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2013 Food and Hospitality Roundtable Using Technology to Prevent Manager and Employee Fraud Presented By: Robert D’Ambrosia Ctuit CEO & Founder.

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Presentation on theme: "2013 Food and Hospitality Roundtable Using Technology to Prevent Manager and Employee Fraud Presented By: Robert D’Ambrosia Ctuit CEO & Founder."— Presentation transcript:

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2 2013 Food and Hospitality Roundtable Using Technology to Prevent Manager and Employee Fraud Presented By: Robert D’Ambrosia Ctuit CEO & Founder

3 The Hospitality Environment – Hospitality operations are notorious for theft given the nature of distributed cash handling and high-turnover employees. – Employee theft is worse than consumer theft. Both include financial loss, but employee theft abuses a trusted relationship, damages morale, and is more likely to spread among employees.

4 ROI on 10 Minutes per Day – The US Chamber of Commerce reports that up to 75% of employees have at one point or another taken product or cash from their employment – Between 5 and 7% of gross revenue is lost due to employee theft – This means a restaurant doing $2 million per year may be losing $100,000 to $140,000 per year. –

5 Prevention is Better than Prosecution – As tempting as it may be to catch theft in the act, prosecutions can be expensive, distracting from your business goals, and if mishandled, can backfire on you. – When you do catch someone, work with HR and your legal counsel to make sure you protect yourself from repercussions.

6 Have a Documented Fraud Policy Work with your HR department to make sure that in the event of a disciplinary termination, you are protected from being accused of discriminatory practices. – Create a written policy of active steps – Create a schedule of daily spot - audits to make sure all cash- handling employees are periodically checked. (Compare mid- shift checks for accuracy, then confirm they haven’t change post – EOD) – Log the results – 2-3 audits per manager will take 5-10 minutes per day – Let your employees know that you perform spot audits daily

7 Finding Theft – Bad news, there’s no “Magic Bullet” Every restaurant will have nuances that need to be taken into account – employee meals, coupons, bar transfers – Good news: theft usually leaves a trail. – Use spot audits to discover suspicious activities, then go data sleuthing – For the most part, look at baselines and outliers – Don’t jump to conclusions. Use reports to determine where theft is likely, then you’ll still need to catch someone in the act. (Spot audits will often suffice.)

8 4 Theft Detection Tools – Surveillance / Security Cameras – Spot Audits – Data Analysis – Using a Shopper / Spotter

9 Accounting Department – Embezzlement is often not POS related – Don’t allow POS check adjustments by accounting staff – Perform external accounting audit annually

10 Managers – Editing Checks after servers have turned in paperwork Look for checks with comp/void/promo activity significantly after the last item ring time. Compare manager activity % to other managers Graph out manager activity over time, compare managers to each other. Are any spikes towards the end of shifts? Sometimes Manager Activity will be disguised as Server Theft

11 Bartenders

12 – Abusing the “spill check” Compare the ratio of spills in between bartenders – “No Sales” instead of closing cash transactions “Get a receipt or it’s free” policy Review “No Sales” on video if you have a camera system Compare bartender ratios of Cash vs. Credit card tenders

13 Bartenders

14 Servers – Be sure to verify it’s real server activity, and not a manager. (check transaction times.) – Server theft will often show up as higher CC tip percentage Look for checks with unusually high CC tip %’s. – Abusive Manager Comps Insure that table is still present / hasn’t paid and left – Coupon Redemptions Compare redemption %’s on a per-guest or per-check basis – Buffets / Salad Bars (Another Self - Transfer) Compare guests served to host’s count Look for tables open longer than expected Cash tender ratio works here too (Like the bartender example) Spot Audit checks – Self Transfers / “Wagon Wheel” Compare self-service transferred items as % of total items sold

15 Sample Baseline Report

16 Preventions – Make your spot-audit policy known to everyone – Establish a “Ring it before your bring it” policy – Don’t allow shared POS accounts (“AM Bar, PM Bar” etc.) – Don’t allow managers to change employee checks after employees have clocked out – Limit employee’s discount / promotion capabilities as much as possible – Eliminate employee ability for table or item transfers if possible – (recognize that voids / transfers are often result of server error / lack of organization)


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