CHAPTER 1

LOSS PREVENTION MEETS OPERATIONS

Becoming a Restaurateur, a Dream Come True

For some, owning and operating a restaurant is a life-long goal andthe culmination of a long career in the restaurant industry. For others,the professional satisfaction comes from opening another corporaterun restaurant. Either situation has its rewards and challenges. Butthe high failure rate can turn a dream into a nightmare and has adevastating effect on many.

Each restaurant failure has an effect on the economy. The successof a restaurant has a direct impact on the livelihoods of its honestemployees. There are many reasons to strive to make a restaurantprofitable, the livelihood of its employees notwithstanding. Perhapsthis is why some honest employees will sometimes step forwardto blow the whistle on those who they feel are jeopardizing theirlivelihood. When an employee has the courage to do this, stop andlisten ... with an open mind!

The restaurant workplace is commonly described as a "family"atmosphere. This is true even in the corporate owned, multi-store,franchisee restaurant environment. Much time is spent withco-workers and the natural progression is to form a bond with thoseindividuals whom you like and have common interests. A numberof personal relationships are formed. An example of this is thesignificant number of co-worker marriages that have taken place aftermeeting in the restaurant workplace. This is a common occurrenceand speaks to the power of the relationships that can developbetween two employees in this type of setting.

The downside to this is that this type of "family" atmosphere is notconducive to apprehending the restaurant's thieving employee. Therestaurant manager, both the general manager and the assistants,may have already fallen into the trap. The personal relationships theyhave developed in the workplace may have diminished their abilityto function in the managerial position they were promoted to. Theymay not have the ability to keep an open mind. They may no longerbelieve that their newfound friends could possibly steal from them."I know them better than that." "My friends wouldn't do that to me!"Think again!

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How We Got Here

The first public dining room—later known as a restaurant—openedin Paris in 1765. Through the nineteenth century and into the earlytwentieth century, restaurants were solely independently owned andoperated. These early restaurant operations lacked organization orprofessional associations. During the early twentieth century, groupslike Howard Johnsons and White Castle began expansion operatingmulti units and looked toward franchising in an effort to expand theirbrand. Professional organizations began to form creating America'srestaurant industry. Today the industry represents billions of dollarsin sales with millions of employees.

Like with any successful business, success is achieved by managingrevenue and banking profits to your greatest potential. As therestaurant industry blossomed, so did the need to develop businesscontrols and accountability. It is hard to imagine a restaurant withouta cash register. But, prior to 1879, restaurateurs did not have suchequipment. It was common to find restaurants using a cigar box as ameans to hold the day's proceeds. Most restaurateurs did not know ifthey were operating at a profit or loss. That all changed when a newdevice named the cash register was invented.

The early cash registers were simplistic machines, limited infunctionality, nothing more than an adding machine with a cashdrawer. Even so, coming from the cigar box, cash registers foundtheir place in business and history. The evolution of the cash registerwas driven by the need to manage sales collection through a formaland reliable process.

National Cash Register Company (NCR) became the most successfulof all cash register companies and aggressively developed better andmore reliable theft-proof registers used throughout the industry.During the twentieth century NCR built better machines with bettercontrols to thwart the unwanted business partner-thief who devisedmore ways to steal from his employer.

Not only were cash registers theft deterrents, they provided a newanalytical approach which resulted in a systemized use of informationto produce profits. The cash register became a major control pointmaking restaurant commerce much easier while making it moredifficult for thieves to steal.

Cash registers remain a key business machine but have adopted manyof the technological inroads made with the advancements of thecomputer. Computer technology allowed cash register companiesto build more control features into cash registers providing betterreporting and stronger controls over theft.

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Point Of Sale (POS) Technology

The evolution of computer technology dramatically changed therestaurant industry with the introduction of the Point of Sale System(POS). Today, POS options are numerous, such as: touch screencomputers, inventory control, credit and debit card processing, andprinting of items to kitchen printers. Restaurant ownership andmanagement now are much more efficient, effective, and profitable.

The evolution of business and the desire for businesses to be moreprofitable drives the demand for better systems and controls tolimit loss due to theft and fraud. The partnership of cash registerand computer into the development of today's POS systems hasdelivered intelligent systems making the job of catching your businesspartner-thief much...