Sponsored by DTT
Restaurant operators know there are many ways to lose money. They can suffer losses due to theft, liability, slow speed-of-service and other issues. Technology can help prevent these losses in ways that go beyond installing a video camera and waiting for someone to slip cash into their pocket. Loss prevention experts say the most effective systems are the ones which integrate video with data analysis to predict shrinkage and other problems.
“It’s about creating awareness and having the information necessary to take a prescriptive action,” says Thomas M. Moran, executive vice president of sales and marketing for DTT, a Los Angeles and Las Vegas-based full-service provider of loss prevention solutions for the hospitality and retail industries. That information can come from a combination of sources, such as video or point-of-sale systems, as well as through a general manager who is attuned to what is occurring at the restaurant.
“What operators really need is a software solution which analyzes all this data and uses it to isolate areas of potential loss, while at the same time providing recommendations for action,” Moran says. “These tools need to identify what is happening so operators can get in front of it and prevent these things from continuing to happen in the future.”
Integrating Video With POS
For example, Moran says, one quick-service restaurant was seeing an unusual number of employee meals at a drive-through window. “We looked at the trending information and found that the cashier was using the drive-through as a good buddy discount, giving out free food,” he says. “We worked with the point-of-sale (POS) vendor and took that capability out of the drive-through POS. The cashier could no longer apply employee meals as a code at the window.”
Another risk is liability and lawsuits. Moran cites a case in which a guest claimed that she found a toothpick in a pancake. “We went back to the point of production, looked at video in the back-of-the-house, when the batter was created, when the pancake was put on the griddle, plated, passed through the window, carried to the table, set down for the guest — and there was nothing wrong,” he says. “We did see that the guest got up and left the table, and another guest at the table reached over and put a toothpick in the pancake, maybe as a joke.”
In another case, a guest claimed she slipped and fell. A review of the video showed that the floor had been mopped, and that the customer, who was on her cell phone, tripped on the Wet Floor sign. “We showed the video to the business owner and opposing counsel,” Moran says. “The case magically went away.”
Technology, and more specifically, data analysis, is a big growth area in loss prevention, says Mike Mershimer, president and chief operating officer of Boston-based HS Brands International, which offers mystery shopping and loss prevention services. “The future of loss prevention in foodservice is prescriptive analytics,” he says. “Technology is huge. It is the lynchpin of future loss prevention in retail and restaurants.”
Big data, which includes everything from information collected through the point-of-sale (POS) system to crime statistics for the area, can predict shrinkage, food waste and other losses. The data can help the experts identify whether a certain employee is likely to be committing fraud. Exception-based reporting can flag whether transactions in the POS are falling outside of a typical range, and are deemed suspicious. Video can back up and support a suspicion.
For example, loyalty card fraud is an area that is becoming an easy way for employees to give themselves free items. When a customer is preparing to pay, the server asks if they have a loyalty card. If the customer says no, the server scans their own card and keeps the points. Mershimer says those points add up. “We have seen employees with 20 cards and thousands of points.”
The first step to take, he says, is to inform employees that the store is experiencing losses and that management is introducing video cameras and other technology, and even mystery shoppers and employee training programs. “It all comes down to communicating with them,” Mershimer says. “Say, ‘I don’t know what the problem is, but we’re going to help you. We're going to hire a company to come in, and, by the way, here are the numbers. We’re going to look at the loyalty program, cash flow and food inventory.’”
What happens next, Mershimer continues, is that a handful of employees will quit. “They are going to work for restaurants that don’t have controls in place.”
Protection From Lawsuits
Technology also is useful for preventing losses related to injuries. “One of the things we use cameras for is defending against lawsuits in slip-and-fall cases, to see whether they are staged, whether the floor was really wet,” says Thomas Nedderman, field director of asset protection at San Antonio-based Whataburger Restaurants. “Without video it’s an open checkbook.”
Nedderman, who is a member of the Roswell, Ga.-based Restaurant Loss Prevention and Security Association (RLPSA), says video is also useful in operations. A restaurateur launching a new menu item will want to know how the preparation of the item affects the workflow in the kitchen. The video can demonstrate whether workers had to walk around each other, whether ingredients should be arranged on the prep table in a certain way, and even whether new equipment will fit into the space. There are also systems for the drive-through that show how many cars are lined up behind the menu board, so the kitchen can adjust production.
“Video is evolving and it continues to get better and better,” Nedderman says. “We went from analog to IP and cloud-based where you can download clips and get out of using thumb drives and CDs and DVDs. The tradition has been post-incident; now we’re using it proactively.”
Moran, from DTT, says technology and prescriptive actions are key in loss prevention. “When you look at mitigating risks, there are so many things to get in front of,” he says. “If you talk to loss and security officers, they don’t want to deal with bad things happening. They want to get in front of them.”