Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Revenue Collection Is Important If the time and specific cause(s) of the shortage cannot be identified If the cause of a cash shortage cannot be traced to a single individual When “small” shortages are ignored OH – 15.1 When the amount of revenue to be collected is unknown, shortages inevitably occur and will likely continue:

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Results of Undercharging The restaurant may not achieve budgeted revenue forecasts even with sufficient sales levels. Product cost percentages will be higher than if all guests were charged the proper amount. Labor cost percentages will be higher than if all guests were charged appropriately. Cash flows will be negatively affected because collected cash will be reduced. Profit goals may not be met. OH – 15.2

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Results of Overcharging Guests who discover overcharges may feel cheated and relay their experience to others. Guests who do not discover the overcharges may feel the restaurant was “too expensive” and/or did not deliver an appropriate level of value for the prices charged. They are less likely to return and will also share their experience with others. Employees may begin to purposely overcharge guests to increase their income. The reputation/image of the restaurant is negatively affected. OH – 15.3

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Basic Principles for Design of Revenue Collection and Control Systems The name of the item purchased must be accurately recorded The quantity of items purchased must be accurately recorded The price of the item purchased must be correct (the same as that printed on the menu or recited by the server) The sum of the costs of all individual items purchased by the guest (the guest check total) is accurate OH – 15.4

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Key Features of a System to Determine Guest Charges OH – Guests are informed of all menu item prices prior to placing their orders. 2.Individually numbered guest checks are printed legibly by machine (computerized cash registers identify each guest’s bill with a unique transaction number) or by hand. One copy of the guest check is given to the guests; at least one copy is retained by the restaurant. 3. Menu item prices are clearly identified on the guest check. 4.The number of menu items ordered is clearly indicated on the guest check. 5.Extensions (if any) are clearly indicated on the guest check. 6.Where possible, guest checks are totaled by machine to reduce the chance of error. In all cases, the total charges incurred by the guest are plainly indicated on the guest check when it is presented to the guest. 7.Guest check totals clearly indicate whether tips, gratuities and/or service charges have been included in the totals. If they are, the amount is clearly listed as a separate item. 8.The guest check is presented to the guest prior to accepting the guest’s payment. 9.Guests are given a reasonable amount of time to review their bills prior to payment. 10.All unresolved guest-initiated disputes are promptly addressed by management.

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ The Three Goals of Revenue Collection Identify the employee collecting the money. Collect the correct amount of revenue. Properly record the transaction. OH – 15.6

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Revenue Re-Cap Sheet OH – 15.7 Name of Restaurant __________________ Date ______________ Revenue Generated: Breakfast Lunch Dinner Total Revenue Generated (1) Revenue Collection: Credit card charges Debit card charges Checks received Currency on Hand (Excluding Cashier Banks) Bills Coins Total Revenue Collected (2) (add) Paid-Outs (3) Net revenue collected and paid-out (4) Net Over (or Short) (5) Deposit Amount (6) Prepared By

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Steps to Help Prevent Falsification of Bank Deposit Totals Make daily bank deposits whenever possible. Ensure that the individual(s) making the daily revenue deposit is/are bonded. Establish and enforce written policies for completing bank reconciliations by the monthly (or more frequent) comparison of bank statements and daily deposit records. Use on-line banking features to reduce the time between the performance and verification of any banking activity. Review and reconcile all bank deposit and checking statements received from the bank with operating account balances. Employ an outside auditor to examine the accuracy of deposits and account activity on an annual basis. OH – 15.8

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Suggested Procedures for Reducing Walks OH – In dining rooms, present guest checks promptly upon serving guests their last ordered item. 2.In bars, collect for drinks as they are delivered to the guests or require that bartenders obtain a credit/debit card whenever an open tab is created. 3.Encourage servers to carefully monitor guest checks that have been delivered to the guests who have not yet paid them. 4.If guests are observed leaving their table prior to paying their bills, and are still in the restaurant, approach them politely with the assumption that they have simply forgotten to pay the bill. 5.If guests actually have left the restaurant prior to paying their bills do not attempt to physically restrain them. Never ask a server or manager to physically confront a guest over a walked guest check. 6.If cashiers are used, place cashier stations centrally to ensure maximum visibility of dining areas. 7.Encourage employees to continually monitor remote exits that could allow guests to easily leave the restaurant without paying their bill. 8.Schedule staff in sufficient numbers to allow servers to maintain a vigilant watch on their guest checks that have been delivered but not yet paid. 9.In the event a walk is observed, instruct servers and cashiers to notify management immediately. 10.Report all actual cases of walks (include amount, date, time and description of guests) to local law enforcement authorities to assist in their efforts to apprehend the thieves.

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Paper and Print Counterfeit Detection OH – To detect counterfeit money, use the following information to evaluate “Paper and Print” of each bill accepted. Paper Real: The feel should be crisp and substantial in a new bill and soft in a worn bill. Counterfeit: The feel will be “lighter” and floppier than in a genuine bill. Print Real: The print in some areas of the bill is raised in a pronounced way. You can feel the raised areas. Counterfeit: Most counterfeit money is flat in all areas. (Raised areas are very rare.)

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Procedures to Manage Credit Cards Examine the card for signs of obvious alteration. Verify the card’s expiration date. Compare the signature on the charge slip with the one on the back of the card. Refuse to accept the card if it is not signed (usually on the back of the card). If necessary, ask the guest for a driver’s license or other form of picture identification to confirm that the person presenting the card is the individual named on the card. OH – 15.11

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Suggested Procedures for Reducing Risk Related to Personal Check Fraud OH – Develop written guidelines on the types of checks you will accept (for example, personal, two-party, payroll and traveler's checks). 2.Insist on proper picture identification. 3.Verify that the check writer’s name and mailing address are printed on the check. In addition, secure the check writer’s driver’s license and telephone numbers. 4.Compare signatures on the check with the signature on the picture identification presented. 5.Do not allow checks to be written for amounts in excess of that required to pay the guest check. 6.Deposit checks into your bank account as rapidly as possible (within 24 hours, if feasible). 7.Consider securing the services of a check verification or check guarantee company. 8.Require a manager’s initials or signature prior to accepting the check for payment. 9.If you are the victim of fraud, send a certified letter requesting re-payment to the individual who wrote the check. If the writer does not respond with payment, report the fraud to your bank and the local police. 10.Monitor losses incurred from accepting checks and revise check acceptance policies if losses reach unacceptable levels.

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Frequent Causes of Employee Theft Ineffective internal controls Excessive control limited to one or two individuals Lax management of controls Failure to adequately prescreen employees OH – 15.13

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Cashier Theft Methods Making “mistakes” when adding the totals of legitimate purchases and keeping the difference between the correct total and the incorrect total. Charging guests for items the guest did not purchase and then keeping the extra money collected. “Mistakenly” returning less change from guest purchases than should have been retrieved. Charging guests more than the correct prices and keeping the difference between the two prices. Reducing guest check totals in the POS or manual revenue system after the guest has paid and keeping the difference between the original and modified charges. Voiding a sale from the POS after the guest has paid for the full amount of the sale. OH – 15.14

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Server Theft Methods Charge too much for items ordered and keep the excess payment. Charge the appropriate amount, but not record the sale and keep the payment. Charge the appropriate amount and record the sale, but later falsify the sales record to keep all or part of the payment. Fail to charge for the items ordered and collect a reward (e.g., a higher tip) from the guest. OH – 15.15

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Reasons Why Employees Steal Personal pressures. Financial difficulties, addictions and greed can cause many employees to consider fraud or theft. Personal integrity. Some employees with personal pressures give in to the temptation to steal; others do not. The opportunity to commit a crime. This is where managers can do the most to prevent supervisory and managerial fraud and theft. OH – 15.16

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Procedures to Safeguard Cash Assets Revenue Collection – Revenue reports from the POS System should not be modified without a double-check by another manager. Revenue Control – Persons, including managers who handle cash, should be bonded. Accounts Payable – A two-signature check system should be used to pay bills. OH – 15.17

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ How Can Dishonest Bartenders Steal? Product substitution Dilution Under-pouring Bringing in products to sell Bottle substitution OH – 15.18

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ How Can Dishonest Beverage Servers Steal? Shortchanging Overcharging Serving undocumented drinks Soft drink fraud OH – 15.19

Restaurant Operations Management: Principles and Practices© 2006 Pearson Education, Inc. Ninemeier/HayesUpper Saddle River, NJ Software Can Help with Revenue Collection and Control Maintain revenue totals from different POS locations within one restaurant Maintain revenue totals from different POS locations within a restaurant chain or group Compare products produced (from guest checks) in the kitchen or at the bar to actual inventory reductions Reconcile guest check totals with total revenues collected Identify revenue collection variances by restaurant, day, shift and/or server Reconcile credit card deposits with credit card sales Maintain accounts receivable records Create the revenue portion of the income statement after reconciling bank deposits, charge card sales deposits, returned checks and bank deposits OH – 15.20