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The Scoop on Restaurant Loss Prevention and Cash Management

Friendly's Restaurants' Ernie Patnode approaches cash management with a lot of common sense, a little technology and, yes, politeness

Vendors always say [a product] can do X, Y and Z. But to me it’s just as important to use these tools to prove someone’s innocence as it is to prove someone’s guilt. People look at the technology as a means to deterrence and penalty. It’s not bad bad bad all the time. I look at it as an opportunity to reward people for doing the right thing. Rewarding someone makes them a better employee who is less likely to steal.

Using CCTV for praise. That’s a new one.

Praise is important. Thanks. Acknowledgment. It makes you become part of the institution, part of the team when you’re praised. And guess what? Now I’ve got an extra pair of eyes and ears in the restaurant. After this [interview], I’m going to stop at a couple of restaurants. Drop in. See what’s going on. Tell those guys some of the good things I see.

It almost sounds like intelligence gathering, in a benign sort of way.

Who knows what’s really going on better than the supervisors in the field? Not a camera or a computer.

What’s something people misunderstand about loss prevention?

In the restaurant industry, one of the things about loss prevention is that it goes way beyond money. It’s not always cash. It’s food. Inventory. Nowadays we run reports on what was shipped to each restaurant and what was used, every day. We should be able to match inventory to sales. If inventory comes out too low, it’s a loss. But what if it comes out too high? Too much inventory is just as much a problem. Some managers get bonuses for efficiency, and they could be padding the inventory to receive their bonus. That’s larceny.

Or, if an employee eats and fails to pay for the meal, that’s a loss. Even if they say it was a mistake, it still costs the restaurant money. We can’t eat mistakes, so we let them know it has to be reconciled. Ring it in when you eat. Instill in the cooks that if you prepare a meal and there’s no receipt for it, you are partly responsible for the loss.

But, come on, it’s just a burger for a hardworking teenager.

Say you sell a product—a meal—for $10. The employee who’s eating that free or skimming the cash off someone else’s meal sees that as $10 the company is getting. What they don’t factor, because they don’t know, is that it costs us $6 for the ingredients, $1.50 for the wages to serve the meal, another $1.75 for insurance, licenses, lighting, marketing, whatever. Of that $10 you may get 75 cents down to the bottom line. They steal five of those dollars, you’re not $5 ahead, you’re $4.25 in the hole, you see? If all your employees ate a hamburger and had a soda every day and never paid, that’s a huge cash loss.