Employee Theft Takes a Bigger Bite Out of the Restaurant Profit

Last month on this blog we addressed Organized Retail Crime and referenced staggering data from the National Retail Federation’s 10th Annual Organized Retail Crime Survey published in May 2014. This month we turn our attention from external theft to preventing internal loss caused by individuals from within the business including employees, contractors and service providers such as cleaning staff.

Loss prevention professionals specializing in protecting restaurants from theft and risk will gather next week at the Restaurant Loss Prevention & Security Association 2014 Annual Conference in Orlando. Nearly all of the 50 largest restaurants chains in the US will attend. Keynote speakers include Steve Davis, Chairman of the Board and CEO of Bob Evans Farms, Inc.; Steve Miller, Manager, Security Business Integration with Walt Disney World; and executives from CKE Restaurants which operates Carl’s Jr., Hardee’s and two Tex-Mex restaurant chains.

Why are these busy executives trekking to Florida in August? One word: Necessity. In the hyper-competitive restaurant business, protecting employees, customers and assets means protecting profitability.

Unlike other retailers, the majority of loss at the nation’s restaurants results from employee waste, error, fraud and deliberate theft. Viewers of reality shows about the restaurant industry such as Food Network’s Mystery Diners and Spike TV’s Bar Rescue, even Undercover Boss on CBS, may understandably think the business is rife with dishonesty and incompetence. Although the real reality is not that dire, internal loss is a big problem for restaurant operators.

While the restaurant industry doesn’t compile granular data about employee theft and other loss, we can extrapolate from broader retail studies. A June 2014 news release from Jack L. Hayes International, leading loss prevention and inventory shrinkage control consulting firm, decried “Shoplifters and Dishonest Employees Are Apprehended in Record Numbers by U.S. Retailers.”

Findings from the company’s 26th Annual Retail Theft Survey of 23 large retail companies with 23,204 stores and over $660 billion in retail sales in 2013 include:

  • Employee Apprehensions: 78,085 dishonest employees were apprehended in 2013, up 6.5% from 2012.
  • Employee Recovery Dollars: Over $55 million was recovered from employee apprehensions in 2013, up 2.5% from 2012.
  • One in every 39.5 employees was apprehended for theft from their employer in 2013. (Based on over 3.0 million employees.)
  • On a per case average, dishonest employees steal 5.4 times the amount stolen by shoplifters ($706.21 vs $130.89).

As a provider of full spectrum security solutions – from physical security to cash management products to cybersecurity – Dunbar will be at the RLPSA 2014 Annual Conference in Orlando from August 3 – 6 to share our expertise gained from more than 90 years in the industry. We welcome the opportunity to meet you. Stop by booth #115 to learn about our wide range of retail solutions to protect your business. Our newest line of Dunbar Cash Manager Safes will be on display and available for hands-on demonstrations. These “smart safes” provide ongoing monitoring of activities and include state-of-the-art real-time counterfeit detection. When incorporated into your cash management processes, Dunbar Cash Manager Safes provide superior cash loss prevention.

We hope to see you in Florida next week.