Using technology to stop restaurant theft

Using technology to stop restaurant theft

Association POS program

Sept. 16, 2013 | by Cherryh Cansler

Whether it’s employees pocketing cash, giving away free food or simply making honest mistakes because of poor training, losing money at the POS can be a serious problem for restaurant operators. In fact, The National Restaurant Association estimates that internal employee theft is responsible for 75 percent of inventory shortages and about 4 percent of restaurant sales. Three-quarters of employees steal from the workplace at least once, while half steal repeatedly.

SaaS-based technoloy, however, may be the solution to this problem, according to a group of professors who recently published a survey on employee theft at U.S. restaurants. The study found that restaurants using NCR Restaurant Guard to monitor employee interactions with the POS systems not only reversed theft losses, but also led to more profit: From minus-3 percent in losses to plus-7 in gains.

The team measured how rates of theft changed at 392 restaurants in the U.S. after they installed the system and found that:

  • Sales increased by more than $2,900 per location, per week on average.
  • Sales of average weekly drink revenues increased by more than $900 per location, representing an increase of more than 10 percent.
  • And there was about a 35-percent average increase in operating margins.

“Employee theft is an enormous cost to the restaurant industry,” Jeff Hindman, VP of NCR Corporation, the company behind NCR Restaurant Guard. “The theft NCR is catching is cash leaving the restaurant — all lost profit to the owner. The cumulative impact of that theft is huge across the $660 billion restaurant market.”

The cloud-based system, which now has a real-time mobile app to alert managers when suspicious activity occurs, gives managers hard data on their employees, said Lori Kittle, CIO of Landry’s, the company behind 40 restaurant brands, including Morton’s, Bubba Gump and McCormick & Schmick’s.

“It looks at different things that can go on in a store; it really looks at comps, voids, transfers of items and clears and basically lets you know if you have an employee who falls outside the norm,” said Kittle, who first tested the software in five stores but rolled it out to all 421 of units after seeing how it worked. “It flags those items as something that needs to be investigated. Sometimes there is a area that needs to be addressed. Other times its an anomaly that has happened.”

Catching employees doing well

The system, Kittle said, not only flags mistakes and suspicious activity, it also ranks employees based on things they do well. For example, it tracks when employees sell add-on items like desserts or sides, so managers often use it to motivate employees with contests or calling out who is selling the most.

“Sometimes you think your best employee is your best just because you may like them, but this is based on analytics, so you know exactly,” Kittle said.

Although NCR nor Kittle could comment on the price of the system, Kittle said “We feel the investment was worthwhile. It’s easy to use, too. It’s a service that you just turn on and NCR basically installs the service and notifies us if there are any issues. There’s no hardware installation at all.”

While identifying employee theft is the No. 1 goal, the software also prevents it, Hindman said.

“Once word gets out that Restaurant Guard is installed at the restaurant, it positively impacts behavior and employees stop stealing,” he said. “In some cases, we have even seen some employees come forward, admit that they have taken from the business, and promise not to going forward if they can keep their job. The real impact of Restaurant Guard is the behavior change —  it is a way to keep your employees and keep them honest.”

Caught on tape

Another company specializing in detecting and preventing employee theft is EZConnect, which is used in Subway and Dunkin Donuts units. The platform features the ability to integrate digital video with the POS system as well.

“Suspicious cash transactions can be pinpointed and reviewed quickly, avoiding hours of research on standard digital camera systems,” Michael Starer, CEO of Profit Enhancement Technologies Inc., the company behind EZConnect.

“Sales trends by whatever time period requested can be delivered in real time. Specific information requested from the system can be delivered to a smartphone or iPad,” he said.

Nine months after rolling it out in 900 stores, Subway franchisees have seen savings above $1.6 million.

“The best part of this new system is that it is Internet based so I can get on any of my stores from anywhere in the world and look to see what is going on,” said Debra Odom, Subway multiunit owner. “One of the great features of the Subway Loss Prevention Surveillance System is the dashboard. It enables me to go and look at a glance at the total business picture and then also click in and look at each store’s individual data or video.”

It’s no longer necessary to review hours of video tape to find employees stealing, Starer said.

“EZConnect tells you what needs attention. After you set up a library of business rules, the system flags questionable transactions, events and conditions day and night and reports them to you as alerts,” he said.

An expert in restaurant loss prevention and CEO of LossBusters, D.B. “Libby” Libhart said, these types of technologies can save a restaurant operator a lot of headache, time and money.

Software that can isolate POS activity not in compliance with performance standards and that is integrated with accompanying video provides training opportunities and also highlights suspicious activity of a particular cashier or manager, he said. Top that off with a video catching an employee in the act and it’s icing on the cake.

“Restaurant operators are busy enough running the operations of a restaurant,” he said. “This integration saves time and energy in researching problematic and profit draining activity. It’s a ‘game changer’ in reducing losses, increasing profitability, and providing an advantage in the marketplace.”

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Cover photo: NCR

Cherryh Cansler / Before joining Networld Media Group as director of Editorial, where she oversees Networld Media Group’s nine B2B publications, Cherryh Cansler served as Content Specialist at Barkley ad agency in Kansas City. Throughout her 17-year career as a journalist, she’s written about a variety of topics, ranging from the restaurant industry and technology to health and fitness. Her byline has appeared in a number of newspapers, magazines and websites, including Forbes, The Kansas City Star and American Fitness magazine. She also serves as the managing editor for
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