Rebecca 0.10
Welcome everyone to the first in our series of Sustainability 101 podcasts for retail and hospitality. I’m Rebecca Green, Senior BDM for Intertek Business Assurance in the UK and I’m delighted to be joined by Scott Oakley from our auditing team.
Today we are going to talk about a topic that more and more of our clients are asking us for support with - Loss Prevention. Loss prevention is crucial in today's restaurant and retail sectors due to rising costs of goods, labour shortages, increasing theft, and growing consumer demand for sustainability, making it essential to protect profits, reduce waste, and ensure operational efficiency in a highly competitive and economically volatile environment.
You may also hear the term ‘shrinkage’ – which refers to the loss of inventory that can be attributed to various factors such as employee theft, shoplifting, admin error, vendor fraud, damage, and cashier error. It’s the difference between recorded inventory on a company's balance sheet and its actual inventory.
For retailers – this means putting processes in place to mitigate the loss of unsold retail inventory through causes such as shoplifting, employee theft and admin errors. For restaurants – it involves strategies and practices designed to minimize financial losses caused by food waste, theft, fraud, and operational inefficiencies.
So Scott, delighted to have you participate today, it may be helpful to our listeners to first of all understand your role within the auditing team at Intertek, then let’s talk about how you are helping our restaurant and retail clients with loss prevention.
Scott 1.50
Thanks Rebecca, I am responsible for conducting audits for Intertek across a variety of food-led businesses including food safety, health and safety and loss prevention.
Rebecca Green
Thanks Scott ! A–you and the team assist our clients in identifying and preventing loss across their businesses, now can we look more specifically at the types of loss you are helping clients prevent?
Scott 2.14
Yes of course, so with retail, as you know there are constantly moving parts - from maintaining inventory levels to ensuring prices are competitive and everything in between. With the rising popularity of online orders, in-store pickup, curbside pickup, and self-checkout registers, comes an increase in retail loss prevention measures.
Shoplifting remains one of the most prevalent risks in retail, thieves frequently target high-value items or those with easily removable security tags. Now retail outlets have more self-service checkouts and “shop & go” capabilities, that brings with it new vulnerabilities and additional ways to shoplift – from changing the reduce to clear stickers, to miscounting, to even taking the ‘bags for life’ without paying for them. And some of the solutions that you will see in retailers include:
- Reducing blind spots in the store layout using specialized mirrors and domes. These are areas that are difficult to see by security, such as under shopping baskets, aisle corners and intersections.
- Placing high value items behind locked or secure cabinets – more supermarkets are adding items to locked shelves, and things like honey, coffee and dishwashing liquid have also been locked up.
- Increasing security presence in store with trained security guards and CCTV cameras is more and more prevalent.
Paper Shrinkage: Administrative errors are also known as “paper shrink”. They include mislabeling items, accidental markdowns on the wrong products, errors in cycle counts, and data-entry errors. They can be intentional or honest mistakes, but still contribute to inventory and revenue loss.
Solutions for that - retailers need access to tech that pinpoints potential process failures and provides the data-led insights needed to resolve them. My role involves conducting audits for retail stores, restaurants and hotels across the UK, incorporating all of these areas I’ve mentioned.
Rebecca 4.27
Thanks for that overview Scott with examples. So with your experience within these areas, can you give us some more detail around the challenges and solutions specific to the restaurant sector?
Scott 4.36
Sure, so in the restaurant sector we get employee theft, inventory management, operational mistakes and external threats such as dine and dash, break ins and vendor fraud as the main areas of loss/shrinkage. Internal employee theft plagues some restaurants, leading to profit loss and an atmosphere of distrust. Increased use and sophistication of EPOS systems have largely eliminated employees being able to skim cash directly from the till. However, unauthorized discounts, voids and refunds are all ways to take money from an EPOS system without disrupting the end of day reports, meaning theft can go unnoticed. CCTV in the bar and pantry areas and kitchen can reduce theft of raw materials like food, meat and alcohol. Meanwhile ‘dine and dash’ incidents are increasing, ie when people leave without paying.
Measures to reduce this include applying effective video security measures, by entry and exit points and car parks. Also consider floor plan and try to have just one entry and exit point. Appoint a host - establishing a presence at the front of the restaurant can help improve your customer service and allow the host to keep an eye on who is coming and going; they will also deter potential dine and dashers, as they’re less likely to risk being seen and caught in the act.
Then we have the least obvious form of theft - self-imposed breaks. Excessive self-imposed breaks disrupt the flow of service and productivity. Even in slow periods “time to lean, to clean” should apply. There’s always something to do in hospitality – from restock, cleaning and service prep etc. Having set policies to deal with mobile phone use such as a ban during service will reduce the opportunity and temptation for self-imposed breaks.
Rebecca 6.44
Yes and also some clients have also mentioned that accidental miss-ringing is an issue where employees forget to add additional drinks etc.
Following on, let’s now look at wastage. Firstly, food : I read recently that the UK generates around 9.5 million tonnes of food waste annually. While households contribute the majority, the hospitality and food service sector accounts for about 12% of this waste – equivalent to 1.3 billion meals!!
So how can restaurants reduce food waste?
Scott 7.26
There are many ways restaurants can reduce food waste, such as:
- Waste audits - Sort through all waste generated in the restaurant, including food waste and packaging, Identify opportunities for improvement
- Inventory management - Order ingredients and supplies when needed, not just at regular intervals. Calculate and control inventory days on hand
- Food donation - Donate food to food banks and shelters to reduce disposal costs and help the community which is always a good thing
- Composting - Turn organic waste into compost for example, coffee grounds in coffee shops.
- Menu planning - Plan menus more effectively to prevent dishes from being sent back to the kitchen. Offer weekly specials that feature ingredients you have to use before they spoil.
- Take the opportunity to build team culture and involve your staff in the experience. For example you could hand out a prize to the cook who comes up with the most weekly special ideas, or the server who is able to sell the most specials in a night. That also builds morale in any restaurant.
- FIFO - practice First-In-First-Out storage systems (FIFO) to ensure older food items are used or sold before newer ones
- Repurposing ingredients - Find ways to use ingredients in multiple dishes
- Offer staff meals: Use leftover ingredients to make meals for employees
- Offer take-out containers
- Encourage guests to take a doggy bag of leftovers in takeout containers
Rebecca 9.27
Some great ideas there! Cutting down on food waste decreases operating costs but it’s also good for the environment – a selling point for eco conscious consumers driven by sustainability and the charity element is one of the biggest benefits of lowering your amount of food waste.
Scott 9.51
Also to add to that Rebecca, restaurants can look at Accident / Mistake management: I’d recommend restaurants keep an accurate record of wastage for stock management purposes and streamline procedures so that mistakes aren’t commonplace. You could offer your staff incentives and rewards for months showing no stock discrepancies or minimum wastage. This should encourage staff to be less careless, reducing mis-pours, dropped food and discourage potential theft.
Intelligent stock management systems provide detailed data reports allowing you to track trends, including wastage. You can track the data for any time period, hourly, monthly or annually which will help you mitigate loss. Finally a quick mention of offering food and drink ‘On the house’. Whether it’s a few free drinks for friends at the bar; or snacking on the complimentary bread rolls – it will all impact your bottom line.
Inventory management is your biggest defence against this crime. It’s unlikely you’re going to catch staff in the act. Unlike the less obvious forms of theft, this is the same as taking cash out of the till and the team know it’s wrong. The data provided by your EPOS system acts as proof.
Rebecca 11.10
Thanks Scott for a great overview. Of course it’s essential to have an employee training and education programme around loss prevention. From front-line staff to senior executives, spreading awareness about the impacts of shrinkage and the role everyone can play in prioritising actions and preventing causes, is crucial in tackling losses effectively.
So to wrap up: Loss prevention is about creating systems, fostering trust, and being vigilant. Small changes can lead to big savings! Thanks Scott for your time today and for our listeners – we hope you can take away some useful tips on loss prevention.
Please get in touch if you’d like help - as Scott outlined in his role, we have a team of highly skilled auditors who support restaurant and retail businesses nationwide and globally, with services to help them protect their brand including food safety and loss prevention audits, supplier management and other sustainability initiatives, training programmes and much more.
You can get in touch either by email to ukenquiries@intertek.com or call +44 0116 296 1620.
Have a great day!
