Tracking Loss Prevention KPIs

KPIs, also known as Key Performance Indicators, are an important way for restaurant owners to track internal losses. Unlike external factors, like people who “dine and dash” without paying for their food or robbers who demand money from the cash register, these measurements focus on losses caused by your waitstaff, hostesses, bussers, and even kitchen workers. Every employee has the potential to play a role in your losses and prevent your restaurant from making crucial profits. So, let’s dive into the details to see just how keeping an eye on these measurements can help your business grow in the long run.

Three Types of Losses to Track

In general, you want to track three different types of internal losses. These include:

  • Theft – Obviously, outright theft is the first thing to measure. Sometimes, employees will help themselves to items from your kitchen or supply closet. Towels, canned or boxed dry goods, and even packs of ground coffee may go missing because your workers feel they have the right to take them home.
  • Errors – Mistakes happen, but they shouldn’t occur on a consistent basis. When the same employees begin making the same errors all the time, it’s time for some serious retraining or to let them go. Errors can add up quickly and slash your bottom line, especially if the errors are continual and go unnoticed.
  • Negligence – When employees simply don’t take pride in their job and do whatever they want, it’s called negligence. “Accidentally” giving away free drinks to customers, not billing for desserts, and ringing up less expensive meals than what is actually ordered all fall into this category.

Employee Training and Morale

It’s easy for an employee to become disillusioned and take a wrong turn. All you need is for them to feel overworked and underappreciated. Often, your disgruntled employees have issues with their co-workers or supervisors, leading them to believe that no one cares — so neither should they. Putting a value system in place that makes employees feel appreciated, such as performance bonuses and tangible rewards like gift cards, goes a long way towards building team morale and pride in performance. This will often help prevent theft, errors, and negligence. In addition, you should provide regular training to teach employees what signs to look for in their co-workers, so any theft or other forms of loss get reported and addressed right away.

Determining the Impact of Your Actions

Evaluation is key. So, how can you tell that your additional training sessions and preventative actions are actually preventing losses? There are three main indicators to look for:

  • Evaluating Your Training – Is the extra training proving effective? Are your employees running the cash register more proficiently and giving away fewer extras to customers (known as “sweet-hearting”)? Are they in better moods at work and less disillusioned? Even better, do they feel comfortable coming to you with reports of co-worker theft? If you answered yes, then the training sessions you’re conducting are proving effective.
  • Conducting Audits – There are a number of different audits that you can run, from basket analyses to safety measures. Take the time to examine the numbers, look into everything that you can, and find ways that your employees are — either accidentally or on purpose — cutting into your profit margin.
  • Investigating Theft – Don’t forget to look into every instance of theft. Whether you have employees charging customers for kiddie meals and serving them steak or kitchen workers helping themselves to crab legs from the cooler, you need to make it clear that you won’t allow any of these things to slide.

KPIs to Keep an Eye on

Overall, there are many important KPIs to continually measure to ensure that your actions are having a positive impact on your restaurant. Certain indicators like employee turnover are easy to analyze because you simply identify which workers are staying for the long haul, thanks to training and morale-boosting efforts, and which are leaving. Also, measuring your sales in comparison to the wages you pay out as well as the amount of food waste will help. When it comes to auditing your employees, look at every aspect of their job — including running the cash register — because losses can become evident in different ways.

In the end, actively analyzing your loss prevention KPIs can help you identify internal losses, implement strategic protocols, and remedy situations that may be cutting into your hard-earned profits.

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