5 Ways to Reduce Theft in your Bar
I once read the results of a survey that said 20% of bar owners said they had been the victim of theft in some form or another. It went on to say that the other 80% were either lying or not aware of just how widespread theft and fraud in this industry is.
In an average week, I work with 5 or 6 Hospitality Business owners in identifying stock and cash losses and implementing simple effective procedures to Identify when theft is occurring, Eliminate the losses once identified, and Implement a procedure to prevent it from happening again. It never fails to amaze me as to the level of complacency that exists and the potential that exists for significant losses.
Follow these steps and you’ll reduce the risks in your business:
1. Standardise your Systems
Sounds complicated but this simply means that every critical action in your business needs a standard system and method. Take your Cash Reconciliation of your Tills at the end of the night. If you don’t follow a certain system, you won’t get your reports, your tills won’t be zeroed for the next shift and you won’t know if cash takings are down. The same applies to every other action in the running of your business. Document your House Standards and train each staff member so that everyone completes a task the same way. Once staff members have been trained, a standard is in place and it will become easier to monitor staff performance.
2. Perform Physical Inventories
Hire an external stock auditor to undertake regular inventories and to report the variance results directly to you, product by product. Only by knowing exactly which products are missing can you take action to prevent the theft. A ship taking in water needs to know where the hole is before it can plug it. Think of your business the same way and you’ll fix the problems in a timely manner. I know one owner who used an external auditor to assist with the first few months of inventories, they tightened the stock losses to a satisfactory level and now the owner performs his own spot checks in the bar on random occasions. The staff see him counting and know he is serious about control procedures. What they don’t see, is him throwing away his count sheet without even looking at it…..his accountant gives him a profit report once a week, he sees he is on target based on stock sold so he uses this exercise to keep the staff on their toes.
3. Undertake Surprise Cash Counts
If you do have an opportunistic staff member working for you, (s)he will be looking for routines in the business to take advantage of. Similarly to dropping your cash to the bank at random times to foil thieves, you should do the same within your business. Most bars wait until the end of the night to balance their cash and most staff know this. If a staff member has been taking cash from customers without entering anything into the till, then they will normally wait until the end of the night to remove their “takings”. Remove this opportunity by taking a reading from the till at random times during the day and counting the cash. If you have too much in the drawer, the chances are you have stumbled upon the aforementioned scheme.
4. Remove Managers Keys and change Passwords
If you leave Managers Keys in the till during service, you are allowing staff to perform refunds, void transactions, print readings of cash takings, program prices and so on. Obviously you don’t want this to be going on so only provide a Manager’s Key to trusted members of management and keep a record of who is in possession of these keys. Certain tills, do not require keys, but a password to undertake the above functions. Change the password every few months or whenever you think there is a problem in the bar. Never write it down or disclose to the bar staff. This is another variable you can remove from your business to bring you closer to a business that gives you answers rather than raises questions.
5. Manage your Back Door
How many times have you seen a member of your staff signing a delivery docket from a supplier without checking the delivered quantity? This is another area which needs standardisation in your business. All orders to suppliers should be on a Purchase Order. This should be matched to a delivery docket and both checked that they correspond. Any variances should be noted and countersigned by the supplier or driver and both dockets sent to accounts payable for comparison with the monthly statement from the supplier. I have just been working with a business that was losing a Case of Coke a week from the delivery area to another supplier who would deliver at the same time and when he dropped the vegetables off, he would take the case of coke with him as he left because nobody had stored the soft drinks away as they were delivered. A case of coke a week is worth an average of €50 a week at retail which is over €2500 a year if not spotted!
Start with these steps and you will begin to have a more measurable and manageable business. It starts with you and must be continuously enforced by you to ensure success.
I'm Barry Chandler and I'm The Bar Blogger. I've been involved in the bar and hospitality industry for 16 years. From Bartender to Bar Manager and from Food & Beverage Controller to Small Business Owner, I have worked with more than 500 bars in the last five years to help them streamline their costs and run a more profitable business and more than 800 bars and clubs use my Management Toolkit which can be accessed at ManageYourBar.com.
Excellent views. Congrats friend.