It has been estimated that about $52 billion a year is lost due to employee theft and that approximately 95% of all businesses experience employee theft. Employee theft amounts to 4 percent of food sales at a cost in excess of $8. 5 billion annually, according to the National Restaurant Association (Neighbors 2004. ) The small Business Administration indicates that 60 percent of business failures are a result of employee theft. There are several reasons why the restaurant industry is extremely susceptible to employee theft. They are: o High employee turnover o Easy access to cash Food and Liquor are highly desirable items There are many different way in which restaurant employees steal from their employers, some of the ways are: 1) Under-ringing of sales and the tearing up order tickets are two longtime scams in the food and beverage industry.
An employee serves a customer in the restaurant, and the customer pays the check at the meal's end, but instead of putting the money and ticket in the register, the employee tears up the order ticket and pockets the cash. The restaurant owner has no record of that order or money tendered. Or an employee sold something for $17. 50,' and rang in $7. 50 The employee put the $17. 50 in the register and at the end of the night, would pocket the extra $10.
00. Since the cash in the register drawer would match the transactions listed on the register tape, the theft would not be known. 2) Food theft or taking home supplies. 3) Leaving and coming in at a later time to clock out. 4) Phony walk out - waiter / waitress keeps the cash and claims that the customer left without paying 5) Phantom bottle - bartender brings his or her own bottle of liquor and pockets the cash earned from its sale An employee stealing from their employers has some of the following consequences: For Restaurants: 1) Restaurants have to pay state tax on every ounce of liquor they pour, so when drinks are given away by employees the restaurant still has to pay tax on the liquor, but they don't receive any revenue from the drink (Pratt 2001. ) 2) Increased menu prices to compensate for stolen food and beverages.
3) Many restaurants are forced to close their door because they can not make a profit because they are losing to much of their revenue to employee theft. For Customers: 1) Customers will pay a higher price for food due to the restaurant compensating for their losses. For Suppliers: 1) Employees have been known to steal items as the supplier is delivering them. When the management goes over the delivery list and notices the absence of the item they will refuse to pay for the missing item causing the supplier to suffer a loss.
The most important way to prevent employee theft is through management controls. One way to do this is to make the manager a partner in the business where they receive a compensation package along with a very healthy bonus package. One company using this approach is Outback Steak House in the where managers are partners and receive a bonus package which can earn them up to US$150, 000. (web 012.
html. ) Some other ways of reducing employee theft are: 1) Provide a receipt for every transaction. Encourage customers to expect a receipt by posting signs at each register. 2) Get your employees involved - Offer rewards to employees who report theft. Ask your staff for their suggestions on how to eliminate theft. 4) Secret Shoppers: Secret shoppers or mystery shoppers pose as customers and watch employee behavior and situations that owners can't always observe.
Secret shoppers are trained to look at how customers are treated, the type of service provided, efficiency, honesty, sales techniques as well as misbehavior. 6) Video Surveillance: Often just installing cameras will cause employees to think twice before stealing. But in order for them to be effective, you need to let your employees know you check these by offering them feedback (Positive or Negative) based on their job performance by viewing these videos with them. References Neighbors, Andrea The Greater Baton Rouge Business Report. Baton Rouge: Jul 20, 2004.
Vol. 22, Iss. 24; pg. 62 Pratt, Mary K. The Boston Business Journal. Boston: Nov 23, 2001.
Vol. 21, Iss. 42; pg. 37 web 012. html.