Skip to main content

Combat Shrink at the POS: Four Profit Loss Prevention Technologies

Employee theft and loss prevention are definitely not new areas of concern for restaurateurs. Yet in a dynamic economy where restaurant operators need to work even harder to get customers out of their homes and into their restaurants, the loss of valuable profits to untrusting employees is a disheartening occurrence. According to the National Restaurant Association, employee theft amounts to four percent of food sales at a cost of $8.5 billion annually. Fortunately for operators, technology is coming to the rescue with a number of solutions that are guaranteed to combat employee theft at the restaurant nerve center: the point of sale (POS).

Integrated video
Traditionally, video surveillance systems have been utilized by restaurants for premises monitoring and surveillance. Yet, a relatively new phenomenon is emerging within this technology group that enables operators to integrate video with the POS to quickly and easily gain visual context into every aspect of their operations. When integrated with the POS, managed video as a service (MVaaS) enables managers to set up and track user-specific business rules around transactions such as voids, returns, discounts and coupons.

MVaaS offerings such as that from Envysion, the solution in place at Larkburger and several of Wright III Food's Burger King locations, provides a single point of central administration to easily control multiple-users, their access and roles, and camera and DVR parameters. Managers can set up custom reports and alerts that notify them of occurrences where employees are performing transactions such as voids excessively. Operators can then watch the associated video to determine whether the transactions are valid or fraudulent and take the necessary follow-up actions.
"Envysion's unique combination of user-friendly navigation and robust feature capabilities provides a powerful video solution that drives our loss prevention efforts. The ease with which I can navigate the interface to view detailed point of sale transactions and the video associated with each transaction, allows me to quickly monitor my entire operations with just a few simple clicks of a mouse," says Adam Baker, president and CEO of Larkburger.

Beverage tracking solutions
A situation that spells trouble for many restaurant concepts, especially those that feature draft beer service, comes in the form of bartenders or wait staff that give away or undercharge beverages. When repeated over and over, this action alone can lead to a huge loss in profits. Operators like the California-based Hootwinc, LLC, a franchisee operating Hooters restaurants in Washington, Oregon and Southern California, has adopted a new technology at company-wide stores to curb liquor theft and stem the straining profits from its bottom line.

The technology, invented by Syracuse, New York based US Beverage Net, enables operators to measure every ounce of beer dispensed. The system, called bevManager, involves the installation of a flow meter in every beer line between the keg and faucet that measures the ounces of beer flowing, and sends that data to the company's centralized servers. The system is also tied in with the restaurant's cash register to monitor beer sales. When restaurant operators log into the bevManager system via a regular internet browser, they can monitor the quantity of beer poured against revenue collected at the cash register in real time. Losses, if any, are identified immediately.

"The system has helped us troubleshoot and pinpoint not only mechanical issues that cause loss of product, but also theft and poor techniques in pouring by our bartenders," said Mark Potter, CEO of Hootwinc LLC in a June 2008 Hospitality Technology case study. The real-time system enables restaurant operators to view product losses by the hour or minute, and is also capable of alerting restaurant managers of any suspicious activity by sending email or text message alerts to their mobile phones.

Coin dispensers
A tried and true solution that has proven successful in reducing theft at the POS is the coin dispenser. This relatively inexpensive device has been in existence for over 30 years and has seen few if any physical changes since its creation. Automated coin dispensers can help to increase accuracy and help eliminate specific opportunities for theft to occur in the cash flow transaction process.

An automated coin dispenser requires the cashier to ring in the customer's order on the POS system in order to execute the transaction and dispense the correct change. Many brands, such as Telequip, integrate with most popular POS systems via a Universal Serial Bus (USB) port. And in many cases, they can also tie into the financial reporting system.

The impact of a coin dispenser on an operators shrink problem should not be underestimated. Because the coin cup faces the customer, cashiers do not handle the coins going to the customer. This makes it difficult for the cashier to substitute a different amount of change in an attempt to short-ring an order. If a cashier intentionally overcharged five customers 50 cents a day, that adds up to almost a $1,000 a year.

Another loss prevention technology that is starting to gain more of a presence in restaurants is the use of biometrics to help curb internal theft and occurrences of buddy-punching. In an industry where keycards and passwords can be shared or stolen, thus creating a challenge for many IT departments when it comes to limiting the access that workers have to the POS, biometrics can be a solution. By implementing biometrics, operators can ensure managerial oversight of sales transactions to prevent the occurrence of fraudulent voids.

Valenti Management, operator of 16 Chili's locations throughout Alabama and Mississippi, is one of many operators turning to biometric fingerprint readers. Each of the restaurants' POS terminals are equipped with fingerprint readers from DigitalPersona along with POS software from Digital Dining. The readers are USB pug-ins and simply require the user to place his or her finger on the optical reader window. The fingerprint is then automatically scanned and sent to the POS through a USB interface after on-board electronics have calibrated and encrypted the data.

"The biggest benefit is that you cannot lend someone your finger, and we know whoever is using their finger in the fingerprint register. With this we can hold people to their actions," said Pachy Torresola, director of IT for Valenti Management in a December 2008 Hospitality Technology case study. "Any security function that requires punching or logging into use a terminal, such as when you split a check, requires security. And your security can fail if you need to use codes. With this, you log in and a manager approves it with his finger."
Excerpts taken from "Small Change Leads to Big Dollars: Shrinking Opportunity by Keeping the Cash Drawer Closed" by Alan Burt, vice president of finance, Crane Payment Solutions.

This ad will auto-close in 10 seconds