Watch Out for These Problems with ‘Perfect’ Staff

Do you have a dream employee?

They smile a lot, cover extra shifts, keep the bar clean, and know how to fix the fryer and the coffee grinder. They can cheer up cranky guests and sell them all dessert… and they know how the boss likes her coffee.

And because everything is going so well, it’s easy to leave them alone while you concentrate on fighting fires. But putting time into managing these people can be a much better investment than constantly chasing problem staff. And if you don’t, there’s a bunch of bigger issues that may come up.

So what could go wrong?

  • They may burn out from taking on too much. A key goal for all staff should be a work-life balance – it’s not just a new fad. Enthusiasm can slide into feeling exploited, and then resentment. Work with them on career plans and ensure (insist!) they have good holidays.
  • You may be overpaying them. The relief of having reliable help tempts some owners to be too generous. Make sure that the pay is not out of line with other key staff.
  • Are they good because your other staff are not? If the systems are faulty, lacking or chaotic, you need super staff to hold the place together. If you’ve got good, clear systems and everyone ‘follows the manual’, it’s surprising how well a 20-year-old can run key shifts.
  • They may not be great team players. Don’t let resentment build – suddenly Mr NewGuy is getting all the love and attention. Other staff may be good ‘B team’ workers but they just don’t share this person’s mad enthusiasm for being at work. Developing teamwork is a key skill for supervisors and maybe an area where this person is weak.
  • Do they know more about the business than you do? It’s never a good look when the staff know more than the boss – how to fix a POS problem, find an emergency wine delivery or handle large bookings. You don’t have to do everything yourself, but you need to show you can make it happen.
  • They have no life outside work. This is a business, not a religious order – is something happening at home that could affect future performance? Do they find it hard to form normal adult relationships? It may affect their teamwork.
  • Is doing a ton of shifts just a short-term fix? Why do they need so much extra money? Is it a gambling (or drug) problem, family drama or crazy spending habits? Technically it’s not your business…until it becomes your problem.
  • They might fall in love. Be realistic – everything will change. If they’re single, someone (else) perfect may come along and suddenly the world is different. Long hours at the business come second to evenings with someone special.
  • Someone will steal them. Your star may be tempted by a dazzling offer – more money, responsibility or glamour. Time will tell if the new job lasts – your competitive advantage is your reputation, the ease of working there and the ‘solidness’ of your business. Make these factors more obvious.
  • Even perfect staff don’t balance the till and count the float. There have been too many tragic tales of supergirl helping herself to the proceeds. Keep audit systems strong, and make sure they take regular holidays. People who are genuinely good don’t mind proving they are honest.

Does this mean less trust or lower expectations? Not at all – just make sure ‘how we do it here’ (your systems) are of the same quality as the person in the limelight. Careers change quickly and even golden staff can be tempted by someone else’s crazy pay offer. No problem, we have good systems and we’re covered…next!

The Fraud Triangle: Could it Hit Your Cafe or Restaurant?

Ever had a trusted employee rip you off? When I spoke with a bar owner recently, she was still in shock after uncovering a six-figure fraud carried out by a ‘trusted’ manager over more than 4 years. I hope that doesn’t sound familiar.

Most people who commit fraud against their employer are not career criminals. The vast majority are trusted staff who have no criminal history and don’t even consider themselves lawbreakers. Donald Cressey, a criminologist, calls it the Fraud Triangle. He says there are three factors that must be present for an ordinary person to commit fraud: Pressure, Opportunity and Rationalisation. Think about how this could apply at your business:

Pressure comes from a ‘non-shareable’ financial problem that can’t be disclosed or solved in a legitimate way. It might a gambling or drug addiction, desire to impress friends or problems with a loan that must be repaid urgently. Non-shareable problems involve some sort of embarrassment or shame. They threaten the fraudster’s status as a person who is trusted by others. In almost every fraud case, their financial problem relates to gaining or maintaining status.

Opportunity arises when the fraudster sees a way to use their position of trust to solve the financial problem, knowing they are unlikely to be caught. Think of all the opportunities that arise with money handling at your business: balancing the cash against the POS readout, counting cash, making up floats, ‘correcting’ over-rings and errors. Inadequate stock-control with liquor or food gives plenty of opportunity to trade these items for cash. Most hospitality businesses offer wonderful opportunities for fraudsters, with little monitoring of warning signs and poor cash control systems.

Rationalisation is the third part of the triangle. Cressey says most fraudsters are first-time offenders with no criminal record. They see themselves as ordinary, honest people who are caught in a bad situation. This lets them justify the crime to themselves in a way that makes it acceptable or justifiable. They may say they were ‘just borrowing it’, felt they were entitled to it, had to look after their family or felt they were being underpaid and therefore deserved it. Sometimes they feel the employer is dishonest and should be ‘sharing the spoils’.

Prevention is possible in all three parts of the triangle. Do you have your ‘sources’ for inside information about staff problems? Ideally, regular employee reviews will give you an understanding of the ‘whole person’ and their needs. Drug, alcohol and financial counselling services are widely available, but you may need to be bold and suggest them – this can be a sensitive topic.

Tight checks and balances with cash and stock handling will eliminate most opportunities, with unexpected spot-checks to keep people on their toes. Plus a clear division of labour between those who count and those who check the figures – whether it’s cash, liquor or food. Would an external stocktake service really be so expensive if it meant the job was done properly? Is there a good reason why the cost percentages in your Recipe Software are lower than the monthly food cost percentage?

Your Code of Conduct should also talk clearly about the value of integrity and honest dealings in the business, so rationalisation is harder: ‘but nobody said I couldn’t borrow!’. A separate Theft Policy can be useful, making it very clear about grey areas. This is not about staff needing sainthood as a condition of employment, but there are too many times that trust is misplaced through naivete or laziness. Wake up!

In The Dark Side of Behaviour at Work : Understanding and Avoiding Employees Leaving, Thieving and Deceiving, the authors list 12 danger signs – do any of them look familiar?

  • Rewriting records for the sake of ‘neatness’.
  • Refusing to take vacations; never taking personal or sick days.
  • Working overtime voluntarily and excessively, and refusing to release custody of records during the day.
  • Unusually high standard of living, considering the salary.
  • Gambling in any form beyond ability to withstand losses.
  • Refusal of promotion.
  • Replying to questions with unreasonable explanations.
  • Getting annoyed at reasonable questions – ‘don’t you know how hard I work?’
  • Inclination toward covering up inefficiencies and mistakes.
  • Pronounced criticism of others (to divert suspicion).
  • Frequent association with, and entertainment by, a member of supplier’s staff.
  • Excessive drinking or associating with questionable characters.

Petty Theft – Where Do You Draw the Line With These ‘Grey Areas’?

Ever seen staff help themselves to food, drink or even cash, and they seem to think it’s OK?

You call it shrinkage, waste, ‘unders’, discrepancies or theft. What do they call it?

It’s the grey areas that cause problems: drinks or food for friends and family, sloppy work that results in waste, or taking home left-overs. Grey has to become black or white. Does the culture you’ve created reward honesty, or overlook those who break the rules? Do the consequences encourage the behaviour you desire…or the opposite?

Don’t beat around the bush – make it clear what’s not acceptable. And let’s tell the truth – sometimes it’s the boss’s shortcuts or bad example that encourages staff to make the wrong choice.

What would your ruling be on these situations?

  • Free drinks or meals for friends or family who come to visit.
  • Special prices for staff visiting from other hotels, cafes or clubs.
  • Staff drinks at the end of the night that go one more than the rules allow.
  • Sloppy writing up of the Stock-transfer Book so the stocktake makes no sense and is disregarded – again.
  • Cook allows something to burn because she won’t get properly organised.
  • Beer lines contaminated and keg wasted because cleaning procedures not properly followed.
  • Using the computer at work to write up your resume to apply for another job.
  • Using the ‘Open Key’ on the Point of Sale because it’s easier. As a result sales count figures at the end of the week are invalid and stock usage can’t be checked.
  • ‘I’m just putting the money in the till while we’re busy – I’ll ring it all up later’.
  • A staff member says ‘I won’t charge you for that because I know the service you got wasn’t very good’. A better tip follows
  • Kitchen worker asks the bar ‘can I have some beer for my buddies in the kitchen?’
  • The Till is ‘over’ – so it must have been a tip that we forgot to take out.
  • Employee over-states hours or changes times because the hard work she’s been doing is going unrecognised.
  • Signing for lesser quality meat or produce and ‘we’ll fix it up on the invoice next time’ – which we forget to do.
  • Personal phone calls received or made in work time.
  • Keeping free samples from vendors eg food samples, bottles of wine or liquor.
  • Serving adults at junior or senior prices ‘because they can’t afford it’.
  • Chefs or bar managers expecting personal gifts from suppliers to secure an account.

What needs to tighten up?

7 Small Ways You Could Be Leaking Money

None of these is major, but each week they soak up cash and cut into profits. Part of the fix is showing staff that every cent counts and you do watch the cents! They can be an active part of the solution, not standing on the side watching. Every single member of your staff could point out something that’s ‘leaky’ and wasteful – do they tell you? Do you ask?

  1. Late to Arrive and Early to Leave. You know who they are – the commitment of these employees is questionable. Other staff notice, and watch if you do anything about it. Finger or facial recognition clocking on and off is inexpensive to set up and integrates with payroll – if you haven’t done this already, it’s time.
  2. Dripping Taps and Running Water. In many venues, water down the toilet is more than half of the total consumption. Plus spray arms in the kitchen that use way too much and cleaning routines that use it like it’s free. Work out your water bill per day to show staff the real cost . Energy use consultants can be very useful to check this and other utility costs, and always pay for themselves.
  3. Coffee and Milk Waste. A few grams of lost coffee every time the dose is done – it adds up to big money each week. Plus all the milk that’s been overheated and can’t be used again for coffee – does it go down the sink? Ben Armstrong, the smart operator at Three Bean Espresso in Newcastle collects it to make their own yoghurt – they are now self-sufficient. Clever!
  4. Colour Printers – they’re money pits if you are still using a ‘cheap’ ink-jet printer. Really, do you need to print in colour, or would a low-cost black & white laser printer do for 95% of the printing? Or have both and set the default to the laser printer. Add up your ink cartridge purchases and divide by the number of days – the figures can be scary.
  5. Credit for Goods You Returned – this is one of the first things I look for when I’m doing a ‘costing blitz’ in a business. It’s not uncommon to return goods that are the wrong brand, size or not needed, but has the credit appeared on your statement? What’s the process to ensure this happens every time? Easy to overlook.
  6. Credit Card Fees. What’s the ‘effective rate’ your provider is charging? They create confusion with base rates and extra rates for different types of cards. Add up a month of charges and divide by a month of card sales – if it’s above 1.2% it’s time to talk with the bank manager.
  7. Back Door Dealing. In the rush of deliveries and a busy kitchen, it’s easy for delivery people to be unsupervised and cages left unlocked. Food and alcohol is as good as currency for many people – it needs a range of measures to control this including patient checking (you need the right person for this), cameras, tighter key access and storage routines. When did you last catch a thief?

Dealing With Copycats…

Tell the truth – most restaurant and foodservice ideas are some version of what you’ve seen or eaten before. You could call it ‘creative swiping’ instead of copying or plagiarism, but it’s rare for any chef or restaurateur to create a full set of completely original ideas for a new menu or cocktail list. Remember that trip to Chicago, Bali or Barcelona – tasting, taking photos and dreaming up how you could do an Aussie version for your customers?

And sometimes true originality does happen – a magic combination of sauce, spice, protein and fire. An unusual chocolate cake, upside down ice-cream or lethal cocktail – the stuff that drives word-of-mouth, Instagram and crazy return customers.

What can be copied? A recipe, decoration and furniture ideas, a menu layout, fonts, website design or even a name – how many times have you seen an Aussie concept that copies a US original?

What can be stolen? Your chef, your manager, the best waiter and some of your customers…

READ the rest of my Copycat article on p.24 of this months Hospitality magazine

Bar and restaurant found in Madrid…

It’s World Backup Day – When Did You Do It Last?

March 31 is World Backup Day – and apparently 30% of people have never backed up their data, ever. Or maybe you did it a long, long time ago…which is equal to never. All your employment records, emails, sales data, recipes, booking information, customer lists, tax records, your website… let alone all the personal information and family photos. One in 10 computers is affected by viruses every month.

You need to be backing up to a local hard-drive, and a cloud service. I now use cloud-based service Backblaze, for a measly $50 per year. Very easy to set up, and it quietly backs up my new and changed data every hour, without me noticing. Double security, and highly recommended.

Imagine your laptop, phone, iPad and POS system all stolen or destroyed, or your system hijacked – what would it take to recover?

When You Take Over a Cafe or Restaurant – How to Do It Right

A while back I wrote about the decline of a favourite cafe now under new ownership. I was challenged to give suggestions for how this could be done well, so here’s my To-Do list for the new business owner:

New Faces: own it, and let people know who’s who. Now’s the time for name tags (yes!) and the owner or manager could even add a cheeky label to say ‘Proud New Owner’.  Could you get a ‘best wishes’ message from the old owner? Put it up on the wall for all to see.

This is also time to say goodbye to staff who weren’t adding to the business – the slow and the negative. In most situations, you have a unique opportunity to let go of previous employees without any obligation – the previous owner should be paying them out, or compensating you for any accrued benefits they have (eg long service leave). New owner, new start – talk to your lawyer.

Do More of What Was Done Well: the great cakes, the friendly greeting, excellent coffee (don’t change the blend!) and the special services. Keep buying flowers and providing newspapers.

Fix the Weak System: businesses are rarely sold because they’re making too much money… it’s usually the opposite, no matter what stories you were told by the broker! Audit and start upgrading the ordering systems, stocktaking, recipe costing, booking and customer service procedures. Are staff signing on and off correctly? Assume that there’s been internal theft, and look for system gaps that have allowed this eg stocktaking, POS not being used correctly, cash handling etc. Once you close off these opportunities, the thieves will soon leave.

Dig Into the Numbers: the figures you were given from the old business are probably a bit sketchy, but you will soon find valuable information from your POS and the bills you pay. A well-setup cloud accounting system is essential eg Xero or MYOB, so you can track results day by day – get your accountant onto this immediately. Detailed figures from the POS will soon show best and worst sellers, plus sales by hour and day. A good roster system like Tanda or Deputy let’s you compare wage costs against sales – even a spreadsheet will help to find areas of strength and weakness. Slice and dice all the numbers you can – opportunities will be right there in front of you.

Clean and Repair: businesses for sale often look tired, and cleaning is one of the first things to be neglected. Blitz the floors, and ceilings, plus behind counters and shelves – you’ll be surprised at what you find. Fix the broken appliances, toss out old platters and pots, ditch the broken furniture. Front of house, fix wobbly tables and repair all the dings and scratches on furniture. Paint the toilets and install new toilet seats and amenities.

Don’t Redecorate Just Yet: if you’re launching a whole new concept, go for it. But if you value the concept you bought, minimise the redecoration until you’ve settled in. Once you know more about the customers and service rhythm, you’ll be clearer about new decor.

Leave the Menu Alone: there will be weaknesses that need to be fixed, but in the first few months you are stabilising the ship, sorting out the staff and making friends with customers. You’re also finding out what customers really like, so use the specials board to try new ideas. Ask questions and listen.

Improve the Marketing: another area where the previous owners were probably economising or forgetful. Increase the friendliness and frequency of posts on Facebook and Instagram, including targeted ads. Check that your ‘Google My Business’ listing is up to date and has plenty of photos. The website may need a major improvement – this should be a high priority, with better photos, more relevant information and optimised for mobile phones. If an email newsletters was being send, use it to spread good news – another area where things had probably slipped.

Improve Staff Culture and Conditions: that includes fairer treatment, proper pay, better rostering and good communication channels. There will be times you are told ‘that’s the way we’ve always done it’ – just smile and explain why it needs to change. Don’t be surprised if within 3 months all the old staff have left – it usually happens with new management. Yes, even the ones who say you’re much nicer than the old boss! Staff manuals and policies, job descriptions and a noticeboard – they’re all part of the healthy new broom.

Another day, another story of restaurant fraud…

Trusted, helpful staff given too much responsibility by weary owners, and a lack of systems for proper checking. How many times do operators make ‘trust’ their default mode with employees, instead of ‘check and verify’. When you work with cash, food and alcohol and have haphazard security, the thieves will soon find you. It was a bit sad to go through ‘the facts of life’, again, with a couple of new cafe owners…

Your Point of Sales system can be a key element in taking back control. Watching for error corrections and inaccurate use of PLU keys will soon alert you to problems – here are a few to watch:

Open Key – the one that’s used when you can’t find the one to use. A new menu item that hasn’t been added to the system, or there’s a rush and you can’t find Prawn Salad. Disable this key or make strict rules about who can use it – it’s wide open to abuse, and spoils the accuracy of sales data for stocktaking.

Voids, cancels and errors – all slightly different, and can be used to negate an order that has already been made. The end-of-shift report will show how many of these are done – they should be rare and explained.

Over-ringsOMG I ordered 10 salads instead of just one – I’ll tell the kitchen and fix it later! Maybe it wasn’t corrected, and the end of shift sales totals won’t balance with the till. In the struggle to reconcile, it’s easy for deliberate errors to be missed.

Training key – it’s there for training staff on the POS, so their practice transactions aren’t part of the shift totals. But it can be abused – I’ve been given a bill with a tell-tale letter T beside each transaction, and there was definitely no-one being trained.

More on restaurant security in my podcast interview with the Crime Doctor on How to Reduce Employee Theft in Restaurants.
Trust..and verify.