When you make a substantial investment, it’s always wise to protect it. As a restaurant operator, it’s likely you have tens of thousands of dollars (or more!) invested in your dream, so taking steps to prevent excessive losses or financial damages should be an integral part of your overall business strategy.
Unfortunately, there are a number of ways that these losses can occur — from employee theft to workplace injuries to carrying too much inventory. On the flipside, there are thankfully just as many ways you can counter them while also improving operations and saving money at the same time.
Use this simple checklist to form the basis of your loss prevention efforts.
Dig deep with new hires.
Effective loss prevention begins well before an employee’s first day on the job. You’ve all heard the tales of companies making hiring decisions in haste, skipping background checks and rushing through the interviewing process, only to quickly find out that the employee isn’t a great fit. That’s why it’s important to identify where and how each potential new hire would fit into your culture before extending that offer letter.
• Create and follow standardized hiring and interviewing procedures and make sure to ask interview questions that dig deep into a candidate’s personality.
• Ensure that candidates’ personalities and goals align with the company’s overall culture and brand mission.
• While an employee referral program can yield an influx of talent, avoid giving referred candidates preferential treatment by skipping aspects of the hiring protocol.
• Perform background and reference checks as well as drug testing on all employees — no exceptions!
Food for thought: One-third of employees quit within six months of hiring, according to a survey by BambooHR, so careful screening for cultural fit is imperative to avoid inflated hiring costs.
Invest in onboarding and training.
The honeymoon period that occurs right after hiring a new employee will end abruptly if there’s not a smooth transition into the open role. Onboarding helps to ease employees into the job and culture and provides them with expectations, parameters, resources, and on-the-job training.
• Establish an onboarding program for new hires that introduces them to your brand, mission, values, and culture.
• Spread the orientation over three or more days to prevent overwhelming employees and to provide ample time for answering questions, covering policies and procedures, and taking advantage of impromptu teaching moments.
• Pair up each new employee with a mentor on day one who can be their go-to person for questions, concerns, and feedback.
• Conduct thorough food safety training before any food handling occurs and document those efforts.
• Before placing them on the register, ensure cashiers are well-versed in cash-handling policies and understand the ins and outs of the POS system, including when and how to apply coupons and discounts.
• Track employees’ performance in order to identify further training and mentoring opportunities.
Food for thought: According to Gallup’s State of the American Workplace report, only 12 percent of employees strongly agree that their company does a good job with onboarding new team members. But an engaging and thorough onboarding program pays off — research from TINYpulse indicates that a solid onboarding program leads to a 91 percent retention rate of first-year employees.
Get a handle on forecasting and scheduling.
Knowing your numbers is key to identifying exactly when and where losses may be occurring. While it can take some time to initially gather this data and dial in procedures, the benefits far outweigh the upfront work involved.
• Develop a forecasting methodology that works for your restaurant’s needs, which may include monitoring sales daily, identifying peak service times, and comparing past monthly and annual sales to current sales data.
• Meet with management frequently to gather input, identify problems, and make necessary adjustments, particularly if noticing variances of more than 5-10 percent in forecasted numbers.
• Complete and post employee schedules at least one week in advance to allow employees sufficient time to coordinate plans and minimize workplace scheduling disruptions.
• Cross-train employees and rotate them into different positions throughout their shifts. This keeps their skills and minds sharp, which can decrease the likelihood of mistakes made from repetition or boredom.
• Rotational schedules during shifts also reduce losses in the event of employee theft.
Food for thought: Restaurant managers spend as much as 20 percent of their workweek creating employee schedules, according to a TimeForge survey. Streamlining just this one process alone can be a significant timesaver for managers, allowing them to direct their focus toward more critical tasks.
Closely track inventory.
Having too much or too little inventory is never ideal. Between purchasing an abundance of fresh ingredients that are likely to spoil before being used to upsetting customers by running out of a popular item, striking a middle ground should be the inventory goal.
• Utilize inventory control procedures such as first-in, first-out (FIFO) to minimize and eliminate unnecessary waste.
• Implement inventory count sheets and update them regularly as items are added or discontinued.
• Provide training, and retraining as indicated, on proper food and beverage portion sizes. Place visual aids in prep areas to serve as useful reminders too.
• Establish a system of built-in checks and balances such as having morning managers spot-check inventory counts from the prior night’s close as well as evening managers doing the same for morning counts.
• Assign specific employees to be responsible for verifying receipt of inventory shipments.
Food for thought: Employee theft accounts for 75 percent of restaurant inventory shortages, according to the National Restaurant Association.
Tighten up cash-handling procedures.
While credit and debit cards are an increasingly popular payment method, cash remains a prominent part of most restaurant operations. Improving how cash is handled by your staff can prevent losses as well as quickly raise red flags when something is amiss.
• Perform daily banking deposits to minimize the amount of cash on-site.
• Invest in a time locking safe to limit access to stored cash and banking information.
• Have at least two people verify and sign off on drawer counts and deposits.
• To boost accountability and avoid drawer-sharing issues, assign one drawer to each employee per shift.
• Have cashiers count their assigned drawer before and after their shift.
• Provide counterfeit bill detector pens to all cashiers and request they verify all bills $20 and greater as well as any other questionable bills.
• Review negative cashflow transactions daily and have managers document reasons for any voided, discounted, and comped sales.
• Consider moving to a cashless system if the significant majority of customer payments are made via credit cards, debit cards, or mobile wallet apps.
Food for thought: According to a 2017 study by TSYS, credit and debit card payments account for as much as 75 percent of dine-in restaurant transactions.
Take workplace safety and security seriously.
Employee accidents and injuries are very real possibilities in restaurant environments, often because of overexertion or repetitious movements as well as exposure to hazards in the kitchen. And due to the extended hours and available cash thought to be on-hand, restaurants are frequently targeted by robbers. In either instance, your top priority should be to keep employees and customers safe.
• Establish an efficient kitchen workflow to prevent employee trips and falls.
• Provide ergonomically-friendly work stations and seating options for employees to help avoid musculoskeletal strains and injuries.
• Install security cameras with recording capacity near all exits and throughout the facility.
• Following an employee’s termination, collect their uniform, security badge, and keys and deactivate any building or access codes to which they were privy.
• Ensure parking lots and entrances/exits are well-lit.
• Create and enforce a policy for the secure storage of employees’ personal belongings while they are on the clock.
• Make sure all entry doors are locked and the alarm is engaged once all patrons exit the building and employees remain to perform closing tasks.
• Have managers conduct regular walk-throughs of the restaurant during shifts to look for suspicious activity.
• Teach employees about situational awareness and have clear policies for entering and exiting the building (i.e. staying in pairs or a group).
Food for thought: According to the Bureau of Labor Statistics, food preparation and serving occupations experienced a 64 percent increase in fatal work injuries from 2015 to 2016. These included fatalities related to slips, falls, contact with equipment, and violent crimes.
Stay the Course
Loss prevention is a process. While many of these techniques can almost immediately head-off and limit the occurrence of incidents, the key to long-term loss prevention is continuous monitoring, employee training, and a commitment to revising procedures and policies along the way.