To Catch a Thief

Feb. 18, 2002

Think your employees are honest and forthright, the kinds who'd sooner take a ride through a conveyor oven than swipe a ten-spot from your till?

Think again, say experts.

The Web site lists some depressing stats about employee theft:

* Undercover investigator K.C. Bettencourt reports that one in three employees steal.

* The Wall Street Journal reports that up to 75 percent of employees steal at least once, half of them at least twice.

* The FBI reports that employee theft is the fastest-growing crime in the U.S.

And according to the National Restaurant Association's Web site, a study administered by National Computer Systems in 2001 placed annual theft per restaurant employee at $218.

Dave Ostrander is not surprised. As the owner-operator of Big Dave's Pizza in Oscoda, Mich., he learned the hard way that there are three kinds of employees: those who will never take a penny; those who will occasionally steal a little; and those who will steal you blind at every opportunity.

After 30 successful but trying years in the business, Ostrander sold his store and became a full-time speaker and consultant to the pizza industry. One of his best-attended seminars is on employee theft.

"We all deal with it," said Ostrander during his seminar, "Thanks for the Job, Now I'm Going to Steal You Blind," at last October's Northeast Pizza Expo in Atlantic City. "We're in a cash business, and it's not real difficult to steal. And pizzeria operations generally have fairly lax cash and inventory control policies."

Adding to the problem, says Jim Laube, the foodservice business, by nature, holds multiple temptations for serious and petty thieves.

"If they're really serious, they go after the cash," said Laube, a foodservice consultant and speaker, whose Web site,, dishes up practical advice to operators. "The food products and (supplies) are desirables needed by anybody and everybody. There's just a lot of stuff hanging around a restaurant that people want."

Restaurateurs unknowingly make the pickings easy for thieves, Laube added. Trying instead to focus on pleasing customers -- and even see the best in their employees -- they rarely consider an alarm-free back door a risk, or wonder whether the fresh-faced high-schooler making dough in the back would steal from them.

Why Steal?

Operators give mixed reasons as to why some employees will steal and others won't. In some cases the thief is a college student living paycheck to paycheck and faced with a huge car repair bill. Other times the thief is a parent feeling pressured to feed and clothe a family.

"They have kids at home with no formula or diapers," said Ostrander, who lives in Oscoda, Mich. "Instead of asking for a payroll advance, they clip it if it's simple."

Still others believe the cash and goods they steal are somehow owed to them for their hard work and sacrifice -- even for dealing with a particularly ornery supervisor. To them, taking $20 from the cash register is nothing when the store grosses $2,000 on a Friday night.

"Most pizza employees think the boss is clearing 25 to 50 percent of every sale as profit,"
said Ostrander. "So they're justified if they're working for $6 or $7 an hour to crank the boss when nobody's looking."

Richard Lewis, the executive chef at The Flagship Restaurant in Louisville, Ky., recalled the rationale a co-worker used to decide how much food he would steal.

"If it was a busy night and the chef was yelling at him, you knew he was thinking of a way to get back," said Lewis, a chef of 22 years. "One night the chef chewed him out and then left the kitchen. Then (the cook) turned to me and said, 'Looks like a surf-and-turf night,' which meant he was going to steal some steak and a lobster. Other times it might have been a sandwich."

Thieves also are cunning and difficult to catch in the act. One popular racket is charging a customer the correct amount for a meal, but ringing it up for half the amount and keeping the difference. To ensure the drawer balances out, the employee shifts a coin to an empty slot in the drawer to symbolize the amount to be taken. In this case, a penny would represent a dollar, or a nickel would remind him he'd taken $5.

"I think some people, no matter how well you treat them, are going to steal from you if they get a chance."

Jim Laube

One of Ostrander's most senior employees unwittingly let him in on his long-running scam by loaning Ostrander his car. When Ostrander hopped the wheel, he discovered a handful of order books tucked into the visor overhead. By taking orders with his unauthorized books, delivering the product, keeping the records and then pocketing the money, the driver had bilked his boss for $9,000.

"There are some people who are just wired that way," Ostrander said. "They're wired different than you or I."

Less creative -- and arguably more hungry -- are thieves who will steal food. Some wrap it in protective plastic, place it in a garbage can, take out the trash and then retrieve it from a dumpster once the store is closed. Laube has seen similar crooks go a step further and become black market salesmen.

"One operator told me that he was back at his dumpster around noon and some guy asked him what he was selling today," he said. "Apparently, one of his bus boys was taking stuff out of the back door and actually had a little shop going on in the back alley. He was selling to people just about everyday."

Lucky for operators, said Ostrander, the resale demand for pizza products isn't high outside of the pizza business.

"We don't have much food in our inventory pipeline that the average person can use," he said. "What are you going to do with a case of mozzarella at home? What are you going to do with 25 pounds of pepperoni at home? Not much.

"But sometimes they'll take a 25-pound box of pepperoni, drive to the next town and sell it to a pizza operator at half price and convert that food into money."

To Catch a Thief

The best and most obvious solution to theft problems is to avoid hiring thieves, said Ostrander. But he admits it's difficult, if not impossible, to guess whether that person you're interviewing will rip you off.

Calling past employers to do background checks work some, but he said it's always a good idea to ask a former employer if they would hire that worker back. If the answer is no, then keep on looking for another employee.

But even then, that method isn't foolproof either.

"A lot of employers are very hesitant to finger an ex-employee," Ostrander said. "They're just glad to get them out of their life and glad to get them off of unemployment so somebody else can pick them up."

Linda Gutowski, owner of Mancino's Pizzas and Grinders in Traverse City, Mich., doesn't always know exactly how much is being stolen from her store, but she's aware it's happening. Like a lot of operators, the books have to fall mysteriously out of balance with inventory, or food costs will spike before they're aware there's a problem.

"I know that there's been periods of time where we lost more than others," Gutowski said. Right now, however, theft at her store appears to be low, something she credits to trustworthy management. "I think we have a better handle on it right now than we've ever handled it because of the management team we have in place. It all starts with the management team."

Ostrander tells the story of a pizzeria operator who hired an undercover operative to work as an employee. Within just two days the thief was discovered, and after six days the mole himself stole $300 in cash to prove to the operator how easy it was to rip him off. Ultimately the money was returned, the employee lost his job, and within 90 days the pizzeria's financial situation turned around completely.

Laube said that theft prevention can be simplified by conducting daily inventory audits of key food products. By comparing sales records with inventory on hand, the operator can get an instant idea of where his product has gone. One chain that Laube worked with did audits of its steaks three times a day.

Those audits, Laube added, should be done where employees can see the operator in the act of counting.

"That, in and of itself, really has a dramatic psychological impact on your employees because they know that you're counting that stuff," Laube said. "The owner's going to know if there's a shortage."

Computerized point-of-sale systems also are good theft detectors and deterrents.

"Point-of-sale cash register systems have really eliminated a lot of (theft)," Ostrander said. "But, still, only about 35-percent of pizzerias are on those, and the other ones are still working on paper forms, and they don't track very well."

Consultants also suggest the use of surveillance cameras.

Theft Controls

* Always lock up petty cash and counted money.
* Make employees sign for cash drawers.
* Have two signatures on night deposits.
* Conduct random, unexpected counts of cash drawers.
* Use clear garbage bags, and, to ruin any hidden product, pour bleach into the bags before taking them to the dumpster.
* Make employees sign out knives, roller cutters, etc., to give them ownership and responsibility for each tool.

"People tend not to steal when Big Brother is looking at them," Ostrander said. "It's a deterrent for crime. It's almost a given nowadays."

Some operators balk at using surveillance cameras because it implies employees aren't trustworthy, but Laube said that's just too bad.

"Do you want to protect people's privacy or do you want to make money?" asked Laube. "It's bad to say because it reflects human nature, but that's the way it is. The longer I've been in this business, the more I realize that operators just have to have controls and procedures and systems to do things to protect themselves."

Laube recalled one operator who told him that sales increased after he installed a computerized point-of-sale system and surveillance cameras.

"He said it directly correlated with the date that he installed those things (and) probably paid for his security camera in less than six months."

Protect Yourself First

Reducing theft, the experts say, boils down to employers taking a proactive steps to eliminate the possibility for it.

"If management allows a playground atmosphere ... the employees will have a playground existing. And when a playground exists, there are problems," Gutowski said. "When there's proper supervision, then the workplace is healthier and it stays a workplace."

Like a lot of employers seeking to reduce food theft, Gutowski offers her employees free meals and drinks -- within reason -- along with competitive wages.

Rewards also are an important theft deterrent, Ostrander added, saying money is usually the best payback for positive work.

"It starts with reinforcing these people," Ostrander said. "How do you reinforce them when they do a good job? How do you punish them when they truly tear you up? We have to balance our management styles with rewards for (positive) behavior. If it's rewarded, it'll be repeated."

Laube agreed -- to a certain extent.

"Doing things that elevate the level of morale within an organization doesn't hurt," Laube said. "I think it helps a lot. You appreciate your people.

"I don't think that's a solution (though). I think some people, no matter how well you treat them, are going to steal from you if they get a chance."

Topics: Independent Operation

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