Two weeks after Tom Bruce took a job as production manager in a healthcare facility in Sacramento, CA, he caught an employee running a "mini grocery store" out of his home garage. Selling stolen cases of sodas and various snacks to his neighbors as well as the general public, the employee had been pilfering what amounted to "about $200 to $500 per week in raw product costs," Bruce says.
"No one knew just how long he'd been operating his own storefront, but it had been at least a year, since it was a tip from his ex-wife, from whom he'd been divorced for a year, that led to the discovery," Bruce adds.
Now a senior partner at the consulting company, Sacramento Food and Beverage, as well as part-time instructor specializing in National Restaurant Association certification classes and cost control/security issues at American River College in Sacramento and at the University of Phoenix, Bruce has heard it all. Acknowledging that almost every establishment must contend with an element of pilferage, Bruce works with foodservice operators to set up systems and programs to minimize the opportunity for employee or supplier theft in the first place.
"The biggest damage comes from employ-ees using drugs who have to support a habit," Bruce says. He works with many clients who've instituted stringent policies for drug testing. "As long as it's a blanket policy, it's legal," he notes.
Bruce also recommends operators get a complete background check done by a private investigator before hiring a potential worker. "It costs about $50 to $60 per applicant, and can be completed in about two days," he explains.
You only need an applicant's permission to conduct a credit check. Others can be done without their knowledge. But Bruce advises letting applicants know that you will be conducting such checks. "This alone will eliminate nearly one fifth of all undesirable applicants," he says.
Other measures include honesty and integrity tests (outlawed in some states) and running a bonding backgrounder on potential applicants. Even though there may be no intention of having a particular position insurance-bonded, the process itself is more extensive than a basic background check.
Once hired, new employees should have the rules and a clear definition of what "theft" is spelled out for them. Obviously, hauling home cases of drinks, paper goods and other items is a criminal act, but can they munch on a bag of chips every now and then?
Donna Wittrock, executive director for food & nutrition for Denver Public Schools, issues a bulletin once a year for all employees to read and sign. "It serves as a reminder to them of what they can eat and what constitutes theft," she says.
Beyond that, operators need to establish a policy of zero tolerance for theft. Immediate dismissal of the perpetrator may not be enough. Employ-ees should understand that those caught stealing will not only be fired but criminally prosecuted as well. Just losing a job may be a small price to pay for someone who's managed to appropriate a considerable amount of inventory over a period of time.
Establishing security measures
Minimizing access to storerooms and inventory is crucial to controlling theft. According to Bruce, these are some of the basic procedures all operations should follow:
- Keep the storeroom locked at all times. Do not hand out the key or allow random access by staff members.
- Have a designated receiver/ storeroom manager. This can be a part time position combined with other duties; however, this individual should not be the person who places the orders.
- Use a requisition system to eliminate the need to frequent the storeroom every time a can or container is needed. This function should be administered by the receiver and done a day ahead of time.
- Maintain satellite working inventories built on a par stock in the production areas. This will allow the storeroom manager the opportunity to automatically replenish supplies.
- Develop and maintain an inventory/order/delivery system for use by all parties involved in the purchasing and receiving functions. This single document supplies the common thread throughout the various functions and eliminates missing items which may not have made it to the invoice.
- Identify the 100 most valuable items in your inventory and maintain a simple perpetual inventory of these items. Make your staff aware of the process.
- Maintain an inventory turnover ratio of one or less. Standing inventory should never exceed the dollar value of one week's usage. The more product that is on hand, the more conducive it is to theft, and the harder it is to manage and maintain.
- Have all deliveries "staged" (set up in sequence) out-side of the actual storage areas, or if necessary, stage them in the storage area under the direct and continuous supervision of the receiver. This will eliminate theft by delivery people.
At Johnson & Wales University in Providence, RI, Culinary Purchasing Office Manager Neil Fernandes sets up rigorous checks and balances in lieu of "high tech security systems."
The three doors that provide access to the building are kept either locked or attended. The front door, which opens to a desk with a gate, is where most employees enter and exit, and only five management personnel have a key. A side door, accessible by keys which only three senior management personnel hold, is to be used by storeroom managers only. And no one enters or exits from the back receiving door, which has neither a handle nor keyed lock on the outside.
Also locked are the hallway with refrigerators, the storeroom, and smaller security areas within the storeroom, which contain small wares and equipment, sodas and snacks.
"We hold regular training sessions and go over our policies and the reasons for them with the employees," Fernandes explains. "And employ-ees know that no one is allowed in the storeroom with a duffel bag or storage bag of any kind. Any food that is taken out of the storeroom must be on a requisition form."
At Denver Public Schools, Wittrock notes that the 111 kitchens were designed with the offices in the same area as the storerooms (at the back door) so that managers can watch as employees leave for the day. Furthermore, Wittrock maintains a four-pronged approach to storeroom security that she believes is the reason why "we don't feel we have a major problem with theft."
- Employees know they will be fired immediately if caught stealing.
- Each kitchen is responsible for profits and losses, and their evaluations are tied to that.
- A system of monthly storeroom inventories and profit and loss statements from each kitchen keeps a handle on food costs and draws attention to amounts or costs that are out of line with other schools.
- The yearly bulletin reminder signed by employees re-emphasizes management's policies on theft.
Maintaining receiving integrity
Employee theft is not the only problem facing storeroom security. Operators also need to keep an eye out for irregularities from suppliers, ensuring there is enough time to check all deliveries thoroughly. Vendors should only be allowed limited—and supervised—access to the building, and never in the storeroom. Any emptied boxes or containers they remove should be checked. And their deliveries should always be accompanied by invoices, examined for the correct prices and accurate amount of product.
Cozy personal relationships between employees and vendors can point to a possibility of collusion. To minimize the danger, create a written policy that limits such friendships; make sure all purchasing requires competitive bids; have all bids put into writing; require that all purchase orders be approved by a manager; spot check deliveries; and put away all shipments in storage areas as soon as possible after delivery.
With paper-trail and systems safeguards, proper employee policies, and necessary hardware (such as pinhole or closed circuit cameras, alarms and heavy duty locks), operators stand a good chance of maintaining minimal-pilferage storerooms.
As Bruce likes to tell his clients, "Once employees [and vendors] are aware of thorough security measures, the honest people stay honest; the semi-honest ones stay honest; and the dishonest ones. . . are challenged."
Conducting a security audit
The National Restaurant Association publishes foodservice security training manuals that help operators conduct a thorough security audit of their establishments. Among the key points to ensure the security of an operation's storeroom are:
Source: Foodservice Security Manager Handbook, The Educational Foundation of the National Restaurant Association, 1993.
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