Detect & Deter Theft in Restaurants

By Jennifer Goforth Gregory, Contributing Editor | June 05, 2014

Management of a Jason’s Deli franchise was shocked to find out that one of their beloved 10-year plus employees had been cashing out cash deliveries for months and pocketing the change. “While we knew that employee theft happened, we are like a family and never thought that one of our best employees would steal from us,” says Ed Huston, a franchisee of multiple Jason’s Deli (www.jasonsdeli.com) locations. The franchisee decided to prevent future theft and began looking for a loss prevention system to install. After installing NCR’s Restaurant Guard (www.ncr.com), which integrates with the POS system, Huston discovered that fraud was occurring in two additional locations as well. “After terminating employees in all three restaurants, we have seen significantly increased revenues in those stores as well as increases across the board,” says Huston.

One of the main benefits of installing loss prevention systems in your restaurant is that it deters employees from considering fraud or theft because they know that the chances that they will get caught are high. The goal of loss prevention isn’t to prosecute employees criminally, but to deter crime from happening and force employees currently committing fraud to cease their behavior. Although it may be tempting for operators to disclose exactly what is being monitored, it is a best practice to alert employees on a more general level to prevent employees focusing on strategies that the system does not detect.

Loss prevention technology is not something that you can simply install in your restaurants and expect all theft to immediately cease. If an employee is flagged for questionable activity and spoken to, often, the fact that they know they are being watched is enough for the behavior and activity to come to a complete halt. While loss prevention systems can both deter theft and alert management to potential issues, it is essential that the technology is used as part of a comprehensive loss prevention program. Management will need to consistently review the reports or video to follow up on issues. Supervisors will also need training on how to delicately handle situations and coach employees on proper procedures.

One point to consider when purchasing a loss prevention technology is to find a product that is designed for a specific restaurant category. Fraud techniques are typically different across delivery, catering, fine dining and quick service establishments.

Tactics and tech types for stopping theft
One of the most common types of restaurant loss prevention technology is software integrated with the POS system that flags transactions that are typically indicative of fraud or theft, such as excessive voids late at night, a high number of coupons and large cash tips. Many POS vendors include loss prevention capabilities integrated into standard systems or sell the product as an additional add-on, such as NCR’s Restaurant Guard. Other products are sold as an add-on to work with existing POS systems.

Ctuit’s Radar product (www.ctuit.com) looks for different patterns based on the type of restaurant and creates extensive reports of any activity that deviates from baseline norms for the location and time of day. Additionally Radar can be used to monitor back of the house theft of inventory as well. Avero (www.averoinc.com) integrates with the POS, but uses a scoring system to rank each employee to detect abnormalities and compare transaction types to other employees.

Since delivery businesses have different challenges, Speedline Solution’s POS product (www.speedlinesolutions.com) looks specifically for coupon usage and other fraud specific to pizza and other food delivery businesses. The product also alerts managers to events such as the POS system being turned to training mode, which is often used to pocket cash that is not recorded.

Hyperactive Technologies’ (www.gohyper.com) drive thru management system integrates into the POS system and uses a car tagging system and POS data to detect unusual activity, such as a car bypassing the payment window or orders that are zeroed out.

Other vendors, such as DTT (www.dttusa.com), offer surveillance products and forensic investigation services. Toyin Fawehinmi, director of loss prevention at Mitra QSR KNE (www.mitraqsr.com) uses DTT’s Smart Audit to randomly dial into stores to monitor performance and activity through video and data. When an incident occurs instead of spending hours reviewing footage, he uses the services to help conduct his investigation. “I provide DTT with the times to investigate, and they provide me with a forensic report of exactly what happened,” Fawehinmi says. “I also use the technology to conduct investigation interviews in other cities which increases effectiveness and reduces travel.”

Biometrics is another type of loss prevention technology that is gaining traction in foodservice.  Products such as digitalPersona (www.digitalpersona.com) reduce theft because employees cannot use someone’s identification or a manager’s access to make a transaction; all register activity can be traced to each employee. “Biometrics is efficient because you can’t leave your finger lying around and claim that someone else completed the void,” says Phil Olea from the technology department for Yogurtland (www.yogurt-land.com). “We know exactly who completed every transaction.” Olea says that Yogurtland has had a 20 percent increase in sales gains at some locations after installing the biometrics.

“It is foolish to think that none of your employees are stealing from you,” says Huston. “The cost is worth every penny that we pay. Once people know you are looking for suspicious activity, you shut down those avenues for fraud. You can respect your employees while still inspecting their behavior.”

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