A restaurant owner spots a server snatching a few fries from the kitchen in the middle of a busy shift — no big deal, right? But what if a whole bunch of high-priced items started to go missing: premium cuts of steak, crab legs, exotic spices, bottles of alcohol?

Losses from stolen stock can quickly add up at restaurants, especially for small to medium-sized businesses that often operate on thin profit margins. And, in addition to pilfered products, restaurants are vulnerable to other forms of theft, such as invoice padding, falsified refunds, vendor scams and point-of-sale (POS) fraud. If owners fail to take steps to safeguard their businesses against widespread stealing, their restaurants may find themselves in enough financial trouble that they could risk closing.

This article explores the most common forms of restaurant theft, providing restaurant owners with an overview of the types of illicit behavior they should keep an eye out for. It also outlines 10 strategies for keeping a restaurant’s products — and hard-earned profits — safe from thieves.

What Is Restaurant Theft?

Restaurant theft involves the intentional stealing of a company’s cash, food, drinks, cooking tools, kitchen equipment or other assets. Some common and costly forms of restaurant theft include employees fraudulently voiding sales to steal money, customers “dining and dashing” without paying their bill and vendors overcharging restaurants or delivering fewer ingredients than ordered.

Key Takeaways

  • Theft can be financially devastating for restaurants, particularly at a time when many businesses are struggling with higher food costs and slightly lower consumer demand.
  • Restaurant theft can take many forms, from customers refusing to pay and employees pocketing cash to vendors fudging invoices and cyberattackers stealing data.
  • To prevent theft, restaurants can implement a variety of strong security measures, such as installing surveillance cameras, training employees on spotting and reporting theft, and restricting access to cash, food and other valuable items.
  • They can also use software that tightens controls on inventory.

Restaurant Theft Explained

At the end of a meal at a local restaurant, a customer slips a fancy cocktail glass from the table into her purse. A server comps a pricey dinner for a few friends. Burglars break in after hours and haul off high-end cooking gear and small appliances. These are all examples of restaurant theft — intentional rip-offs that can lead to large losses for businesses.

These losses can be devastating, especially at a time when restaurants have been grappling with higher costs. In a 2024 National Restaurant Association (NRA) report, 97% of restaurant operators said higher food costs were an issue, 98% said labor costs were up and 38% said their eateries did not turn a profit last year. What’s more, higher expenses have been forcing restaurants to increase menu prices — a move that comes with some risk, since pricier meals may turn away customers.

And consumers are clearly feeling the pinch, with the NRA reporting separately that restaurant sales had leveled off in early 2024, compared to late 2023. In fact, 44% of adults said they weren’t going to restaurants as often as they’d like and 38% were not ordering takeout or delivery as much as they wanted.

With profit margins running tight for many businesses, restaurant owners can’t afford to ignore theft issues. Instead, they must proactively put the proper internal controls in place to detect and ward off thieves.

Types of Restaurant Theft

Restaurants produce and serve products — namely, food and drinks — that instantly disappear upon consumption, making them an attractive target for those intent on concealing stolen meals. While a few comped lunches here and there might seem harmless, losses from rampant theft can, in some cases, put a restaurant in dire financial straits. Therefore, it’s important for business owners to be aware of the kinds of prevalent stealing scams they should be looking for.

  1. Employee theft: No restaurant owner wants to believe that their own employees will take food, cash or other items from them. Unfortunately, industry officials report that theft among employees can and does happen. Servers, chefs, bartenders and other staff have been caught stealing in a variety of ways, including swiping high-priced foods, alcohol and other items and concealing the theft by substituting lower-priced ingredients or filling empty alcohol bottles with water; giving away free food and drinks to family and friends; overcharging customers and pocketing the difference; and voiding orders paid with cash to steal the money.
  2. Time theft: Some employees might try to get paid for time they didn’t work by punching the clock before their shift starts, leaving before it’s over or even asking other employees to clock in and out for them when they’re not working. Employees may also inflate their paid hours by taking longer-than-permitted breaks or spending work hours running personal errands.
  3. Customer theft: Customers have been known to pocket items from the table, such as silverware, glasses, salt and pepper shakers — even sugar packets. In addition, some restaurant patrons may enjoy a meal and then walk out without paying the bill, while others may short the bill, paying cash for only a portion of the amount due before leaving.
  4. Vendor fraud: Restaurants have been victims of various types of vendor fraud, including overbilling, the addition of nonexistent supplies to invoices or delivery of fewer quantities of goods than the restaurant ordered. In addition, vendors may collude with one another to fix their prices above market rates or bribe restaurant employees with kickbacks to cover up inventory shortages.
  5. Break-ins: In 2022 alone, restaurants in the United States were victims of 21,732 burglaries. And in some parts of the country, break-ins are on the rise. Chicago, for instance, has seen a sharp increase in restaurant burglaries, with 607 incidents in 2023, which is nearly double the 350 reported in 2022. Thieves often break the windows of restaurants in the middle of night, cleaning out cash registers and making off with food and other supplies.
  6. Professional theft rings: Restaurants have occasionally been the target of professional theft rings. For example, three employees of a fast-food chicken restaurant in Arizona were arrested in December 2023 for running an extensive theft ring, selling items stolen from the restaurant out of their homes and in an online marketplace. In some cases, this type of stealing is the result of a highly coordinated employee and external theft ring.
  7. Data breaches: Several restaurants have been hit by major data breaches in recent years, exposing employees’ and customers’ personal data. For example, Panda Express parent company Panda Restaurant Group reported a breach in March 2024, saying an unknown number of employees had personal information stolen. And in August 2023, restaurant chain Golden Corral suffered a data breach that exposed the Social Security numbers, financial accounts and other sensitive information of more than 180,000 current and former employees, leading to a class-action lawsuit against the company.
  8. POS system manipulation: Employees can manipulate POS systems at restaurants, for example, by voiding legitimate purchases and taking the money, comping meals for friends and family, or ringing in only part of an order and keeping the cash difference or pocketing the extra products. In addition, cybercriminals may hack into POS systems or install malware to steal sensitive customer information, such as credit card numbers.
  9. Delivery theft: Customers might order food and request delivery, then falsely claim the meal was unsatisfactory or say they never received the order and refuse to pay for it. In addition, food may get stolen if delivery drivers leave orders on customers’ front porches unattended. And sometimes vendors’ massive food and beverage deliveries get stolen from the truck before the products ever make their way into the restaurant.
  10. Inventory mismanagement: Employees may falsify inventory records to conceal shortages of food and beverages. For instance, an employee might mark fresh food as waste, making it appear as though items have been tossed when they were actually stolen. Or someone may claim that an order was never delivered when it was actually intercepted by thieves.
  11. False refunds: Employees may process refunds for sales that didn’t occur or void legitimate transactions, then take the cash. Or customers may claim the order they placed online was wrong or never arrived.
  12. Overportioning: Kitchen staff may serve customers too much food or bartenders may add too much alcohol to cocktails, putting the squeeze on the restaurant’s profit margins from each purchase.
  13. Invoice padding: At first blush, it can be tough to tell whether a vendor invoice is completely accurate. For instance, did a food-service distributor include all 12 pounds of white rice a restaurant operator ordered, or did the actual amount come in closer to 11 pounds? At times, vendors may also substitute lower-priced items for higher-priced food and drinks, overcharging the restaurant.
  14. Intellectual property theft: At the heart of a successful restaurant is food that customers are eager to enjoy time and time again. Therefore, popular recipes that attract and retain customers are valuable — and most restaurant operators and head chefs would like to keep their secret sauces under wraps. But employees and others may steal proprietary recipes and innovative cooking methods, often intending to share these with competitors, which may diminish demand and cut into a restaurant’s profits.

Theft Impact on Restaurants

Theft can pose a major problem for restaurants if left unchecked. As a result of widespread stealing, restaurants may suffer the following consequences:

  • Financial Losses

    Experts estimate that thefts cost the restaurant industry billions of dollars each year. And with inflation jacking up the cost of food and other restaurant supplies, small and large businesses alike can ill afford to lose substantial amounts of cash or inventory. Even relatively small grabs — a few meals or drinks per week — can add up quickly and have a significant impact on a mom-and-pop restaurant’s bottom line. Restaurant operators that don’t get theft under control may experience such large financial losses that they’re forced to close the business.

  • Operational Challenges

    Employee theft can create a variety of operational challenges for restaurants by causing inventory shortages, payroll problems from lack of cash flow and, ultimately, service issues for customers. If managers are distracted by figuring out how half of the produce they ordered went missing from the fridge, they aren’t focused on overseeing all of the critical day-to-day operations that keep the business running smoothly.

  • Poor Customer Experience

    Ultimately, a theft problem at a restaurant could disrupt the customer experience if staff are so preoccupied with monitoring for and addressing criminal behavior that they’re not serving customers’ needs efficiently. And restaurants certainly won’t be able to serve the food and drinks customers desire if in-demand products are suddenly gone. In addition, if customers get home and later discover a discrepancy in a bill, such as a doctored tip that a server inflated, customers could lose trust in the restaurant and decide to take their loyal business elsewhere, reducing overall foot traffic and impacting profitability.

  • Legal and Regulatory Consequences

    Theft incidents could expose a restaurant to legal liabilities, especially if customers or employees decide to sue the establishment for failing to protect them from a pattern of stealing. Restaurants that fail to address a rampant theft problem may also be exposed to regulatory fines, tax discrepancies from unreported income and criminal charges, particularly if widespread fraud is committed.

  • Long-Term Business Impact

    If wait staff and customers get wind of a theft issue at a particular restaurant, the company may have trouble attracting and retaining employees, or it may struggle to maintain and grow its customer base, either of which can have a detrimental effect on the company’s profitability and reputation. In some cases, restaurants have failed due to a severely out-of-control theft problem.

  • Prevention and Recovery Costs

    To detect and prevent theft incidents, restaurants must implement sophisticated security systems, auditing procedures, employee training and other protective measures that require significant investments in both staff and technology. Although these security measures are necessary, they can eat into profits.

How to Prevent Restaurant Theft

While it may be difficult to root out all theft, restaurant owners can take several steps to prevent as much stealing as possible — for example, by creating strict security protocols and taking advantage of technology to audit inventory, restrict access to valuables and conduct background checks on employees. Here are 10 effective strategies.

1. Implement Robust Inventory Management

Restaurant managers need to closely manage their inventory, prioritizing high-end food and drink items like seafood, meat and alcohol. Inventory management software simplifies the process, providing real-time updates on stock levels and notifying managers when inventory falls below a certain threshold; more advanced software can automate replenishment. NRA predicts that by 2030, a growing number of restaurants will use technology to automate inventory management, payroll and bill reconciliation processes, as well as many other tasks.

Also key to managing inventory is monitoring access to stock by requiring badge or card swipes to enter storage areas that contain valuable products. Restaurants should plan to train staff on the correct portioning of meals and regularly spot-check dishes to prevent employees from overserving customers, which can generate inventory shortages.

2. Strengthen Security Measures

Restaurants need to tighten security throughout the building, installing video cameras and alarms, using safes for securing cash, providing key cards to a select number of trusted staff to limit entry to stores during off-hours, and closely supervising certain duties, like cash handling and inventory counts. If after-hours thefts are suspected, restaurant owners may want to hire security guards to patrol the grounds and immediately report any suspicious activity to police.

3. Enhance Employee Training and Awareness

Businesses should provide extensive training to employees on how to address customer theft. (They probably shouldn’t run after a customer who walks out without paying, for instance, but they should try to jot down the license plate number of the person’s car before it pulls away.) In addition, managers should be clear with employees about anti-theft policies and let them know they will be immediately terminated if they are caught stealing. It can also be helpful to post notices about any inventory or cash discrepancies in high-traffic areas like breakrooms to send the message that management has detected a problem. This can help deter future swindling.

4. Improve Cash-Handling Procedures

Restaurants should require dual signatures when counting cash and closing out register drawers. In addition, restaurants should keep a close eye on discounted and voided orders and require a manager’s approval for refunds above a designated amount. Cash drawers should be reconciled throughout the day, and cash drops to a secure safe or bank should be conducted only by restaurant owners and a limited number of trusted managers.

5. Conduct Background Checks

Preventing internal theft starts with hiring honest staff members. Restaurant owners should carefully vet applicants, verifying their employment history and educational credentials, contacting previous employers for input about job candidates’ work habits and conducting criminal background checks to uncover any previous charges or convictions. When possible, owners should even consider reviewing job candidates’ credit histories, social media accounts and driving records to gain insights about whether they behave responsibly.

6. Monitor and Analyze Data

At the end of the day, a restaurant’s numbers should add up. Do sales receipts reconcile with the total dollar amount of payments at the end of a shift? Or do the sales totals seem suspiciously low after the place was packed on a Friday night? If so, it might be time to home in on the data. Cloud-based POS systems often integrate directly with a company’s accounting and reporting software to provide real-time sales data that restaurant owners should review closely, checking for a pattern of refunds, excessive discounts or voided transactions. Restaurants can also implement inventory tracking software to closely monitor stock levels and keep tabs on food waste.

7. Foster a Positive Work Environment

If workers are mistreated, overworked or underpaid, they may be more likely to retaliate against their employers and may even justify stealing as a way to make up for a lousy, low-paying job. On the other hand, happy, engaged employees who are paid a competitive wage with benefits and feel welcome, respected and valued are less likely to cut corners, shirk the rules or engage in behavior that could damage a business they are proud to work for.

With that in mind, restaurant owners should make sure workers are well compensated and feel supported, for example, by honoring their scheduling requests when possible and making sure no one is feeling overtaxed and burning out. Managers should set a warm tone in the workplace, providing positive feedback for a job well done and even handing out occasional perks, like gift cards or bonuses, to recognize workers for exceptional performance. Also, to discourage the temptation to steal food, restaurants might consider developing a policy of covering a certain number of free meals for workers per week — and perhaps requiring workers to report each freebie to keep track.

8. Establish a Theft-Reporting System

A restaurant’s best security method often lies within its own employees, who can lend their watchful eyes when managers aren’t looking. Restaurants can establish an anonymous mechanism for reporting theft, such as an online form or even a locked box that employees can drop notes into. Reassure staff during training sessions that any reports of theft or other inappropriate behavior on the job will be kept strictly confidential. Once a credible report of theft is submitted, the restaurant should take it seriously, designating particular managers to gather evidence, such as security video footage, inventory records or sales logs, before taking action against the perpetrators and involving law enforcement, if necessary.

9. Conduct Regular Audits and Reviews

Restaurants should conduct routine audits of their inventory, cash and accounting records with an eye toward identifying any suspicious activity. An inventory audit might reveal missing products, for instance, and cash audits could detect skimming. Furthermore, restaurants should review security footage periodically to look for customer or supplier theft, as well as check employee time records, comparing scheduled hours to reported hours to search for time theft. Software applications can ease the audit and review process by keeping close track of inventory and sales figures and providing real-time updates. An unexpected spot audit is another good idea, since that alone might deter someone who is considering stealing from the restaurant.

10. Collaborate With Suppliers

Maintaining a close relationship with suppliers can go a long way toward preventing theft and fraud. For example, restaurants should verify that product deliveries match the specific items and quantities on the invoice to spot any discrepancies that might indicate a theft problem during the shipping and receiving processes. Restaurants should also leverage inventory management software to track stock and spot shortages.

How NetSuite Can Help Restaurants With Inventory Management

Manual counts of inventory on spreadsheets are not only ripe for error, but they could open the door to intentional manipulation of figures, allowing misplaced or stolen stock to go undetected for extended periods of time — and possibly put the restaurant in deep financial trouble.

Restaurants can tighten their control of inventory levels with NetSuite Inventory Management Systems Software, which automatically tracks stock levels, orders and sales in real time. By providing better visibility into stock, NetSuite helps restaurants accurately manage inventory to maintain optimal stock levels, automatically sending alerts to the purchasing manager about anticipated shortages and the need to reorder supplies.

In addition, NetSuite Inventory Management allows a business to trace inventory by lot and serial numbers, providing a restaurant with the ability to better manage fulfillment, such as by prioritizing soon-to-expire food to minimize waste. All in all, the software puts restaurants in control of their stock, so they can feel confident no supplies are slipping through the cracks, especially when customers need them most.

Restaurants can suffer significant losses due to various types of theft, including customers who dodge bills, employees who process improper refunds and vendors that charge restaurants for supplies they never delivered. However, restaurant owners don’t have to sit idly by and allow these criminal acts to continue. By taking proactive measures to safeguard their businesses from theft — for instance, by closely monitoring inventory and properly training employees — restaurants can build a culture of trust and accountability that benefits everyone: the business, its workforce and its customers.

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Restaurant Theft FAQs

How do you deal with inventory theft?

Restaurants can address stock theft in multiple ways. Methods include using inventory management software to accurately track supply levels; restricting access to expensive food and drinks; supervising certain responsibilities, like receiving inventory and counting cash; conducting audits to check food orders against supplies received; and alerting staff about any discrepancies that have been discovered to deter future thefts.

How can you avoid restaurant theft?

Some of the main ways restaurants can thwart theft include:

  • Strengthening security measures by installing video cameras and hiring security guards to patrol the grounds after hours.
  • Improving cash handling processes by requiring dual signatures on cash counts.
  • Leveraging inventory management software to keep close track of the movement of goods and the restaurant’s supply levels.
  • Conducting regular audits of cash, orders and stock to look for potential discrepancies.

What is an example of inventory theft?

One common example of inventory theft is when suppliers deliver fewer quantities of products than a restaurant ordered but still bill the restaurant for the full order. For instance, a food supplier might invoice a restaurant for 50 cases of ground beef, but only provide 40 cases, pocketing the difference in both product and payment.

How can restaurants deal with employees stealing food?

Restaurants can take several steps to prevent employees from stealing food:

  • Establish a confidential theft-reporting system.
  • Make sure employees are well paid, receive the support they need from management and are satisfied with their jobs.
  • Use inventory tracking software to closely monitor stock and identify shortfalls.
  • Install security cameras to keep a watchful eye on highly sensitive areas of the restaurant, such as cash registers and food-receiving ramps.
  • Require manager oversight and approval for certain activities, such as counting cash, voiding orders and refunding food and drinks.
  • Conduct background checks on job candidates during the hiring process.
  • Take decisive action against any employee caught stealing, which can send a strong message to the rest of the staff and deter others from engaging in the same behavior.