Especially in the Quick Service Restaurant (QSR) space, employee theft can have a huge impact on a business’s profitability. According to a study by the National Restaurant Association, QSRs lose up to 7% of sales to employee theft. Another study found that 75% of all restaurant inventory shortages are the result of employee theft as well.
It makes sense, then, that in our work with hundreds of restaurant owners, we so often hear the question “How do I eliminate theft in my restaurant?” The answer is to work with General Managers to implement policies and procedures that will support accurate cash flow and account reconciliation.
Unfortunately, we’ve seen many franchise owners and restaurant groups experience meaningful losses before turning their attention to preventing employee theft. At OnePoint, we often help catch problems through regular account reconciliation, but getting proactive about loss prevention in your restaurants can help curb problems before they arise.
Enlist Your General Managers’ Help
Emma Moholt and Nicole Scott, two of OnePoint’s expert Account Managers, have worked with dozens of franchise and restaurant group owners across a wide range of brands, helping to strategize effective loss prevention measures. More than anything, Emma and Nichole encourage working with your General Managers as a key to solving the problem of restaurant employee theft.
Especially for multi-unit operators, partnering with your General Managers will help to keep things on track. You can’t be everywhere at once, and the more you can lean on your General Manager to implement measures at the location they manage, the more likely you are to prevent theft.
Emma and Nichole shared three key strategies that will make a big difference:
- Be relentless about instituting best practices in cash management with your General Manager
- Ensure your point of sale (POS) system is programmed to require a manager’s approval for voids as well as a regular review of discounts
- Tie employee bonuses to the accuracy and consistency of cash deposits
1 – Make Regular Cash Deposits
The first strategy they recommend is an update to your policies and procedures designed to ensure cash shortages are quickly identified. Requiring that your General Manager perform daily cash deposits to your bank is the best way to quickly identify cash discrepancies. It’s much easier to review a day’s payouts than a longer period, but if daily isn’t feasible, then deposits should be made at a bare minimum of once/week.
Making regular deposits is critical to ensuring that any cash shortages are quickly identified and rectified. It’s also a best practice to ensure that cash is secured offsite.
For restaurants with high average unit volumes and cash transactions, you may also want to consider installing a smart safe. These digital safes allow for cash deposits to be entered into the safe daily, recorded digitally, sent electronically to the bank, and then picked up weekly by armored car. Brinks Total Cash Management is one of these services.
2 – Require Manager Approval on Voided Transactions
Another key strategy for preventing restaurant employee theft is to program your POS system to require managerial approval for voided transactions. Only the GM or manager on duty should be able to process voids.
Why is this important? Because if not, an employee can easily ring in a cash sale, then void the transaction, and pocket the cash. Since the transaction was voided, it won’t show up as a discrepancy in the POS report and can easily go unnoticed. Adding an extra layer of oversight will make sure this kind of skimming doesn’t occur.
Along these lines, Nicole also recommends instituting a regular review of discounted transactions no less than monthly. Best practice would be to have the General Manager and the Owner review discounts in every location on a monthly or weekly basis to ensure that the discounts fall within the expected and acceptable range. If discounts spike, it is a good indicator that an employee may be pocketing money from a cash sale.
3 – Incentivize Accuracy for Everyone
Finally, Emma and Nicole recommend that the employee and General Manager bonus pool is tied to the accuracy and rigor around cash deposits. Building a direct connection between accurate cash flow records and employee compensation will help to incentivize everyone to participate in loss prevention.
Emma worked with a restaurant owner who was having ongoing issues with missing cash at one of their locations and reconciliations that did not tie. After months of this issue with no clear culprit or resolution, Emma’s client instituted a policy that any variance in cash deposits would be taken directly out of the bonus pool to reconcile the accounting. The following week (and every week thereafter), there was no missing cash and the reconciliations added up to the dollar.
Strive for Prevention Over Problem-solving
No one wants to think the worst of their employees or be paranoid every day that someone may be stealing. It’s also much more stressful to address problems with employee theft after they occur. These three simple strategies are easy ways to ensure you and your General Manager are addressing this issue proactively and maximizing the profitability of your restaurant.
April 2024
