How to Prevent Employee Theft in a Restaurant?

Did you ever think, how much money your restaurant might lose due to employee theft? Undoubtedly, It’s disturbing, but that’s something hard to ignore. According to the U.S. Chamber of Commerce, about 75% of employees have stolen at least once from their workplace, and restaurants are among the most of these workplaces. 

Surprising, right?

Like most restaurant owners, you must have countless responsibilities such as 1) Managing staff, 2) Satisfying customers, and 3) Keeping the business profitable. While managing all of the responsibilities mentioned above, employee theft can be felt both personal and overwhelming.  

But here’s the good news🎉: You can tackle employee theft, but firstly you have to figure out ways of this theft. 

In this article, we’ll guide you through restaurant loss prevention strategies to prevent employee theft in your restaurant. By the end of this article, you'll have the list of the right steps that can help you in stopping theft in your restaurant. 

So, let’s get started!

Internal VS. External Theft in Restaurants

Theft in restaurants can occur in two main forms: Internal Theft & External Theft. Here’s the comparison between these two types.

This article explains internal theft in detail. To learn more about external theft, Click Here. Let’s see how to prevent employee theft in a restaurant.

Short Ringing

Short ringing is a sneaky trick some cashiers use to steal money from restaurants. Here's how it works:

Imagine a customer orders a Pepperoni pizza that costs $20. Instead of punching the Pepperoni Pizza into the POS software, the cashier rings up a Regular Cheese Pizza, which costs only $15. The customer still pays $20, the cashier bags 15$ into the POS cash till and for extra 5$ cash, there are two possibilities your cashier may behave:

A) He will place it in the cash register for the time being. Later at night, he will deposit the amount shown on the POS to the restaurant. As for the extra cash, he will quietly take it for himself. OR 

B) The cashier will put the cash in his pocket right away.  

Why is this fraud hard to catch? Because at the end of the day, the cash in the drawer matches the POS sales report. However, there will be a mismatch in your inventory. For example, your Pepperoni stock will show less quantity, even though sales reports don’t reflect it correctly.

How to Prevent Short Ringing?

Now, let’s talk about the solutions of this theft!

Solution for the Problem A:

• The best way to reduce employee theft is through blind cash handling process. When a cashier finishes their shift, ask them to count the total cash in their drawer and hand it over. However, do not tell them the amount that the POS system expects to be in the drawer. This way, the cashier won’t know the exact figure they need to match, and if they’ve been involved in short ringing, the mismatch will reveal it. Try Butter POS for free!
• Avoid taking orders manually with pen and paper. Switch to tablet-based ordering. Try Butter tableside ordering for free!
• Set up a Kitchen Display System (KDS) or a printer in the kitchen to send orders directly from the POS. This way, the front staff doesn’t need to go into the kitchen, reducing the chance of them teaming up with kitchen staff for fraud. For example, an order taker might punch in a cheese pizza but tell the chef to make a pepperoni pizza instead, planning to split the extra money later. This kind of fraud often involves the order taker, cashier, and chef. Using tablet-based ordering can stop this by keeping everyone in their assigned spots, reducing mistakes, and speeding up food preparation. Try Butter KDS for free!

Solution B:

• Stop your cashier from keeping cash by giving them a pocketless uniform. This ensures they have no place to hide cash.

Bonus Tip🎉: If you want Profitable Growth, Increased Customer Loyalty, and Positive Cash Flow in your restaurant then, subscribe to Butter POS today for free!

Transactional Theft

This type of internal theft happens when employees who’re responsible for handling cash or records manipulate the system to steal money. Transactional theft is often carried out by cashiers or managers.

Here are the common how employees commit transactional theft:

A) Manipulating voids: The easiest and the most common way is voiding a transaction after receiving payment and keeping the money for themselves. Here comes an important point! There are two types of voids: one is voiding an entire transaction, and the other is voiding some specific items from the bill. Type one is easier to catch but type 2 is somehow hard to catch and requires more effort. While considering this theft seriously, Butter POS came up with Blockchain-based Reporting, where every transaction is recorded from punch-in to delivery. Owners can view a detailed pictorial record of what was voided, why it was voided, what was originally punched, and what it was replaced with, ensuring complete transparency and control. Try Butter POS for Free!

B) Manipulating replacements: When you use a conventional POS system, you need to void the item and punch in the new one in case the customer changes their order, like requesting a cheese pizza instead of a pepperoni pizza, the staff needs to void the original item and punch in the new one. However, with Butter POS, items can be directly replaced without voiding. This makes the theft hard. Plus, the owner can easily track the actual number of voids and replacements for better control and transparency.

C) Manipulating reduced quantities: If a customer initially ordered 3 smash burgers but then reduced it to 2, and a new customer came in and ordered 1 smash burger, staff in normal systems might void the extra burger from the previous bill and give it to the new customer while handing the original bill to the first customer. This creates room for manipulation. With Butter POS, any reduced orders are properly tracked, and the owner can monitor the number of reductions for complete transparency and better control.

D) Skimming cash: Some employees take small amounts of cash from the register, hoping it goes unnoticed. This is called register skimming. But this type of theft is often caught in places where a POS system is used, and daily reporting happens. For example, Butter POS helps restaurant owners by generating daily, weekly, and monthly reports. These reports make it easy to spot any issues quickly, so theft like register skimming doesn’t go unnoticed.

E) Setting up fake accounts payable: Employees might create fake vendor accounts and make payments to those accounts, which they control. This type of transactional theft is usually committed by the accounting department. But, in new or single-counter restaurants, cashiers often manage these tasks, making it easier for them to commit such fraud.

F) Underreporting earnings: They report lower sales figures to hide the stolen amount. For example, the accountant prepares the monthly financial report showing the restaurant’s total profit/loss, sales, and expenses. If the restaurant made a profit of $5,000, the accountant might report only $4,000, hiding the remaining $1,000 to cover the stolen amount.

These methods will surely lead to financial leakages for a restaurant if you do not pay attention to them.

Imagine This Scenario

You run a busy restaurant with a cashier named Bella. She has been working with you for years, and you trust her. However, she recently started voiding high-value bills after customers paid in cash, keeping the money for herself. She also created a fake vendor account under a made-up name and approved payments for supplies that were never delivered. At the end of the month, you notice profits are unusually low, but you can’t figure out why.

How to Prevent Transactional Theft

• Invest in a restaurant POS system which tracks all transactions, voids, replacements, reduced quantities, and refunds, making it harder to manipulate records.
• Limit who can void, replace and reduce transactions or refund checks. Only managers or trusted employees should have these permissions.
• Check daily and monthly sales reports to spot irregularities or underreporting. Butter POS generates Tender progress, category progress, order taker progress, order type progress, transaction adjustments, top 10 selling items, discounts, and expenses report. Try Butter POS for free.
• Conduct random audits to ensure everything matches the records, including cash, sales, and accounts payable. 
• Cross verify receipts payable: As an owner, you can act as a random customer and call your vendors to check item availability and prices. This helps you cross-check if your employees are buying supplies at the correct rates and ensures transparency.
• Ensure the person managing payments doesn’t handle vendor accounts creation in the accounting system to avoid fake accounts payable.

Don’t worry about how to stop employee theft, just stay vigilant and use technology to monitor your finances, you can definitely minimize the chances of accounting theft in your restaurant. 

Data Breaches

Data breaches happen when a restaurant's confidential information is accessed by unauthorized individuals. The data might be relevant to the customer details, financial records, and other sensitive information. Employees might steal this data if they are planning to open their own venture or to sell it to competitors. Common types of confidential data are 1) previous month sales, 2) customer information of the regular customers.

A) Sales data: Detailed revenue and performance records of last month’s sales.

B) Customer information: Data like contact details and the order history of all the loyal customers who have placed orders, including contact details and order history.

C) Competitor targeting risk: Insights that competitors can use to target your existing customers with personalized offers or discounts.

You might build your own competitor if you lose such data.

Imagine This Scenario

You own a popular restaurant and you assign your confidential data like sales, customer details, and customer order history to the one trusted employee. Without letting you know, that employee copies this information onto a personal USB drive, intending to sell it to a competitor. A few days later, your competitors start targeting your customers with personalized offers, luring them away with discounts. As a result, your restaurant’s loyal customers begin to switch to the competition, and your sales begin to decline.

How to Prevent Data Breaches

Below are the practical solutions to prevent data breaches in your restaurant.

Solution for the Problem A:

• First and foremost, restrict access to sales reports to trusted managerial staff only. Use a secure POS system, which allows you to set user permissions and track who accesses sensitive data. If you want to get a secure and reliable POS system for your restaurant, click here.

Solution for the Problem B:

• Ensure customer data is stored securely in an encrypted system. Train employees and make strict policies to avoid sharing or mishandling customer details.

Solution for the Problem C:

• Regular audits and monitoring of staff who handle customer data are the key to preventing this theft. Use a POS system that logs all data access, so you can trace any suspicious activity.

By following the above-mentioned solution, you can eliminate the risk of data breaches and protect your restaurant's integrity.

Food & Inventory Theft

Food & inventory theft happens when employees misuse or take food and supplies from the restaurant without permission. This can happen in several ways:

A) Eating on the job: Some employees might snack while preparing meals, taking small amounts of high ticket ingredients e.g. nuts, meat, or special sauces without recording them. 

B) Giving free meals: They might give free food or drinks to their family or friends without approval, leading to losses for the restaurant.

C) Taking food home: Employees could secretly take items home that can easily fit in their pockets. 

D) Delivery fraud: When the delivery truck arrives, an employee might hide some items for themselves instead of stocking them in the restaurant.

E) Fake billing: An employee places an order for 80 bottles but generates a bill for 100 bottles. The restaurant pays for 100 bottles, but only 80 bottles are delivered. At first, it might not seem like a big deal, but the problem shows up during the next inventory check. The records will show a shortage of 20 bottles, causing confusion and potential losses for the restaurant. This is also called “Invoice Padding”.

This kind of theft may seem small, but over time, it can lead to big losses for your business.

Imagine The Scenario

A chef is making pizzas, but while cooking, they eat some of the ingredients, like pepperoni. This means the restaurant is using more material than needed, which increases costs. At the same time, the chef reduces the weight of each pizza. For example, if each pizza should weigh 200 grams, they make it 180 grams instead. After making 10 pizzas, they save enough ingredients to make one extra pizza. Then, they sell this extra pizza secretly without a bill, often with the cashier’s help. This wastes ingredients and causes the restaurant to lose money.

You don't earn from what you sell; you earn from what you save.

“Restaurants don’t just lose money from theft—mismanagement also causes losses. Things like ordering raw material more than the daily usage, poor planning, or not checking inventory properly can waste money.” 

How to Prevent Food & Inventory Theft

Are you finding out how to deal with employee theft? Don’t worry, follow the below-mentioned preventive measures to stop food & inventory theft.

Solution for the Problem A:

• Make it clear that eating on the job or giving away food without permission is not allowed. 

Solution for the Problem B:

• Give your employees a free meal during their shift. This way, they won’t feel the need to steal food.

Solution for the Problem C:

• Place cameras in areas where food is prepared and stored. This will discourage theft and help you review suspicious activities.

Solution for the Problem D:

• Always have a manager or trusted person present during deliveries to check that all items are received.

Butter POS has a great feature that lets you track your stock on a daily basis. It automatically checks the stock at the beginning and end of each day, so you always know how much stock you started with and how much you have left. It also matches the stock with your sales, ensuring everything adds up correctly. Get the subscription to Butter POS for free!

Over Portioning

Over portioning happens when employees use more ingredients than necessary while preparing food. Although this might not seem like theft, it can hurt your restaurant's profit margins. Here's why:

A) Excessive material usage: Employees might add extra cheese, meat, or toppings, leading to higher costs for each dish.

B) Favors to friends or family: If employees knowingly give larger portions to their friends or family, it becomes a form of theft as they are intentionally misusing resources. 

Over portioning might seem small, but over time it can cause significant financial losses for the restaurant.

How to Prevent Over Portioning

Here’s how to prevent employee theft when it comes to portion sizing: 

Solution for the Problem A:

• Train employees to use specific measurements for each dish. Provide tools like portioning spoons or scales to maintain consistency.
• Develop detailed recipe cards with clear instructions on portion sizes and ingredients for every menu item.

Solution for the Problem B:

• Use kitchen cameras or conduct random checks to ensure employees follow portioning guidelines.
• Prepare ingredients in pre-measured amounts to simplify the cooking process and avoid overuse.

With Butter POS, you can control the portion sizes of your ingredients. For example, if you're making a pepperoni pizza, you can set exactly how much pepperoni should be added. This helps ensure consistency in every dish and prevents over-portioning. Get Butter POS now to eliminate theft caused by employees adding extra ingredients.

By enforcing portion control and educating your team, you can prevent over portioning and protect your restaurant’s profits.

Too Many Comps

"Comps" are complimentary items or discounts given to customers for valid reasons, like resolving complaints. However, some employees misuse this privilege by issuing unnecessary comps to cover up theft. Some employees might mark a fully paid meal as "comped" and then take the cash for themselves.

Imagine This Scenario 

Let’s say a table of four pays $80 in cash for their meal. The server enters the order into the system as "comped" due to a supposed issue with the food. In reality, there was no issue, and the server kept the $80.

How to Prevent?

We’ve seen this problem in many restaurants, and the best way to tackle it is by limiting who can issue comps. Ideally, only managers should have the authority to approve them. Also, make it a habit to review comp reports daily. 

Here’s a bonus for you 🎁 Butter POS gives you full control over employee permissions. For example, if you want to prevent unauthorized complimentary items, you can set up a password for this action. Whenever a cashier tries to mark an item as complimentary, they will need to enter the password. This password is only shared with authorized staff, like managers. Get the subscription to Butter POS now and save your restaurant from food & inventory theft. 

Misusing Unclaimed Receipts

Sometimes, customers forget to take their receipts or leave them behind. Cashiers take advantage of this by keeping those receipts. Later, when a new customer places an order that matches an old receipt, the cashier hands over the unclaimed receipt instead of punching the new order into the system. The money from the new customer goes directly into their pocket, leaving no record of the transaction.

Imagine This Scenario

A customer orders a large pizza, pays, and forgets to take the receipt. The cashier, noticing the unclaimed receipt, keeps it aside. Later, another customer walks in and orders a similar large pizza. The cashier takes the old receipt, hands it over to the new customer, and pretends it's for their order. Instead of entering the new order into the system, the cashier pockets the payment. The new customer leaves without knowing, and the restaurant never sees the money.

How to Prevent?

To prevent receipt misuse, make sure that any unclaimed receipt left on the counter is clipped immediately. At the end of the day, all unclaimed receipts should be handed over to the manager for proper tracking and disposal, ensuring no old receipts are left to be reused.

With Butter POS, you can send digital invoices to customers via WhatsApp and email. This eliminates the need for paper receipts, saving you on printing costs. Plus, you collect customer data, which you can use for future promotions. This helps you retarget customers for discounts or new offers, making your marketing more efficient. Try Butter POS for free today!

Conclusion

Employee theft can be stopped, and the good thing is it’s not too hard. If you follow the tips I’ve shared, you can make your workplace honest and theft-free. The key is to trust your team, treat them well, and keep everything in check.

Start with small steps like paying fair salaries, listening to your employees, and using a good restaurant POS system. These actions can stop theft and also build a strong, loyal team that helps your restaurant grow. You can do it!