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Operations | by Karon Warren

Stolen Assets
Employee theft robs you of more than money. Teamwork suffers when crew members can’t be trusted.
Preventing restaurant employee theft.

Competition remains fierce in the quick-serve restaurant industry, and the state of today’s economy only adds to the challenge of making a business a success.

However, there is another real threat to the bottom line: internal employee theft.

Revenue lost to employee theft also can affect employee raises, bonuses, 401(k) matches, and benefits, and it might spur good employees to go elsewhere for it.

Free food items passed along to friends and family, cash pocketed at the drive-thru window, items tossed out with the trash—ask any quick-serve operator and almost every one will have a tale of a different tactic taken by an employee regarding theft. As a result, it takes due diligence to detect it.

Brandon Ansel, who operates a Roly Poly Rolled Sandwiches in Jackson, Michigan, noticed something astray on his bank statements. “We had an employee who was ‘floating cash’—sending us reports that he had deposited the day’s sales, but he actually was taking the money and paying it back later with sales from future sales,” Ansel says. “A careful analysis of our banking records found out this scam.”

In an effort to reduce or eliminate such situations, restaurant owners and operators need to take a proactive stance against employee theft of any kind. First and foremost, make sure every employee knows how the company defines employee theft and the repercussions if someone is caught stealing.

“The employee manual should spell out terms and have employees sign for it,” says Barbara Poole, CEO of Employaid in Ridgefield, Connecticut.

Also, remind employees that theft is unacceptable. This doesn’t mean you have to repeatedly tell them that theft is wrong and they will get caught. Instead, Luis Ramos, CEO of The Network in Norcross, Georgia, recommends creating awareness communications such as wall displays outlining what theft is, the individual consequences of stealing, and the effects such theft has on the company and fellow employees.

Another preventive measure involves having employees take ownership in the activities of the business. “Inspire a collective vision,” says Anthony Silard, president of the Executive Leadership Institute in Washington, D.C. “Use ‘we’ and a team mentality.”

For Ansel, this approach works with his employees. “I try to become a real person with these employees,” he says. “It’s easier to steal from someone you don’t know.”

Of course, technology also provides ways to monitor your business and employees to prevent theft. One of the most common ways to combat employee theft is with the use video surveillance systems.

“Remind employees that a DVR is in use by regularly using examples of activity you reviewed during the employees’ shift,” says Brandon M. Ring, national sales manager for Image Vault in New Albany, Indiana. “This can be positive reinforcement as well as pointing out procedural deficiencies.”

To monitor food consumption, use kitchen management systems, which track where food is going (cooked, sold, scrapped, etc.). By reviewing the system’s log, you can identify where the theft takes place, says Christian D. Koether, vice president of SCK Direct Inc. in Stratford, Connecticut.

I try to become a real person with these employees. It’s easier to steal from someone you don’t know.”

Another effective device is cash-handling equipment such as Loomis’ SafePoint Electronic Safe that can reduce the number of employees dealing with cash, therefore cutting the risk of theft. When implementing such measures, pay attention to those who balk at using these new tools. “Dishonest employees will raise a fuss about the technology, saying it adds time to the process,” says John F. Angove, senior vice president of sales for FireKing Security Products in New Albany, Indiana.

John Rhoads, vice president of business and product development for Loomis, warns operators to keep an eye on employee behavior patterns. “For instance, if they are late for work or have interest in operations that don’t involve or affect them,” he says.

Other clues might be employees voiding a large number of transactions, avoiding eye contact, making only minimal conversation, and personal problems at home.

“Don’t be paranoid, just be mindful,” says Roberta Chinsky Matuson, president of Human Resource Solutions in Northampton, Massachusetts.

When the time comes to confront an employee, make sure you have adequate proof. This might be transaction records from your point-of-sale system, video surveillance, or banking receipts and statements. If you believe someone has money, food, or other items stolen from the business in his or her possession, ask the employee for permission to search his or her locker.

“You have to provide notice of what you are planning to do or are doing,” says Rod Sorensen, a partner with Payne & Fears LLP in San Francisco, California. If the employee gives consent, the search is valid. Sorensen also recommends reserving the right to inspect lockers and break room areas in the employee manual, which employees should sign off on upon receipt.

If and when employee theft occurs at your restaurant, use the opportunity to create a positive effect on your remaining staff. “Bring the staff together to discuss the situation,” says Robert Snelson, vice president of operations for Wings N More in Houston. “Use it as a teaching tool. Go back through procedures and policies.”

Sal Lifrieri, president of Protective Countermeasures in New Rochelle, New York, suggests getting employees involved in theft prevention. Ask them where the weak points are in the business and how they would stop possible theft. “Engage the employees, and ask for their opinions,” Lifrieri says. “They will adhere to it because it was their idea. It will build stronger relationships with them so they are more open to come to you with a problem.”