We are in a time where restaurants are barely beginning to recover from the effects of COVID-19. Due to this, it’s important to know where you’re losing money in your operations.

According to a ReFED report, restaurants could make an extra $620 million per year by putting in place prevention solutions for food waste. The opportunity lies within your restaurant’s actions to stop wasting money. Restaurants already run on some of the thinnest margins. You need to know how to fix some of the problems that are costly to your business.

We’re going to cover a couple of different ways in which restaurants lose money and how to prevent them.

Food Waste

Did you know that the U.S restaurant sector produces 11.4 million tons of food waste per year? That equals costing over $25 billion yearly. Also, it’s estimated 25-40% of food grown within the U.S will never be consumed.

The Food Waste Reduction Alliance (FWRA) number one goal is to reduce food waste. With this, you need to understand the different factors contributing to it. Causes such as order errors, portion size, poor stock, and more, lead to this food and money waste.

Since food waste is one of the biggest ways restaurants lose money, we want to break it down. Outlined below are two of the highest issues for food waste, order errors, and food spoilage.

1. Order Errors

The hustle-and-bustle environment that servers face sometimes involves mistakes when taking orders. There can often be miscommunication between guests and that leads to food re-fires. Due to this, that is now double the amount of food used and some gone to waste. To reduce this, it’s important to communicate frequently with your guests. A helpful tip is having your servers always repeat their order back to them.

There are several factors that can go into an incorrect order. Today,  certain wrong food modifications can lead to harmful effects for your guests. Gluten-free and vegan modifications are orders you especially want to put a focus on. Proper menu training can also help your staff better understand what changes can be made. There’s no need to rush putting an order in if in the end, it’s going to cost you more money and time fixing the order.

2. Food Spoilage

When you throw away food, you’re throwing away money. Controlling food waste can make or break your business and you need to know how to change this issue. A couple of recommendations for preventing food spoilage:

  1. Store food in appropriate places to improve shelf life
  2. Inspect product as it comes in
  3. Have a designated inventory manager
  4. Use your ingredients in a variety of ways

Several approaches can lead to food going bad. From the beginning, poor inventory counting can result in excess food orders. Again, if you don’t check produce and product as it comes in, this can result in you receiving poor stock.

Make sure your prep staff and chefs are practicing first-in-first-out (FIFO) with food. Label everything by date to use food quicker and avoid it going bad.

For more methods on how to reduce your food costs, we’ve outlined 20 ways for you to do so here.

Employee Theft

In the case of restaurants, one of the biggest ways to lose money is through employee theft. It’s not always as simple as stealing cash. Employee theft can range from too many comped meals to ringing in the wrong products.  Here are a few common methods for employee theft found by Loss Prevention Magazine:

  1. Fraudulent Tip Changes
  2. Reusing Receipts/Checks
  3. Providing Free or Over-poured Drinks
  4. Voids or Comps and Pocketing the Cash Difference
  5. Eating without Paying and Unreported Food Waste

Recent data from the U.S. Chamber of Commerce shows that 75% of staff have admitted to stealing from their employers at least once. It’s important to be aware that employee theft is on the rise and recognize the signs.

Prevention methods

There are different actions that management can take to help prevent employee theft. First, is upgrading to a POS station that tracks everything for you. This includes reporting on each employee, payment type, and revenue center. It’s critical to check in on your restaurant’s performance.  If you’re more involved with day-to-day operations, this can help cut chances of theft.

The second prevention method is the usage of security cameras. Security cameras allow you to visually keep track of your employee’s work time and any theft. Consider putting cameras in highly visible areas such as your POS station and back of the house. Studies have shown that cameras assist in reducing employee theft and boosts productivity.

The last way to prevent stealing is by having a strict cash handling procedure. As stated in QSR Magazine, here are some simple rules that you can put in place:

  1. Make sure only managers have access to the safe
  2. One cashier per drawer and they are counted after every shift
  3. Dropping excess cash into the safe at regular intervals
  4. Count the safe after every manager’s shift
  5. Count cash in view of security cameras

Your staff is crucial to long-term success and prevention of money waste. Business owners and management put a lot of trust and responsibility on staff, to be honest. Employee theft is not limited to the methods above in any way. But, as management, these are to help identify some money shortage areas. Given this insight, you can put actions in place to reduce the opportunities for theft.

Bottom line

The ability to measure where waste is coming from is key to knowing where to put effort. It’s frustrating for businesses to work hard and lose money. Take the first step in preventing money waste and get set up with an inventory management system.

A solution to your inventory management is POS integration with Orca. Orca is an inventory software that learns to prevent theft and waste, saving you money. With Orca-CAKE integration, you can accurately measure food waste and spoilage. This helps your restaurant create food budgets and prevent money loss.

On top of this, you need to keep reports on your restaurant at all times. With a cloud-based POS system, such as CAKE, you can do this from anywhere. CAKE Reporting offers real-time performance information on multiple aspects.

Your restaurant deserves to make money, not waste it. Put the preventative actions explained above in place and stop losing money today.