Restaurants have been victimized by their servers for almost as long as restaurants have been in existence.  Many servers take advantage of the industry’s historically high turnover rate to commit their scams at each new place of employment.  Unfortunately, background checks rarely result in uncovering a potential new server’s fraudulent activities since restaurants rarely make this information public.

So to prevent server scams from occurring, restaurant owners generally have to rely on their own systems of internal control, the relied upon controls in their Point of Sale (POS) systems, and visual observation during high volume times.

Since controls around the POS system have vastly improved over the last few years, the successful fraudster generally has to bypass the system altogether.  It comes as no surprise that skimming is the preferred method of ripping off restaurants.

Whether it is voids, comps, or unsecure couponing, the fraudster relies on management to be asleep at the switch.  During high volume periods, many managers will simply sign off on adjustments because they are “too swamped” to investigate.  The successful fraudster knows this and takes full advantage of the situation.  If a restaurant is successful, it has many of these high volume times providing the fraudster numerous opportunities to line their pockets.  Taking care of guests is always the highest priority for successful restaurants so investigating these during high volume periods is not always feasible.

However, if restaurant owners look for patterns in the adjustments, these scams can be nipped in the bud before they become too big. For example, by comparing the amounts and percentage of voids to sales dollars for each of your servers, it may become obvious that one particular server is way out of line.  Of course, this is just a “smell test” that may or may not be due to fraud.  However, by following anomalies like this in your operation, you may not only discover a fraudster, but you could also discover other operational inefficiencies.

As well, these scams are often uncovered because fraudsters are observed by their peers or brag about their conquests. The Association of Certified Fraud Examiners reported in its 2010 Report to the Nations that approximately 40% of all frauds are detected by a tip.  Having a good line of communication with the staff is vital if the owner wants to increase the chance of getting the tip.  Without such rapport and lines of communication, the honest employees have less of a reason to help the owner out.

The professionals at ORBA have experience helping clients not only detect fraud but also devise and implement procedures to deter fraud from occurring in the first place.  If you would like more information regarding fraud prevention and detection, please contact Scott Stringer in confidence at [email protected].