The effect of employee theft on your restaurant’s margins

The effect of employee theft on your restaurant’s margins


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Let me start out by saying that I’m not automatically accusing your employees of stealing from you, but it is a reality that employee theft is a common occurrence in all businesses. A recent study by the Certified General Accountants Association revealed that employee theft costs businesses more than $12 billion per year. In the restaurant industry, according to the US National Restaurant Association, 4% of all revenue in establishments is lost to theft. When the average pre-tax profit margin for food service operators is 4.5% (Statistics Canada, 2012), it’s obvious how dire the costs can be when employees take something that they shouldn’t.

Especially significant is the result of the theft of alcohol, whether it’s through free drinks given to friends or guests, unauthorized staff drinking, or over-poured drinks. Not only does it represent substantial costs to a restaurant in having to frequently replace missing stock, but it can lead to problems later on during tax time. If your employees are stealing alcohol and you are then audited after filing your taxes, there are going to be gaps that will indicate to an auditor unreported sales. Why? Because you won’t be able to prove how much alcohol was stolen and it will be assumed that the unaccounted for amounts were sold and the cash was pocketed without being reported. Your business could be reassessed for sales tax on the unreported sales and you could face penalties and interests for the omission, even if you know it was the result of theft. That theft could end up costing you far more than the price of the bottle you replaced.

Restaurateurs need to be as vigilant as possible about their stock and their employees in order to prevent theft. Whenever you are aware of a loss, you need to formally document and prove that loss in order to save yourself from further costs to your business.

Braymark can help you identify theft risks and develop loss prevention strategies for your bar or restaurant. Contact us today to find out how Braymark can make a difference.

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Brad Moyer is a serial entrepreneur by nature, unafraid to seize opportunity and create companies that solve problems. His first such endeavour was a graphic design business at the age of 16, and his early start set the pace for a career of innovation. Brad has since created and sold enterprise level businesses in the software industry, all while maintaining his community focus and being a family man. In his time away from the office Brad is a Referee for Volleyball Canada, coaches volleyball and sits on the Greater Niagara Chamber of Commerce Government Affairs Committee. He is intimately familiar with the challenges and triumphs of business ownership, made evident in the precise and specific nature of the reporting software and survey content employed in the Braymark portfolio of services.