Commentary

5 ways data can detect fraud in your restaurant

As technology's presence grows in the restaurant space, operators can utilize data to detect theft and increase their bottom lines.

March 22, 2018

By Patrick Bobrukiewicz, director of business development, Rosnet

As technology's presence grows in the restaurant space, operators can utilize data to detect theft and increase their bottom lines.

As more restaurant owners implement technology in their daily restaurant operations, the story that data can tell is becoming increasingly more detailed. Not only can technology allow for seamless operations and better staffing, but the data pulled that details day-to-day operations can also shine light on fraud. Below are five ways that restaurant operators can use the data to detect fraud.

1. Overuse of discount

Restaurant operators should always be cognoscente of the use of a specific discount. If a discount has been used 100 times, and 90 of those uses were from the same person, the employee should be flagged. Often times, employees are rewarded for selling a certain discounted item. It's obviously easier to sell the item if it's free, so employees will ring in the item for $1, and then discount it off and pocket the cash. Operators should look out for these types of trends: when the same employee is using a discount over and over again, each time being paid for in cash, you may need to investigate.

2. Product transfers

Servers sometimes transfer an item like a soda from one check to another, before closing the tab when a guest pays in cash. Then, the next time a guest orders a soda, the server will start the ticket on that tab and transfer the soda, while pocketing the cash. To avoid this, restaurant owners can monitor activity for low sales of server-controlled items like drinks and pick up on trends as they relate to each server when compared to the restaurant average sales of these items.

3. Manager and employee relationship

It's not uncommon that a manager and employee are working together when it comes to fraud. Managers are able to swipe their card for certain discounts. If a restaurant operator realizes that an employee and manager are using the same discount all the time, they should be flagged. This could mean two things, either the manager is in on the fraud with the employee or the manager should not trust the employee. If data reflects that one manager has particularly high volumes of a given discount, it should be investigated.

4. False inventory values

We call this one a ‘pump and dump.' Managers will sometimes pump up the inventory value with phantom inventory, stating they have things like six or seven cases of steak on hand when they only have two. That way, at the end of the quarter, the variance number is lower. Restaurant owners can be on the look-out by taking a closer look at sales numbers. If the sales numbers are consistent but the inventory number is growing, this should be flagged.

5. Timecard modification

Data can shine a light on employee labor, specifically if managers are modifying time cards. It's not uncommon that managers will reduce time on the employee's time card, even if it's by a half hour, so they hit their labor budget. Employees typically don't realize because the fraction of time difference is so little, but they could be getting slighted nearly $100 per week when this is taking place. Data is able to track these modifications to time sheets, and if they are consistent, the restaurant owner should take note and look at that manager more closely.

Operating a restaurant requires an owner to move a mile a minute every day. It's no surprise that fraud happens and is often missed. While fraud will most likely always have a place in the restaurant space, technology and data are able to shine light on what the operator may have otherwise missed. With all of the data that owners have at their fingertips, if it is being used properly, operations are able to run far more efficient.

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