5 Restaurant Employee Scams That Will Cost Your Business Big

By Mona Bushnell
Business.com / HR Solutions / Last Modified: October 11, 2017
Photo credit: Andrey Popov/Shutterstock

Three-fourths of all restaurant employees steal, but you can stop it from happening in your restaurant.

The National Restaurant Association estimates that internal employee theft is responsible for 75 percent of inventory shortages and about 4 percent of restaurant sales. Also, about 75 percent of employees steal from their workplace at least once, if not repeatedly. The key to stopping theft at your restaurant is understanding how it happens and then focusing on the most important areas for theft detection and mitigation: inventory tracking, expense tracking, auditing and hands-on involvement.

Scam #1: Undercharging

One common way restaurant workers steal money is by undercharging customers and pocketing the difference. Here's how it works: A customer orders a $10 beer, and the server charges the customer $10 but enters a $5 beer into the POS system. The server then gives the customer the $10 beer and pockets the $5 difference. When the POS reports are compared against the register take for that day, everything will look correct, but in the physical inventory, a $10 beer will be inexplicably missing and there will be an extra $5 beer on the shelf.

The reason this scam is so popular is because it can't be detected on POS reports and most restaurant owners don't check the physical restaurant inventory themselves. The only way to catch this type of theft is by cross-checking the most recent inventory in your POS system against the actual inventory in your restaurant. If something doesn't match up, you have a potential problem.

Scam #2: Outright stealing

Another common inventory scam is stealing raw materials, like food and alcohol. Many restaurant owners leave purchasing up to managers or chefs, and very few analyze the cost of dry goods, food and alcohol. It may be a stretch to call stealing from the pantry, walk-in or bar a scam, but it's astonishingly common.

When restaurant owners don't track expenditures on food, drinks and dry goods, and don't do the ordering themselves, there's no way for them to identify costs that are higher than they should be. Similarly, most restaurant managers and chefs order what they need but don't delve into tracking costs either, so in many non-chain establishments, employees have free rein to take what they like without fear of being caught by owners or management.

Monitoring expenditures on food, beverages and dry goods and tracking that spending over time is an excellent safeguard against theft of goods, as is maintaining your inventory in the POS system and in person.

 

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Scam #3: False voiding

A common way for employees to steal cash is by voiding checks. There are a couple of ways void scams can happen, but the following scenario is one of the most common. 

A server takes an order for a table that totals $100, and then, when the table pays for the bill in cash, the server voids the check and takes $100 out of the register. Voided check scams like these often require participation on the side of the server and the manager, because many restaurants require manager sign-offs to void a check. Since the voided check won't show up on the total amount sold, the POS report total from the day and the take from the register will match.

If you notice a spike in the number of checks being voided, you should find out why so many voids are occurring. One way to determine the legitimacy of a voided check is to take an itemized look at what's on the voided check and then cross-reference the items that are easiest to count (like non-soda gun or tap beverages and high-end individual food items) with what's on premises. If nothing is missing, the void is real.

Scam #4: Comps and freebies

Loss in goods through comps and unrecorded freebies is a major problem for restaurateurs, but understanding why this dynamic is happening is as important as monitoring it. There are many legitimate reasons for comping dishes on a customer's check, as well as some that are outright theft.

If a server builds a reputation as someone who regularly comps items (or gives away free things), they will gradually build a base of regulars who come in for the freebies. In exchange, these regulars will overtip, usually in cash. So, a server might charge a regular for one drink and one entree, throw in three free cocktails and dessert, and then get a $20 tip on a $28 check. In this case, the server is working with the customer to scam the restaurant, because the diner gets a discounted deal and the server gets more money for their time.

Performing random in-person inventory checks is an excellent safeguard against this type of scam, but you should also regularly review comps in the POS system. If there's a spike in comps, and the inventory levels in your restaurant match those recorded in the POS system, there probably isn't a scam happening, but there may be a larger management or kitchen issue at play. Servers who are consistently dealing with unhappy customers due to slow service from the kitchen, inadequate inventory (running out of popular items) or poorly cooked food often feel the need to compensate with free items just to keep the customers happy.

Scam #5: Faking a dine-and-dash            

Faking a dine-and-dash is a popular scam because it's easy to pull off and difficult to prove.

When a real dine-and-dash happens, it causes a discrepancy between the POS sales total and the till, and a fake dine-and-dash does too. During a fake dine-and-dash, a table of paying customers eats a meal and then pays the check in cash. Without the customers knowing, the server pockets all the cash and tells the manager that the customers dined and dashed.

The best way to prevent a fake dine-and-dash is to be involved in the business. Owners who rarely set foot in their establishments, or who only stop by during certain days and times, open themselves up to bold thefts like this.

Bottom line

It is virtually impossible to prevent restaurant theft without a POS system, an inventory management system that's both digital and physical, careful tracking of both profits and expenses, and on-site involvement. Experienced restaurant workers know how things are supposed to run, and they can tell when things aren't being tracked or monitored.

Failing to be present and actively working alongside your staff also increases the likelihood of widespread employee theft. When staff members don't feel like you care about your business, they stop caring too, and that's when atmospheres of rampant theft occur with the servers and managers working together to scam. It's also logistically easier for employees to steal if you're not on site a lot, but just showing up and hovering around isn't enough. Be present and involved, pitch in when you're there, and drop by unannounced often.

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