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What Makes Restaurant Employees Commit Fraud?

What Makes Restaurant Employees Commit Fraud?

What Makes Restaurant Employees Commit Fraud?

#it’scomplicated…In medieval societies, people were directly accountable to their neighbors and were only as good as their word. Does this mean people back then always did the right thing? Absolutely not. Society has not changed that much over the centuries.

So, what makes restaurant employees decide to undercharge customers, commit time theft, give food away to family and friends, and other types of fraud? As with all other aspects of human behavior it’s not cut and dry, but we can look at five contributing factors some researchers have found to explain this phenomenon.

Acceptance of Small Theft - Big thieves start out as small thieves. As human beings we think if we get away with something the first time then it is probable that we’ll get away with it a second time, or a third time, and so on. Any restaurant that looks the other way at small theft, like taking a roll of paper towel home or “borrowing” a package of napkins, is opening themselves up to theft on a larger scale.

Social Bond Theory - In larger organizations or franchises, employees can tend to feel more disconnected from management and the company. This feeling of being detached, feeling more like a number than an employee, can be a factor in one’s rationale to commit fraud.

Time Pressure - Restaurants that may be poorly managed can cause their employees to feel tremendous time pressure to get the job done. Kitchens under stress trying to keep up with orders can create stress for the servers who are trying to keep customers happy. These situations can cause employees to just do what needs to be done to get through a stressful situation, ethical or not.

The Pygmalion Effect - Poor leadership in restaurants can contribute to feelings of resentment in your staff. If employees are treated as potential thieves, they are more likely to become just that. Unjust or oppressive behavior towards staff can provoke reactions in an otherwise ethical employee.

Self-Serving Bias - Sometimes a staff member may think they are better than those around them. They feel the reason is not due to their performance that they aren’t being promoted and start to feel owed, aiming to “get back at” management for this perceived slight. This can cause them to start to feel justified in taking extra breaks, stealing food, or worse.

Protect Your Investment - Opening and running a restaurant is costly enough without the prospect of various types of fraud. Stay involved and look out for pitfalls discussed in this article. If you aren’t using technology for inventory and time keeping, research software systems that will help you stay on top of managing those areas more closely. Additionally, good accounting methods can help you identify and eventually prevent many of these scams. If you would like additional assistance, our office can help in any number of ways and we’re always here for you.

Michael Allen, CPA

Allen & Company, PC

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