There are certain hallmarks of the “business side” of restaurants – things like a heavy emphasis on cash transactions, complex inventory and supply chain processes, and frequent employee turnover. All of these make the restaurant industry a prime target for scammers, which means that understanding how scammers operate is crucial for restaurant owners to fully protect their assets.
Scammers lurk everywhere; sometimes they’re customers or vendors, while other times they might be restaurant employees. Often, the scams involve collusion among these groups. So what are some common scams that restaurant owners should look out for? Skimming One of the most common scams is skimming, which involves the theft of cash before it is ever recorded in accounting books. It could happen when an employee underreports the total sales amount for an individual transaction or time period, or when an employee simply pockets a customer’s cash without actually recording a sale. Skimmers can be hard to catch, but simple additions like security cameras or modern point-of-sale systems are among the best ways to discourage fraud. Phantom Suppliers & Ghost Employees Not all scams involve cash handling. So-called “phantom suppliers” set up fake companies that bill restaurants for goods or services that were never delivered. “Ghost employees” that don’t actually exist are sometimes added to payroll distribution by third-party payroll companies. Often involving collusion between an employee and an external partner, both of these types of fraud take funds directly from a restaurant’s bank account and deposit it directly to the scammers. The best way to combat these scams is constant vigilance. Restaurant owners should thoroughly vet vendors, review invoices against actual delivered product, and double check their payroll against a list of employees – especially if they’re using a third party payroll company for their wage distribution. Another best practice is separating employee duties to ensure multiple sets of eyes are watching every vendor interaction – for example, the employee who orders supplies should not be the same employee who receives the supplies when the vendor arrives. Reservation Scams Recently, reservation scams have seen a large boost in popularity amongst fraudsters. Sometimes customers might make a large party reservation under a false name with a stolen credit card, and then demand a refund to a valid credit card. If a reservation is in particularly high demand, customers might sell that reservation to someone else – a practice that has only picked up due to apps like Appointment Trader. The Appointment Trader app quickly makes multiple in-demand reservations at different restaurants and essentially lists them “for sale” on their own internal marketplace. This results in diners either paying a large fee for a free reservation, which could limit the amount they spend at the restaurant, or to the reservation not selling at all and resulting in a no-show party (and major loss of revenue) at the restaurant. A good best practice is to always double check customer identity and payment method on large or otherwise suspicious transactions. Should a restaurant discover that they’re listed on Appointment Trader without their consent, it’s important for them to take the proper steps to protect their brand and reputation. Have you been the victim of a scam? Let us know and we can warn your fellow restauranteurs!
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April 2024
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