keep their belongs. Employees won’t want to highlight their flagrant phone usage by making repeat trips to their locker. Consider warnings and reprimanding repeat offenders. People are more inclined to work than stand and do nothing, so removing this distraction will see monotonous jobs that usually go by the wayside completed.
Hospitality roles are high pressure so breaks are an integral part of employee welfare as well as a legal requirement. Have a clear policy that outlines when and where breaks can be taken and communicate this to all staff. This can be monitored by sign in sheets or senior staff, but establishing a trusting relationship with employees should foster the best results.
Reducing employee theft begins with good hiring practices. The hospitality sector has one of the highest staff turnover rates, at 72% in 2015. This revolving door system makes small businesses an easy target for staff with sticky fingers. The best prevention is to practising good hiring practices. Follow up on references, candidates with something to hide will use bogus or old referees and rely on them not checking up. Facilitating high levels of employee engagement through great training, transparency and appreciation should help dissuade the select few considering taking from the till.
While it may be impossible to eliminate employee theft, the opportunity can be dramatically reduced. The data generated by your EPOS affords you greater insight and control of your business operations, safeguarding you from underhand employees who slip through the net.