These employees might be walking out the door with cash- losing revenues is the most obvious. But what happens when they are stealing products that you must pay for? In quick service restaurants- that can amount to anything, and whatever they take adds up quickly.
Some of the more obvious items that employees are stealing might be cash, office/ kitchen/paper or Janitorial supplies, coupons, perishable and non- perishable food items… the list goes on.
Again, consider putting numbers on any of these items and see what the impact is to a single store location. Assuming that for every dollar in sales your food costs are at 21%, what happens to your profit margin if an employee steals $50 worth of food at the end of his shift tonight?
For simplicity purposes, let’s assume your sales for the day were $500, and your normal food cost at 21% would be $105. However, because the employee stole $50, your food cost is now $155, or 31% of your sales. It appears that should be a glaring deviation when reviewing your daily food costs. However, many franchisees are NOT reviewing daily costs. Some only look at this information once each month and by then it might have smoothed out a bit so the food cost is only up 2% for the entire month.
That 2% is easier to explain than ten, but if it is up consistently over averages then you want to find out which three out of four are stealing!
How long would it take you to notice that food cost is 31% instead of the expected 21% on any given day? It is possible that sales of higher margin items just happened to spike at the same time, so unless you are diving in and looking at the details, you might not notice it.
The real issue here is that $50 of product is $50 of product. It is cash out of your pocket because you must pay for it, and you are not able to sell it. You will never realize a return on that product.
It’s important to recognize that theft occurs at ALL Levels- front line cashiers, janitorial, even store managers. The reality is that you will not be able to tell by looking at the person, or even by comparing the “historical ethical” background of the employee. If you are not aware of the 10/10/80 rule, you should educate yourself about who may be stealing and why. This rule states:
- • 10% of employees are always honest
- • 10% of employees are always dishonest
- • The remaining 80% can be swayed based on opportunity and circumstance
Bottom line, don’t give them the opportunity, and if it happens, you need to be prepared to catch it and stop it right away. Any operator that says it doesn’t happen in their operation is simply naïve or ignorant. When employee theft is estimated to amount to up to 10% of your revenues, find it!