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Click here to listen to audio interview with Michael Rasmussen
Welcome to the real world. I was raised to treat your neighbor as you would like to be treated. Therefore if you would not like to be stolen from then do not steal from others. If the world adhered to this standard we all would be in a better place.
Statistics published by the National Restaurant Association (NRA) state that restaurant sales are projected to be over 500 billion in the year 2007 and, on a typical day in that year the restaurant industry will post average sales in excess of $1.5 billion. Over 11 million people work in restaurants in America representing approximately 8 percent of the work force. Approximately 44 percent of Americans eat at a restaurant at least once a day. The average person consumes 4.2 meals prepared away from home a week. On an average day in 1998, 21 percent of U.S. households used some form of takeout or delivery. The average annual household expenditure for food away from home in 1998 was $2,030 or $812 per person. The restaurant share of the food dollar is 45.8 percent. Yet, it is also estimated that 80 percent of restaurants will close within two years of the date they open for business. Why?
One primary reason is theft. Theft comes in many forms. Food, labor, cash, restaurant supplies, office supplies, and time. Yes, wasted time in operations due to a lack of systems to follow. This primarily applies in independent restaurants where the fully documented restaurant operation has not taken place by the operator. Each shift crew prepares the food and provides service to the customers in a different method creating an inconsistent product and service.
In general, full service restaurants are individually owned and most fast food restaurants are franchised. Franchisees typically pay a fixed percent of gross receipts to the franchisor for advertising and royalties. Franchisees will also purchase their inventory from franchisors and have their records regularly audited by the franchisor. Some fast food franchisors also lease the restaurant building to the franchisee for an additional monthly fee or percentage of sales. Internal controls of franchised restaurants are generally extensive and designed to detect fraud, waste, and theft. Individually owned restaurants usually do not have the same third party verification of income and costs.
The bar and restaurant industry is particularly susceptible to theft and embezzlement. Bars and restaurants typically make numerous small dollar sales in a relatively short period of time (for example, lunch or dinner). Many employees receive and manage large amounts of cash. Some restaurants do not properly segregate the duties of their employees to the extent necessary to maintain good internal controls. This is especially true of bars where one bartender takes the order, fills the order, receives the payment, records the payment, and may even balance out the till at the end of the day. Bars and restaurants tend to pay their employees near minimum wage and have a high rate of employee turnover. Additionally, bar and restaurant employees often have access to large inventories of food and alcohol. For these reasons, bars and restaurants may have a high risk of employee theft and embezzlement unless they implement and maintain a set of good internal controls.