According to a research study highlighted in a Nation’s Restaurant News article, 18% of restaurant workers admitted to pocketing cash that should have gone in the cash register. Most fraud detection efforts focus on cash transactions because it’s the easiest way for employees to steal, but that doesn’t mean it’s the only way for them to defraud the restaurant. The “Tip Inflation” scam is complicated and often slips under the radar because operators are only focused on cash theft, which is why we built Avero Loss Prevention restaurant software to automatically detect theft and prevent future fraud.
- How it works: A guest dines in a restaurant and pays with his credit card. He orders a $15 pasta dish and a $5 beer, so his total bill is $20. He adds a $4 tip, signs the receipt for the total amount of $24 and leaves the restaurant. The server then goes back into the POS system and uses a void or promotion to remove the $5 beer from the check. She adds the $5 into the tip so that the new check has item sales of $15 (pasta dish) and the new tip is $9 ($4 original tip + $5 from the beer reduction) for the same total amount of $24.
- Why it works: The guest will still see the same amount on his credit card statement ($24 charge) but the server has just earned an additional $5 tip, and the restaurant misses out on the beer revenue. The server still has to justify the beer void or promotion to a manager if it requires approval, but typically the guest has already left the restaurant so the manager can’t confirm if the guest was unhappy or had redeemed a coupon.
- How to uncover it: If the guest calls to get a copy of his receipt for an expense report, he may notice that the tip and item amounts are different from what he remembered eating and tipping, but the chance of that happening is small. Instead, look for checks that have abnormally high tips and a void or promotion.
Don’t have time for all that manual work? Avero Loss Prevention can do it automatically, helping you improve your restaurant profits. Learn more and get started today, and check out other common restaurant fraud scams:
- Item Transfer scam
- Check Reuse scam
- Transfer scam
- Cash Coupon abuse
- VIP Comp scam
- POS Authorization scam
- Automatic Gratuity scam
