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Entrepreneurial Spirit Gone Wrong
Posted by Ryan Volberg at March 27, 2008 10:15 AM
Protecting your restaurant against internal theft
In the next series, we'll talk about the importance of controls in your restaurant. As we begin, let's make a commitment not to underestimate the incredible damage that a "silent partner," in the form of one of your employees, can do to your finances. Nor can we underestimate the lengths that an employee will go to in order to rob you blind.
Brad Brooks, the Director of Strategic Accounts told me an interesting story of one of the most elaborate bar scams that I've ever run across that depicts this topic well.
It was in the early 1990's on Vancouver Island and the owner of a popular club became concerned that one of his bartenders might have a drug problem. Several times a night, the employee would excuse himself to go to the restroom. The owner began to watch closely and go into the restroom immediately after the employee, expecting to find remnants of drug activity. But each time, the owner found nothing.
The owner KNEW that drugs were involved. After all, what else could it be? The bar had been fully equipped with liquor dispensing guns and an inventory system that rivaled Fort Knox. Every night, each bartending station was counted and balanced against the receipts. The last bartender that had been caught stealing was charged by the police. In the mind of the owner, it was a completely locked down system.
But one night, the owner happened to go into the restroom and noticed one of the ceiling tiles slightly askew. Hoisting himself onto the back of the toilet and then onto the supports that surrounded the stall, the owner peered into the false ceiling. He was puzzled when he found empty bottles of cheap brands of rum and vodka.
Puzzled, he carefully replaced the ceiling tile and returned to the floor. At night end, he checked the restroom again and discovered that the empty bottles had been removed.
The next night, he visited the restroom and checked the hiding place after each employee used the facilities. Then, the first empty bottle showed up. He had found his culprit, but he still didn't know what was going on. By the end of the night, there were four more empty bottles in the false ceiling.
He called the police so that he wouldn't jeopardize his business with a false accusation. He presented the evidence to the police and they agreed to speak with the employees. The guilty employee immediately folded and confessed to his scam.
This bartender had bypassed the liquor system inside the bar. He had a hot water bottle that was strapped under his shirt, just beneath his arm, filled with a cheap brand of alcohol that he had smuggled in. When customers ordered an alcoholic drink, he used the alcohol he had in the hot water bottle.
He would apply pressure to the bottle where plastic tubing running up his body and down his arm to his finger tips allowed him to create the illusion that the alcohol was dispensed from the liquor gun. He would then pocket the cash from each drink sold this way. His cost was less than $1 per shot. The bar charged $4 per drink and he would pocket the cash. Based on three bottles per night, this employee was siphoning off over $300 an evening of revenue from the bar. Since the owner left the re-ordering of the alcohol to the bartenders, he did not notice that his alcohol supply was not being depleted as rapidly as it should have been.
Regardless of the systems you've put into place, a cunning and determined employee can always find a way around them. While this may be discouraging, it underscores the importance of shedding the naivety that will eventually make you a victim. Instead, you must be both diligent in your application of controls and in listening to that little voice inside that telling you that something isn’t quite right.
Ryan Volberg is the CEO of Vivonet, a company dedicated to ensuring retail and restaurant success.
 Category: Survival Tips
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