As a restaurant owner or manager, you know how hard it is to run a successful business. As it is with everything in life, you’ll come across certain obstacles that will jeopardize your lifetime of work and prevent you from achieving the profit you deserve. One of the biggest problems you’ll have to face is employee theft.
It’s by far one of the most devastating issues for every company out there. However, small businesses are the ones who suffer most because of their slim profit margins. On average, businesses lose around 40 to 400 billion dollars each year thanks to employee theft. When it comes to foodservice, that is a common occurrence, causing more than one-third of all business failures.
Personally, employee theft almost caused me to go bankrupt, and I felt like I couldn’t do anything about it. However, once I did some research on the topic and actually implemented some of the information I learned, things changed for the better almost instantly.
All is not lost. If you take the necessary precautions, you can prevent workers from stealing from you. Keep reading to learn how to catch and avoid employee theft in restaurants and other businesses.
Things You Should Know About Employee Theft
As I said, employee theft is quite a common issue, especially in the hospitality business. Even if it’s not that frequent, it can lead to severe financial, as well as psychological consequences. Worst case scenario — your business will slowly bankrupt and meet its end.
However, if you follow the right steps at the right time, you can save your business. It may require some money and time, but in the end, it truly does pay off.
The key to preventing employee theft is control. Not in a way that will make everyone fear you, but rather respect you and see you as someone important. On the other hand, employees should also have a sense of control. But in this case, they should use it for something more appropriate than stealing. Perhaps it could increase their motivation.
Although it conflicts with Frederick Taylor’s principles, I have to point out that surveillance plays a big role in employee theft prevention. Taylor would tell you to trust your workers and invest all your resources into specific labor division and training. However, more and more studies are showing that video surveillance can have a huge impact on employee theft.
If you decide to go this route, besides patience, you’ll also need to set aside some money for the equipment (e.g., outdoor and indoor security cameras).
Why Employees Steal From Their Employers
The most common cause of theft in employees is job dissatisfaction, preceded by the perception of being underpaid for their work. Most people that tend to steal think they’ve been wronged in away. As a result, they want revenge and compensation, and so they steal.
Also, in the foodservice business, studies found a connection between employee theft and quick turnover. In other words, if your company changes employees often, they’ll be more likely to steal from you.
How to Catch and Prevent Employee Theft in Restaurants
So here are a few steps you can take to prevent employees from stealing from you:
Step 1. Install security cameras.
According to a piece of research by Emerald Insight, it’s advisable to implement video surveillance in your restaurant. Still, the mere presence of an indoor security camera might be enough to deter any potential thievery.
According to another study, having cameras present reduces the risk of criminal behavior, especially the one which entails a certain level of premeditation.
Anyone who knows how to catch and prevent employee theft in restaurants knows that merely installing a business security camera surveillance isn’t enough. In addition, you should employ people to watch them and record any suspicious behavior. Keep them updated on what to look for and keep a detailed record of your stock and staff. Keep the stockroom and the cash register under the highest surveillance. Also, you should pay close attention when the restaurant’s at its busiest.
However, be careful when putting up cameras, as it can also have negative effects. If your employees feel like their privacy has been violated, they won’t feel safe working for you. Make sure they fully understand why you’re doing this and have them give their consent first.
Step 2. Keep track of your books.
The majority of restaurant stealing and embezzlement schemes rely on slipping a certain number of sales under your nose and pocketing the money. They write the expenses off as waste or returns, or they hope you simply won’t notice the losses in the stock.
That being said, managing your orders and profits as closely as possible will minimize the chances of thefts going by unnoticed.
If you ask me, you should compare your margins against your total sales as frequently as you can. In addition to installing indoor and outdoor security cameras, you should think about investing in bookkeeping software, which can detect discrepancies and alarm you accordingly.
Another tactic which some employees tend to exploit is voiding a sale on paper, but accepting cash from the customer and keeping it for themselves. However, keeping close track of all voided bills should prevent such actions.
Step 3. Manage your inventory.
A significant part of knowing how to catch and prevent employee theft in restaurants is making sure that nothing comes in or out without your knowledge.
Your workers might sneak in their own merchandise (especially liquor) and sell it at restaurant prices, pocketing the money. This behavior is highly risky, and it could make you lose your liquor license. On the other hand, they might serve a lemonade or orange juice without reporting it and write the missing fruit off as waste.
Depending on the size of your restaurant, managing your inventory might prove to be quite tricky. Sure, installing an indoor security camera might help you out, but you should still be on the lookout. Keep close track of your stock and check for discrepancies between the number of products used and the number of sold items.
Keep in mind, a certain amount of your inventory will inevitably go to waste. I don’t recommend accusing anyone in your staff of stealing if you don’t have a solid proof. After all, you want to learn how to catch and avoid employee theft in restaurants, not how to scare honest workers away.
Step 4. Be observant.
To further explain this step, I’ll need to go back to Taylorism and its principles. Taylorism, or scientific management, try to increase the employees’ productivity using the analysis of workflow.
Upon making the analysis and understanding your employees’ behaviors, you can come up with a new, more optimal workflow. It should take the workers’ needs into consideration. Eventually, this plan should increase productivity and job satisfaction.
So, you should keep an eye on your workers, not just to catch them stealing, but to keep track of their progress. If you do so, you’ll always be able to tell who’s slacking or grazing the food. Later on, you’ll need to find out why they did it and decide what you should do about it.
Sometimes, it’s best just to let them go. Other times, when the employee is valuable, for instance, it might be better to hear them out and invest in increasing their job satisfaction. In the long run, that should prevent employee theft.
Step 5. Engage with your employees.
Unfortunately, employee satisfaction is a thing many business owners completely disregard. However, no business would ever succeed without them. Although you shouldn’t have an inappropriately close relationship with any of your workers, you definitely should pay some attention to them.
If you engage with your employees on a regular basis, you’ll have better insight into their thoughts and feelings. They’ll also probably like you more, making them less likely to steal from you.
In addition, aside from making your employees feel comfortable working in that environment, you should also make them feel integral for the business. Don’t just criticize their work — praise them for things they did right. According to a study from 1998, employees who committed theft reported that they felt “less involved” with the company than their other colleagues.
Moreover, another study claims that co-workers are the best source of clues when it comes to an employee theft investigation. So talk to your employees, and you’ll never have to worry about theft again.
Whether you decide to install a business security camera, observe and pay more attention to your employees, or all of the above, you’ll be doing the right thing. Whatever it is, it will bring you a step closer to recovery, and eventually, success.
When I first confronted a stealing employee, I thought that the act itself said more about me and my business than the person in question. “How did I allow this to happen?” I wondered. Although I was devastated, the whole situation made me think about how much power my workers actually had over me.
When I embraced this fact, I was able to change my business in a way that suits my workers better, and it made all the difference.
So what is your takeaway from all this? Did this article help you learn how to catch and avoid employee theft in restaurants? If so, what advice did you find the most helpful? Let me know in the comments below.