Food and Beverage Is the Area of Most Concern for Internal Theft and Fraud

Do you need eyes in the back of your head for the least regulated department?

The art of knowing what is happening behind your back is limited to a few elementary school teachers and, perhaps, your mother, who always seemed to know what you were up to – no matter how sneaky you thought you were. Today, running a business is harder than ever, and not having that ability to watch your team members and assets puts you in jeopardy of being unsuccessful.

“… but I trust my team members! They always perform as expected, without me watching them 24/7.”

In a recent seminar from the International Association of Certified Surveillance Professionals or IACSP, they noted from an annual poll of all their casino clients that from all departments where internal theft or fraud occurred, food and beverage was the area where most of the cases were detected. To be exact, 69 percent of the total respondents chose food and beverage as the area of most concern. The next closest departments were players club and table games at 21 percent and 20 percent, respectively.

That is huge! How can that be?!

The truth is – food and beverage is the least regulated and least likely to have active surveillance implemented throughout. Remember, “locks keep honest people honest,” and they persuade dishonest people from easily attempting theft. But surveillance cameras and the active viewing of these areas are only part of the concern. Controls need to be in place that are followed and consistently inspected by leadership. This begins with well-crafted training and intentional standard operating procedures. Teams who know the rules will be more likely to follow the rules if their leaders take the time to “inspect what is expected of them.”

But if you have these systems and procedures – is that enough? How do you know that you are not being ripped off? Raving Partners, Derk and Jen Boss, DJ Boss Associates, said that “it is much easier to commit theft in food and beverage” than other areas of the casino. This is due to lack of inventory controls and the fact that food and beverage products are untraceable back to the property. DJ Boss Associates also noted that “food and beverage typically loses five cents out of every dollar to theft, fraud, waste or shrinkage.”

Here are a few areas to watch for that might indicate you have some theft or fraud going on at your property.

  1. Do your food costs line up with your recipes and projections?
  2. Do your inventories fluctuate monthly beyond what would be normal?
  3. Is your waste log growing or spiking during certain months?
  4. Are your POS sales lower than what your kitchen or bar is producing?
  5. Have you noticed markings on alcohol bottles or random matchsticks by the POS terminal?
  6. Does your team complain about one or two of the others disappearing, showing up late, leaving early, and not completing their share of the work?
  7. Do you find that there are regulars who ask for a specific server or bartender and always pay cash?
  8. Do you notice that the same person who orders the product also checks it in and places it in inventory?
  9. Normal non-consumable assets are needing to be replaced sooner than their full lives?
  10. Are there more than normal amounts of voids occurring on a nightly or weekly basis, perhaps for one server and by one manager or supervisor?

This list is by no means exhaustive, but it is meant to give you enough information to ask additional questions. Proper controls can give you some protection, but being aware of abnormalities in the operation and inspecting what is expected of your team can close the gap. As Derk Boss noted, “Casino resorts do one thing very well. They track their costs and profits. The numbers (indicators) are there for a diligent supervisor to detect developing or existing thefts.”

If you need assistance in understanding areas of potential loss, please contact Raving at 775-329-7864 for a comprehensive review.

Brett Magnan 25 Articles