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Texas Restaurant Law

Are Your Waiters And Managers Stealing You Blind?

Posted in Employees & Waitstaff, Employment, Franchises, Franchising, Liability, Litigation

As I’m sure you already know, theft is one of the absolute biggest problems that restaurant owners face. You started your restaurant to have more time, but now that’s eaten up by watching all of the employees constantly. The problem is further compounded by the fact that even if caught, you’re not likely to ever see the money again because it has already been spent.

So what do you do?

Here are some helpful hints and guidelines to prevent theft in the first place and then catch the responsible party as early as you can.

 Separate Employees Who Take In Money From Those Who Spend Money.

The best thing that a restaurant owner can do to prevent theft on a large scale is to separate the spenders from those who take in money. I’ve personally seen more money walk out the door by allowing a manager who counts the money daily to also be responsible for paying the bills. This makes it easy to embezzle money, and it’s a “recipe” for disaster!

Unless you run the place yourself, it’s unlikely that you can delegate taking in money. Therefore, hire an outside party to pay as many of the bills as possible. If the manager is only responsible for money coming in, it’s much less likely to walk out the door without your knowing.

Set A Precedent.

When and if you do catch a thief, bury them (legally). Nothing has the chilling effect on internal theft than termination and prosecution, and the laws in most states set the threshold of theft surprisingly low. For instance, the threshold for a state jail felony in Texas is only $1500!

Have Safeguards (Like Technology) In Place.

It’s amazing how many restaurant owners I talk to who are surprised that theft occurs in their restaurants AND who have no policies or procedures in place to prevent it. The following list of policies and safeguards should assist you greatly in reducing theft in your restaurants:

  1. Install cameras at all cash registers and credit card machines;
  2. Tie the cameras in to recording devices – these are even available as Apps on an iPhone now!;
  3. Monitor and track daily tips. Even if you don’t monitor tips (which is an IRS violation), it’s still important to know how many tips are coming in versus restaurant revenue.
  4. Incentivize managers and employees to catch theft. For instance, you can offer bonuses at each location for reduced “spillage.”;
  5. Monitor revenue and expenses and do it often! It’s one thing to lose a few hundred dollars in a week due to theft or pocketing of cash. However, that adds up quickly if you fail to catch it timely. Nothing works better than simple daily and weekly reconciliation of inventories, cash, and expenses.; and
  6. Run background checks and refuse to hire employees with bad credit. I know this may sound like wishful thinking, and you may have to pay higher rates for this. In the long run, it’s worth it, though. For instance, the federal government has deduced that one of the biggest threats of espionage comes from folks with poor credit. The same applies to the risk of theft.

Hopefully, these tips will keep more money in your pocket. If you have some of your own, please share!

About the author: Matthew Sanderson is a restaurant lawyer in Texas. “Good service with a smile” is his motto. Click here to find out more about Matthew Sanderson’s legal practice and how he can help you today. Follow him on Twitter @dealattorney.