Article
How fast casual operators can mitigate risk
New technologies and attitudes can help operators win the war against employee theft.
November 1, 2009
How to overcome employee theft is one of the biggest challenges fast casual operators face.
"There's no doubt that somebody will steal," Rudy Miick, president of restaurant-industry consultancy Miick and Associates, said.
At least 2 percent of carefully screened employees are thieves and the rates for less selective hires are even greater.
The implementation of more advanced point-of-sale systems and tighter inventory controls are two obvious tools used to prevent sticky fingers. Coupled with integrated video surveillance and even empowered employees willing to self-police, operators may find their arsenol of prevention tactics expanding.
Eleven years ago when POS systems less sophisticated than today, Eric Ersher had no way of knowning one of his employees was cooking more than soup. Within a few months of opening a second Zoup! location, Ersher discovered his general manager had pilfered $50,000 from the till, simply by manipulating the POS system.
While the theft and subsequent investigation was difficult period for the young restrauteur, it also led to the company's development of a proprietary POS system armed with a rigorous set of controls that include a number of checks and balances. Employees aren't allowed to assign drawers or access more than the basic ordering screens, and only managers can access the company's intranet and run data reports.
"[As operators] we're able to look at reports that at the store level, they don't even know we have," Ersher said. "We look for discrepancies. When we see a red flag, we're able to track the activity of a specific cashier to see if there's wrongdoing."
Video surveillance
POS systems have come a long way from where they were 11 or even five years ago. Systems can now run reports tied to specific employees, dayparts and even transactions, but nn some cases, a POS system isn't enough to deter thievery. Companies that specialize in video surveillance — like Louisville, Colo.-based Envysion — now marry video monitoring to red-flagged register transactions.
"We tie video surveillance to POS data and exception reports. This way, we give restaurant operators the ability to see video of relevant transactions so they know whether to investigate," Matt Steinfort, Envysion's president and COO, said.
An operator, for example, might receive an e-mail indicating abnormally high void transactions at a restaurant location. By clicking a link, the operator accesses a detailed report and watches video of every single transaction. The process makes it clear whether the situation is as harmless as a new hire with poor register training or something more sinister.
"When you have that level of insight, it has tremendous impact," said Steinfort, who added Envysion's clients have seen 10 percent to 15 percent increase in profitability after implementing the system.
Cernium also provides a video-monitoring system called Archerfish that can be paired with a POS system. The program can send an alert to a manager anytime the cash register is open and only one person is in the field of view, signaling a possible phony transaction.
"The ehanced video analysis or computer vision capability is not just asking to look for something moving, but to look for something it believes is a person in an area where they shouldn't be, or going in a certain direction," said Craig Chambers, CEO of Cernium.
Employee empowerment
While investing in leading-edge monitoring equipment can be useful, Miick often suggests a low-tech approach to preventing theft — one that puts the onus back on employees.
"Cameras alone don't prevent anything, and employees know how to get around POS systems," he said.
Instead, he counsels restaurant operators to institute a two-prong approach: building a value-oriented culture, and employing check-and-balance monetary and inventory systems.
"When you instill a sense of purpose and an understanding of a company's values, employees believe they've got a ‘good deal' going," Miick said, "and members of an A-plus team won't want to screw-up something good by doing something stupid, like stealing."
That said, Miick still advises using three-way check systems when handling products or cash. For example, bundling a deposit, taking a deposit to the bank and entering deposit data into a ledger should be split among three separate employees. The same holds true for purchasing and selling inventory.
"The second there is a miss, you should know to the penny — whether it's product or money. This works way more effectively than cameras," Miick said.
Ersher, of Zoup!, agreed. In addition to its POS system, the company has tightened store packages, requiring each cashier to have a daily summary sheet. At every point in the inventory and cash management chain, employees are accountable for reconciling those reports.
The key, said James Sinclair, president of Los Angeles-based OnSite Consulting, is to have an employee-focused theft-reduction system in place — even if it doesn't feature the newest technology. He often cautions his company's restaurant clients to watch for a dangerous mix of temptation and opportunity.
"In reality, there is only one solution to mitigate employee theft," said Sinclair. "It's more important than cameras, audit controls, and checks and balances: Don't leave $5 on the table."
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