There are unique challenges when it comes to reducing employee theft at quick-service restaurants. Margins are thin, turnover is high, and almost everything is a consumable. While many businesses focus on external theft, restaurants face a significant risk from their own employees. According to the National Restaurant Association, up to 75% of inventory shortages and 4% overall sales are lost due to employee theft. Meanwhile, the U.S. Chamber of Commerce estimates three out of four employees will steal from their workplace at least once.
Theft committed by employees remains a significant risk for your restaurant. Without action, you can lose thousands of dollars each year in sales, and in some cases, you may face a claim due to a large-scale fraud. However, loss prevention technologies have evolved to help restaurants quickly identify theft by employees, reducing losses and minimizing business risk. Here are 5 tips on security systems for reducing employee theft at quick-service restuarants.
1. Focus on Your Point of Sale
Many cases of employee theft happen at the point of sale. It makes sense to focus your attention first on the register, because this is where you must trust your employees to tender sales, handle cash and enter transactions accurately and honestly. Theft through sales adjustments such as discounts, returns, voids and over- and under-rings can really add up. And while some employees may steal noticeable amounts that get discovered quickly, others may steal amounts so small that they can go undetected for months or even years.
2. Invest in POS Monitoring Software
Investing in POS software can help you detect unusual transaction patterns quickly and determine which register and which employee is involved. The tools available can help you monitor adjustments, track trends and alert you to suspicious activity, often automatically. In one study, a major brand of QSR stores with POS monitoring software was able to reduce sales adjustments by an average of $14,000 per store annually compared to the same brand’s stores which did not use the software.
3. Pair Software with Video Surveillance
Cameras have been a part of QSR store loss prevention for a long time. Video surveillance has been shown to lead to fewer thefts and even better productivity. When theft does occur, video surveillance offers hard proof of the wrongdoing. However, one problem with traditional video surveillance is that business owners often only review tapes after a theft has been discovered. When you are unaware that a theft is occurring, you are not likely to review the tapes and discover the evidence of the crime. Yet by pairing monitoring software and video surveillance, you have a better chance of discovering problems. The software can alert you to a problem and you can review the footage to see whether a customer is present or whether the employee is alone at the POS.
4. Monitor for Suspicious Transactions
It is important to know what to look for when it comes to employee theft at the register. Some of the most common sales adjustments you should watch out for include:
- Discounts—Employee discounts are a common perk but can be abused, with employees giving worker discounts outside of regular hours, extending discounts to family and friends, or adding free food and drink items to discounted transactions.
- Returns and Voids—Employees can use fake refunds and voids to steal from the register. A customer may place and pay for an order, yet the employee can void the transaction and pocket the amount paid.
- Over- and Under-Rings—Another tactic is when an employee charges a customer for a different item or a different number of items than they receive. The employee may give away items or pocket a customer’s excess change.
With security technology, you can monitor for unusual transactions and compare surveillance footage with an employee’s explanations, if necessary, to find out what happened.
5. Monitor for Missing Inventory
Some employee theft, such as food theft, occurs away from the register. If your employees are taking home leftovers, products or supplies, it can have a significant impact on your sales and inventory. Modern security systems can help you detect these thefts even though they do not occur directly at the register. Systems that monitor sales can help you pinpoint inventory losses, even down to the length of time product stock should last, the number of servings and the number of sales. Reviewing video surveillance can help confirm when inventory theft is occurring and who is doing it.
Reducing Employee Theft at Quick-Service Restaurants: A Summary
Unfortunately, employee theft remains a challenge for businesses in the QSR industry. Restaurants that don’t take the risk seriously may lose thousands in sales and inventory and could face a claim due to undetected fraud. But you can protect your business by invested in a security system that monitors POS transactions and record video surveillance. Businesses that take theft seriously often see a reduction in losses, increased sales and higher customer satisfaction.
Find more risk management tips from Lockton Affinity, the administrator of the DQ® Franchisee Insurance Program.