Common Restaurant Employee Fraud

bigstock-Young-barman-15604286Restaurant employee fraud and theft occur in several ways. Don’t think that the only ways fraud and theft occur is by stealing from the till or eating food without paying for it. There are a number of ways employee theft can occur in your restaurant or bar that may not have occurred to you.

Refunds: Restaurants and bars do not typically lend themselves to refunds, so this type of theft may be disguised as another type of transaction. According to LPI “Uncommonly common restaurant theft happening to you,” a McDonald’s employee was arrested for stealing $900 in two weeks by ringing up fake returns and applying them to her own credit card. Beware if your POS system allows for negative sales and put processes in place to require any negative sales to be entered by a manager. Also, diligently and regularly review your POS reports to spot negative sales.

Gift card mishandling is another way restaurant employees steal from their employers. Ensure that your gift cards use scratch-off labels to protect the card account number and be certain that you understand how your POS system handles gift card transactions.

Like gift cards, customer loyalty programs can also be a hot bed for restaurant employee fraud and theft. Technology allows cards to easily be duplicated, and employees may keep cards handy to scan for discounts for friends and family. Again, diligence and monitoring are your lines of defense against this type of fraud.

Other Solutions to Prevent Employee Fraud

Some restaurants and bars are turning to analytics to uncover and prevent employee theft. According to the Wall Street Journal “Restaurants Use Analytics to Thwart Employee Fraud,” employee fraud costs the U.S. economy as much as $200 billion annually. It’s an especially big problem in the restaurant industry where profit margins are typically meager.

NCR Corp.’s Restaurant Guard software monitors all POS data in real time for more than a dozen typical scams. You may find that the simple notion that every keystroke is being monitored and can be tracked is enough of a deterrent to eliminate employee theft.

Boston area restaurant and bar owners who suspect they have a problem with employee fraud and theft can also turn to a company like Data Quest LTD for both investigative and protective services.

Warning Signs of Employee Fraud and Theft

Profitable Hospitality lists several warning signs of staff behavior that should raise a red flag or two:

  • Rewriting records for neatness’ sake
  • Refusing to release records during the workday or shift
  • Rarely, if ever, taking vacation, personal or sick days
  • Disproportionate standard of living based on salary
  • Answering questions with unreasonable or awkward explanations
  • Defensiveness at reasonable questions
  • Excessive criticism of co-workers
  • Covering up mistakes and inefficiencies

Additionally, Atlantic License Brokers featured an in-depth article in one of our recent newsletters, written by Russ Bubas, President of Data Quest LTD, that featured additional red flags regarding employee theft (e.g. beware of a bartender who keeps a swizzle stick or toothpick in his mouth, etc.) and tips to prevent theft and defend your bottom line.

While there are many ways to reduce or eliminate employee fraud or theft in your restaurant or bar, the culture you create establishes the foundation. Lead by example and let employees know that you’re watching.

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