"It's not a case of if a pub business will incur financial loss due to error or theft, it's when."
Theft and fraud are more common in the pub industry than we might like to think, so we invited Malcolm Muir, consultancy director at Venners, to show how a few simple tweaks to procedures can have a significant impact on your bottom line:
"It's not a case of if a pub business will incur financial loss due to error or theft, it's when.
"At Venners, we've completed thousands of observation audits, which note the details of around 100 rounds of drink sales on each occasion. Losses occurred in 100 per cent of hospitality sites.
"The losses were due to a number of factors, including mistakes, poor revenue capture and theft.
Indeed, over the last 12 months, we've already observed more than 10,000 drink transactions. Our findings uncovered significant revenue loss, with 39 per cent attributable to theft but almost half (46 per cent) caused by human error.
The most frequent type of loss is caused by general fraud.
"This can include food and drink consumed by staff on duty – not forgetting that many operators rightly allow teams to help themselves during the course of a shift, however too often, amounts are not specified, which results in staff naturally taking more than the policy intended.
"Similarly, drinks and staff discounts can easily be passed to friends and family. Customer promotions can also be more of a hindrance than help, frequently causing server error and leading to lost profits. If operators don't adequately explain offers to staff, the misuse of promotions can mean the exercise backfires on the till.
"Who is most at risk?
"We've found wherever opportunities arise through flaws in procedures, theft will be swift to follow. For example, nightclubs provide an environment ripe for theft and error, due to the fast pace of the environment, lively guests and dark corners.
"Perhaps surprisingly, the hotel lounge service is just as susceptible. We found the table service provided in lounges often means staff ring in orders away from guests and prying eyes."
So, what can operators do? Here are 10 simple steps operators can take to minimise risks:
This is paramount to avoid server error. This should also apply when someone takes a leave of absence. A thorough handover should be undertaken to ensure nothing is missed.
2. Don't rely on receipts.
Simply asking staff to ensure receipts are produced doesn't always stop theft. Some members of staff don't always print receipts and not every customer wants a piece of paper every time they're served.
3. Is the till visible to customers?
This is an easy check to make. We have seen many instances of fraud occurring when a till display is broken, turned away from the customer or obscured by menus.
4. Operators need to start talking amongst themselves to learn what to look out for.
There might be something - or indeed someone they weren't aware of as a serial fraudster.
5. Managers should talk to teams.
Staff need to be made aware when poor results occur; and to understand that theft affects the whole business.
6. Accurate records are important.
Every till action, payment and shortage should be recorded.
7. Check procedures regularly.
Operators should carry out site visits at odd times. Sunday afternoons can see large losses, attributable to a lack of management on-site and higher numbers of off-duty staff, resulting in families taking advantage of discounts.
8. On the supplier side, operators should conduct random spot-checks to scrutinise deliveries more closely.
Staff will always say they check each delivery on arrival, but in practice, this is not the case.
9. Show care for your staff by keeping them happy and motivated.
This may not seem like an obvious way to curb losses, however, it's a way of building loyalty and trust, which in turn could reduce theft, whilst increasing the likelihood of a whistle-blower calling time on fraudulent activity.
10. Operators should consider a regular external audit.
A third-party review brings experience from multiple industries and types of business and doesn't skirt issues that might "drop a friend in it". Using an outsider removes personalities from the business and the tendency for internal reviewers to presume "he would never do that" or "she always checks that". Presumptions can be wrong. It is impossible to know every staff member's personal circumstances and pressures can cause people to act out of character.
- Do you suspect a problem? Here's what Malcolm advises:
"If an operator suspects they've become a victim of staff fraud or mistakes, they can use their business data to check for suspicious activity.
"Who has the most "No Sale" records? This can often indicate a member of staff with a high error rate and operators should then ensure that extra training is provided.
"External assessors can also be brought in to check a suspicious situation. An outsider will turn a fresh eye on the business, conduct an impartial review and identify risk factors in procedures that have become commonplace. Operators might also consider changing shift patterns or re-assigning tasks to highlight anomalies."