You Have Loss Prevention Tech, but is it Optimized?

By Tammy Mastroberte, Contributing Editor | August 07, 2012

Restaurant operators know loss prevention needs to be a top priority for eliminating employee theft and controlling food costs, and many have taken steps to investigate and implement technology. However, some are still falling short on effectiveness because of improper execution. Without a plan, procedures, and employee education on how to utilize the technology, operators will not see the expected or desired results.

“It’s about the willingness of a company to accept the technology and realize it’s not going to fix the problem by itself. You have to interact with it,” says Michael Kaler, manager of management reporting at Cooper’s Hawk Winery and Restaurants (www.coopershawkwinery.com) based in Chicago with eight locations. “It’s often about not enough education for managers and people in the field. Many don’t realize the amount of reports available to them.”

It’s also important to begin the implementation phase with a plan, policies, and procedures for getting the most out of the technology, whether it’s viewing video, running exception reports at the point-of-sale (POS), or checking inventory on the back end.

“Don’t think about installing it and being done with it. You can have video cameras installed, but do you know who is looking at it?” asks David Johnston, director of business development at LP Innovations (www.lpinnovations.com), a security consulting company in Milford, Mass. “Operators need to think about how they are going to use the technology then educate their team and get them to buy into it.”

Johnston advises that when implementing a new POS system, operators should sit down with the vendor and discuss the data and exception reports they want up front before the implementation begins. “Make sure data is being captured and the right reports are available,” he states. “If video is integrated, ask if you can get time stamps and if it shows the beginning and end of each transaction.”

One company offering this type of detail through managed video as a service is Envision (www.envision.com). From tracking POS transactions to integration with a kitchen management system, the technology can send alerts as soon as a preset business rule is violated.

Making the technology work for the business
Once implemented correctly, it’s important for operators to use the collected data to uncover any loss prevention issues within the company and continually monitor it for any necessary changes. Many POS systems offer a variety of reports to raise red flags for employee theft, including reviews of coupons tendered, excess edits on an order, manual discounts, employee discount details, and voids after payments received. Speedline’s Restaurant POS (www.speedlinesolutions.com) offers a notable activity report to track certain items for a manager to review daily.

Based in Wichita, Kansas, Rage Inc. (www.rage-inc.com) operates 118 Pizza Hut locations, and installed Speedline POS with DigitalPersona (www.digitalpersona.com) fingerprint scanners to gain more control over employees at the POS.

“If you have a user ID number or card, it’s easy for employees to manipulate the system, but fingerprints eliminate that,” says David Logston, director of MIS at Rage Inc. Logston uses the Digital Persona solution to track employees on discounts, clocking in and out each day, voids, comps and more. The system also allows the company to set parameters so only managers can approve certain tasks.

Cooper’s Hawk also set up restrictions at its restaurants, where hourly-level employees can’t perform voids, discounts and other procedures at the POS. “Only head servers and bartenders have increased privileges and we always make sure we have enough people on the floor who can do these things,” Kaler explains.

Running reports on a daily basis is another best practice many restaurants are implementing along with technology. At Rage, Logston’s team runs reports to analyze POS data every day, which he describes as “very granular.” Logston goes on to say, “I can look at what an employee did and track the whole process of a transaction. We also run weekly inventory reports to stay on top of any issues in that area.”

By staying on top of the reporting, Logston was able to uncover an issue with employees manipulating the fingerprint system and storing fingerprints from two different employees under one name. While the system allows employees to store two fingerprints, he recommends other operators only allow one
per employee.

“The system allows multiple fingerprints so if an employee’s left hand is dirty, they can use the fingerprint from the right hand, but we found they were manipulating the system, so now we only allow one fingerprint per employee,” Logston reveals.

Additionally, when monitoring inventory, operators need to know what is being received at the time of delivery and how much waste is going out the door every day. Terri Melincoff, owner of Reel Hospitality (www.reelhospitality.com), operating two restaurants in Vermont and Connecticut, installed Compeat (www.compeat.com) for accounting and inventory, which interfaces with Accubar (www.accubar.com) for liquor inventory.

“We use this technology religiously every day and pull sales reports every morning so we can see if something is missing,” Melincoff says. If something is found missing, a video camera system is relied upon. For both locations, Reel Hospitality installed cameras in the bar area, host station, the back door, front walk-in and prep area.

The food prep area is one of the biggest issues for Cooper’s Hawk in terms of loss prevention. The company uses Compeat Advantage for production, allowing the chain to track each detailed piece of a recipe to see if anything is lost, spoiled, or when a chef used too much via a waste log in the system, Kaler notes. The system is currently being tested in one location, with plans to roll it out across the restaurants.

Employees log into the system to record any waste, recording it as spoilage, dropped items or mis-production, and the company runs daily reports to track these variables. This is used in combination with a camera system in the prep area.

“With the cameras, we can look at the soup wells to make sure employees are only using one ladle, and look for spillage that isn’t logged into the system,”
Kaler explains.

The end of skimming?
It’s no secret that mobile is making its way into the hospitality arena and some chains already utilize a variety of pay-at-the-table technologies. Now that consumers are being allowed to pay via a mobile phone, for example, issues associated with credit card skimming could be solved.

T.G.I. Fridays (www.tgifridays.com) recently began allowing customers to settle a check or bar tab via an iPhone app by Tabbedout (www.tabbedout.com). Last year, Tabbedout became fully integrated with Micros POS technology. The Tabbedout application was built by security experts, and allows users to store credit card information directly on their phone, under passphrase protection, instead of on host servers. The customer no longer has to leave their credit card behind the bar until they’re ready to settle payment.

Cooper’s Hawk is implementing an online ordering system, allowing customers to place an order via the mobile phone. Kaler reveals that Cooper’s Hawk has also switched its in-house wine club program to the iPad for people to sign up and enter their credit card information.

“Pay-at-the-table is the wave of the future,” he asserts.


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