Loss prevention metrics you’re not looking at (but should be!)

Loss prevention is not one of those things you only need to worry about when there's an incident; it's an integral part of operating a business, especially a restaurant. Loss prevention is especially important for above store leaders (ASLs), who are in the best position to act on sources of restaurant loss.

As we've discussed previously, losses are an inevitable part of running a restaurant. If you're not actively working to reduce and prevent it, you're losing money. Luckily, your data analytics software can help—if you let it. You might have a report that tells you how much of your revenue was lost to waste, theft, and other sources, but that information isn't always helpful on its own; you need other metrics to help you take action. Here are some loss prevention metrics you're not looking at—but should be.

Revenue lost

This one may seem obvious, but many QSRs don't track any loss prevention metrics whatsoever (and if that applies to you, it's never too late to start). The first and foremost loss prevention metric to track is the total amount of revenue your store is losing to waste, theft, and other sources.

There are many kinds of loss, but the biggest offenders are inventory mistakes, overuse of food, and employee theft. Your inventory software can likely notify you of sizable discrepancies in inventory, which will help you with the first two sources; if there's an unusual change in inventory, check-in with your team members to make sure they're counting correctly and using the right amount of food during prep.

Employee theft is a completely different ball game. Sometimes theft is obvious—like when a register is mysteriously short by exactly $20—and sometimes it's more subtle, like when you see a suspicious increase in zeroed orders (more on that later). If you're not actively working to reduce and prevent these things, read more about tactics for preventing employee theft.

Time lost

Do you have days when you feel like you're just putting out fires (hopefully figuratively, but sometimes literally)? Maybe it feels like that every day? When you're spending your whole day putting out fires, it can be hard just to keep the lights on.

Odds are, you're not alone; time loss comes at all levels—from team members to store managers to above store leaders and beyond. If your morning shift employees are too busy to prep for the evening shift, your evening shift employees are going to have a hard time. If a manager is too busy dealing with an incident, they're not going to be able to coach their employees adequately. If an ASL has to spend all day driving between locations, they won't be able to review metrics or implement process improvements.

Putting out fires isn't the only culprit. Time loss can take many forms—being under- or over-staffed, finding shift coverage when an employee is sick, hiring and training new employees, and handling new priorities from leadership are all common ways that a seemingly minor time loss can cascade into a real problem.

Look for data on schedule adherence, or just ask employees how they're feeling. If a store has employees sitting around, that's obviously an issue—but if team members are "too busy to get anything done," that's also an issue.

Manual adjustments

The most obvious type of loss is often also the largest source: cash. Whether it's a cash drawer, the safe, or a nightly deposit, sometimes the cash total comes up short. (Side note: sometimes the register doesn't come up short, even though you're still experiencing loss. This can happen when an employee rings up an order, zeroes out the total, and pockets the cash. You can apply these same tactics either way.)

There are tried-and-true ways to mitigate cash loss: make sure no more than one employee has access to each register, change registers after each shift, count cash frequently, and make sure there's a security camera wherever cash is being handled. But it's not always that simple, and a significant percentage of cash loss comes from somewhere that might fly under your radar: manual adjustments.

Different QSRs use their own terms for manual adjustments—deletions, voids, over-rings—but the principle is the same: when an employee has to manually alter an order total, there's potential for cash loss. This could be malicious, like an employee zeroing out an order total so they can pocket the cash. Or it could be perfectly innocent, like a customer using a coupon that hasn't been entered into the POS system yet. In any case, manual adjustments at the register attributed to missing cash.

Look at the total number of manual adjustments and watch for fluctuations. This can identify if specific employees are making too many order adjustments. Make it a priority to keep manual adjustments as low as possible.

Qualitative data

Like many above store leaders, you probably get reports with your stores' numbers every morning. But what are you looking for in those reports? Variances? YOY totals? Upward trends? When you see these things, do you know what to attribute them to, or do you just accept them at face value?

Have shift runners keep a log of the day. Then, as part of your stores' closing procedures, ask closers to include a store recap—in plain text. What went well? What didn't go well? What might look strange on a report? To quote one ASL:

“If I have to ask about a metric, it's too late; you should have already reported it to me.”

By expecting a daily recap, you're training your teams to keep an eye on metrics themselves.

There are many types of loss and many ways you can detect it. Here are some tips to reduce and prevent loss:

1. Review your stores' numbers daily—quantitatively and qualitatively.
2. Have a direct reporting system between store managers/closers and ASLs.
3. Review your loss prevention tools frequently—at least twice per week.
4. Periodically review loss prevention reports with store managers and shift runners.
5. Post rules where employees can see them, and if you detect loss, act on it.
6. Don't act alone. Make loss prevention a team effort.

Store loss affects everyone, whether or not they realize it. Don't make loss prevention an afterthought. Use your tools to detect common types of loss, and take action to reduce and prevent it in your stores.