Restaurant employees can hurt profitability in a variety of different ways.
Rarely is restaurant theft as simple as taking money from the cash register.
Given that restaurants operate on incredibly narrow margins, it is important to identify and reduce the opportunities for employee theft. Here are five common ways in which dishonest employees steal from restaurant owners and customers.
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Fraudulent Tip Adjustment
Most of us are familiar with this scam. It is as simple as adjusting tips on purchases made with cards. Credit card tips written on bill receipts are entered into point-of-sale (POS) systems manually. This can make it easy for waiters to steal in small increments over time, as a dollar or two is not easily noticed. Such incremental amounts can quickly add up over time. In order to avoid detection, waiters might change numbers on signed receipts (such as turning a 1 into a 7) or claim that the handwriting was difficult to read.
The Wagon-Wheel Method
One of the most commonly used scams in the restaurant industry is known as the wagon wheel. This scam involves transferring an item that a server is responsible for making themselves (such as a beverage or cocktail) across different checks and pocketing the change. For example, a customer orders a cocktail for $7.00 and leaves a $10 bill to pay. Later, someone else orders the same drink. Instead of closing out the check from the first patron, the waiter instead transfers that item to the new guest’s check. The waiter can do this repeatedly throughout the shift. With quality POS software, this opportunity can be reduced by requiring managerial approval to transfer items, or by tracking suspicious activity.
Providing Free or Overpoured Drinks
Giving out free drinks is a popular method by which bartenders and waiters attempt to get a larger tip, as beverage sales can be difficult for managers to track, especially without CCTV or other employee monitoring technology above the bar area. The reasoning is obvious. Alcohol is expensive, and overpouring or providing free drinks is an easy way to ensure a big tip. But this tactic extends beyond alcohol. Giving away soft drinks can be extremely damaging as well. Most restaurants can expect to earn up to 90 percent profit per beverage sold. This is often far more than the amount earned on food sales.
Voiding or Comping Items and Pocketing the Cash Difference
In this type of scam, a server charges a customer the full amount for their order, but subsequently voids items from the ticket and keeps the cash. For example, a customer orders three items for a final bill of $25. The customer then leaves behind $30 cash on the table for the bill and tip.
The employee then voids out one of the items, bringing the total down to $18. Thus, the server pockets the extra $7 plus the original $5 tip, and the register still reflects the correct amount of cash-based sales. Detection can be difficult without a good POS monitoring software unless management pays close attention to end-of-period sales, voids, and comps.
Unreported Food Waste and Eating Without Paying
Working around food all day can tempt even the most honest employee. Generally speaking, food theft is more common among kitchen staff rather than waiters, given ease of access. But it is also common for wait staff to eat kitchen mistakes, returned dishes, or voided-out items. What employees often fail to realize is how these actions can artificially inflate shrink and affect inventory.
Inventory shrinkage in the foodservice industry can be notoriously difficult to track. Fresh food and produce can further complicate matters as items can vary in size and quality from week to week. When kitchens receive a meal complaint, a new dish is typically prepared (also called a re-fire), free of charge for the customer. Waiters understand that in order to receive a decent tip, the guest must leave happy. Some will avoid involving a manager or taking note of returned dishes unless absolutely necessary. Too many mistakes often lead to termination. When re-made meals are not taken into account, this will artificially inflate the shrinkage rate.
Restaurant Theft Implications
It is important for management to educate employees on how seemingly insignificant actions can impact the entire restaurant. Many kitchen and wait-staff do not understand how restaurant theft can harm more than just the guest or manager directly involved. Staying up to date on common scams is vital for continued success in a volatile industry.
This post was originally published in 2017 and was updated October 29, 2018.