Restaurant Fraud & Theft – Part II

Part I in this series focused on fraud and theft up to the point your inventory becomes available for sale.  As we found out, lots can go wrong during the purchasing, receiving and inventory safeguarding processes.  These frauds and thefts involved uncooked food or unpoured alcohol.  Now, let’s uncork a bottle and turn up the heat.
Today, I want to discuss some of the major thefts that happen during “normal” operations.  These thefts involve cooked food or poured alcohol.  These are the ones that take place “right under your nose”.  Today’s post examines food theft.

Since we’re looking at cooked food, we’ll be dealing with dishonest chefs, acting alone or in collusion with other employees.
In some ways it is easier to steal food than it is to steal alcohol.  Usually, kitchens are not in plain view of most staff, management or customers, whereas bars are out in the open and subject to more supervision.  Management is usually less concerned about cooked food theft, because they believe staff won’t steal more than they can eat.  So, management spends less time supervising chefs, creating even more opportunities for theft.  Once food theft occurs, the cost is covered up within the overall food cost percentage which varies widely for reasons other than theft (portion control, waste, etc…).
In other ways, stealing food is more difficult than stealing alcoholic drinks.  Alcoholic employees can put away astounding amounts of alcohol during a typical shift.  It is relatively easy to “hide” alcoholic consumption during a shift, and stolen drink “evidence” is quickly disposed of by, well, gulping it.  For food, it takes longer to consume the evidence and there are fewer ways to conceal it.  Just think of Dan Aykroyd hiding the salmon in his Santa suit in the movie, Trading Places.
Chefs prepare the food, but they can only eat so much during their shifts.  Instead, they must collude with other employees to turn “their” food into something more appealing.  Here are a few interesting examples.

Gourmet Staff Meals
Many restaurants offer their employees low cost or free staff meals.  These meals are supposed to have a reasonably low food cost.  It doesn’t take long for the staff to tire of the same staff meals.  So, it occurs to them that, perhaps, something might be worked out with the chef.  Before you know it, grateful employees are enjoying gourmet staff meals, and the chefs are guzzling a few cold ones.  Without knowing it, the restaurateur is paying for not only the steaks but the ale too!

As the owner-manager, you must hold the chef accountable for all staff meals.  Each day’s meal should be listed and described.  This log should be reviewed weekly (or daily) to ensure compliance with restaurant policies.  Any deviations from policy should be authorized prior to the preparation of expensive staff meals.  It goes without saying that the manager must observe the preparation and serving of staff meals occasionally.
Free Feasts For Friends
Often, servers and bartenders will ask chefs to prepare menu items for themselves, friends and high-tipping customers, without ordering through the POS system.  Using the most favoured currency in the restaurant, the chefs are paid with drinks.  Everyone’s happy…except the owner.
Be aware (or beware) of staff members that may have drinking problems.  These are the ones that are most likely to steal and collude with others.  Don’t forget to keep an eye on employees that say they don’t drink, or at least not that often.  You may be surprised to find that they do drink after their shifts, especially if it is free!  Also, keep in mind that the majority of your employees see nothing wrong with giving free food and drinks to employees at other establishments in return for reciprocal arrangements when they go out.  Observation is the only way to catch this type of theft.

Dinner and a Movie  
Some restaurants offer take-out menus.  The problem is that the owners don’t know about it.  Dishonest chefs can prepare meals for employees at local businesses, in return for products or services – stolen, of course – from the “diner’s” store.   In one such case, a chef was feeding the entire staff, including the manager, at a local video rental store, in return for free video rentals…every week!  Other staff that may have blown the whistle on the thief were paid off with free video rentals.  Be on the lookout for employees that appear to be making significant “purchases” from local shops, where it is unlikely that they would be able to afford the purchases.

In order to combat these types of theft, management must hold the head chef accountable for all food inventory.  Analysing margins is a great tool for identifying possible theft losses – after the fact.  The only way to prevent (or minimize) theft by collusion, is through supervision and observation to ensure all employees follow proper procedures.  For example, regularly monitor servers to ensure that all items ordered are punched in and check that all plates going out have a matching order slip.

Today’s post covered the major types of food theft in restaurants, once the food has left the store room.  Unlike most thefts, these ones usually require some collusion with other employees.  Effectively, this doubles the restaurant’s exposure to theft.  While regular margin analyses may provide evidence of theft, it cannot prevent it.  Only proper management supervision can deter these forms of theft.

The next article in this series will cover the theft of alcoholic drinks.

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