How Bar Owners Can Protect Against Financial Losses From Staff

By Russ Bubas, President, Data Quest, LTD

Most restaurateurs know how to control liquor cost, but thanks to the fact that some of the “controls” can be tricky and time-consuming, they get skipped, causing costs to skyrocket. Studies of the industry show that 25%-30% of a bar’s liquor inventory never translates to registered sales, thanks to comps or discounts, over-pouring, spillage, and theft.

Here’s how to stop these types of incidents from happening.

Every restaurateur and bar owner has heard warnings about silent partners. Once in my career, I went to an upscale steakhouse to do an integrity audit at the bar. The bartender was polite, professional, and served my drink promptly. But as I placed the money on the bar for payment, he ignored it as he served the drink. That was the first clue.

A few minutes later, he served another customer, and collected money from him and from me at the same time. Only one drink was recorded, and it looked like my money went into a tip cup. When I called the owner to tell him, he replied, “Impossible! He’s been with us for 25 years. He’s like a member of my family.” I told him we should audit the terminal and take a look at the tip jar. I also advised bringing the bartender into the office to ask why he doesn’t collect from customers every time he serves.

Long story short, he did finally admit to stealing. The owner gave him the benefit of the doubt, offering him the opportunity to make restitution by the next day, then suspending him. The following day, the bartender walked in with a large shopping bag containing more than $7,700 in cash. He’d been using the money to save for retirement. The bartender was terminated, but the owner’s business was saved.

Around 62% of new businesses go out of business in the first year, largely because of unexplained losses. A bartender giving away drinks to generate larger tips has the same effect on the bottom line as if he put the money directly in his pocket. You have to protect yourself and your profits, so here are some tricks to spot warning signs:

• • • Beware of a bartender who keeps a swizzle stick or toothpick in his mouth. They bite down on it whenever they clip a sale, and only count the nicks to know how much they have under-rung.

• • • Watch bartenders using an open slot in the register drawer in which to put coins: Each coin represents a sale they’ve taken for themselves.

• • • They’ll “bunch” sales, collecting from two or more customers at a time, and only enter some in the terminal.

• • Bartenders have been known to smuggle in their own inexpensive booze to keep inventory technically correct.

Stay alert and skeptical of any unusual actions. Don’t let your staff audit the registers, but do conduct unannounced register audits.

A culture of honesty is important: Do frequent inventories, require open communication, and build in deterrents, like the register audits. These things will help you protect yourself, and encourage openness and honesty amongst your staff.