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8 out of 10 Bartenders will Steal

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The following article ran this past Sunday in my local paper about theft in bars and one owner’s, Mr. Yarbrough, solutions to the problem.

Lack of attention to details can lead to major financial issues: My Biggest Mistake | cleveland.com.

Now, I don’t think 8 out of 10 bartenders are thieves, in fact, I like think that most are honest. However, I like to help people stay honest by taking away the opportunity for theft. One of my businesses addresses theft in bars everyday. There are solutions and best practices that will stop theft.

First we’ll address some points Mr. Yarbrough makes:

I didn’t pay close enough attention to details that can lead to major financial issues. Specifically, Mr. Yarbrough didn’t know he was being stolen from by his employees. More than likely he wasn’t conducting a thorough inventory regularly and justifying usage vs. sales.

  • Looking in the store room to order product is not ‘taking inventory’. Inventory is work; the bar fairies are not going to do it for you. You must count every item behind the bar (yes, you have to pull the beers out of the drop and not guess) and in storage.
  • You have to do the math; this means subtracting out goods received between the two counts in a period, adjusting for discounts (happy hour), spills, and comps and then match it against actual sales.
  • Determining  actual pour cost tells you jack squat – you have to know your potential pour vs actual cost to determine the variance and shrinkage. This means more math. And by the way, your bank doesn’t accept percentages, they accept dollars; know the difference between potential profit in dollars and actual.
  • ‘Spot’ inventories will tell you more than full inventories concerning employee performance. Before a shift do an accurate inventory of your top ten sales items (buy a scale to weigh open product). After the shift, inventory the same items and run a sales report. You’ll immediately know if the bartender(s) on that shift are honest.

When business is good, it’s easy to make allowances for shortfalls at the end of a night. I see this all the time in successful bars with high revenue, the drawer is off and no one is held accountable. One of the first questions I’ll ask an owner is, “Is the drawer ever short?”. Five times out of ten they’ll reply, “Why no, in fact it’s usually over”. This should be a red flag. The register is a calculator, it should balance to the penny. Drawer overages point to bartenders running a cash scam; short ringing orders, collecting proper revenue, and then removing extra cash when counting out tips at the end of night. Bartenders should be required to ‘blind drop’ the drawer, i.e. count out their starting bank and separate it from remaining in the till (this should be their cash drop) without seeing their sales. Also, bartenders should not exchange tip jar bills and change for higher dominations from the till. They should count, stack and turn the cash tips into management for higher dominations. This will help prevent cash scams.

I started using surveillance cameras and even started my own secret shoppers program to track theft. I like cameras. I really like cameras that I can watch remotely from my phone or home computer. Nothing says I’m watching you more than a phone call at midnight reminding the bartender to ring in the draught beer they just poured for their friend. I applaud Mr. Yarbrough for taking time to review his tapes also, that takes dedication. As far as secret shoppers are concerned I have mixed feelings. I certainly don’t think amateurs should be determining someone’s honesty. There are too many variables  and it’s extremely difficult to see exactly what is happening during a transaction. I know, I’m paid to do it a lot. When I write spotting reports I don’t put anything on paper that I couldn’t say in court under oath. Telling an operator that I ‘thought’ I saw something could easily cost someone their job and if it can’t be proven, could open an owner up to a lawsuit.

Best of luck to Mr. Yarbrough and I’m glad he had the determination to change the way he conducted business to ensure his own success. I’ll pick this thread back up soon to explore other ways to protect your business.

(to be continued)

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This entry was posted on August 15, 2012 by in Operations, Theft and tagged , , , , , .

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