Tips to Build an Effective Restaurant Loss Prevention Plan

Tips to Build an Effective Restaurant Loss Prevention Plan

As a restaurant owner, your sole focus is providing the best dining experience day in and day out for your customers. But while you may spend so much time perfecting the outward-facing portion of your business, it might be easy to overlook what happens behind the scenes — specifically, we’re talking loss prevention.

Whether you operate a new restaurant or your restaurant has been handed down over generations, a loss prevention plan is critical in maintaining your business. But what exactly does loss prevention mean?

Essentially, loss prevention cushions the blow in the event of theft, employee fraud, and more. And no matter what type of restaurant you run, there are steps you need to take to ensure you have an effective loss prevention plan. Here are some loss prevention tips that will protect you and your restaurant.

Make sure you’re compliant with NFPA 96 and UL AES 300

When you navigate what type of insurance is best for your restaurant, you’ll come across two common standards: UL AES 300 and NFPA certificates. Both of these are fire safety-related, which is essential in a commercial kitchen. Your insurance provider may require you to meet specific certifications before granting you a property insurance policy. Here’s what each certificate entails:

UL AES 300 is a fire-safety standard for commercial kitchens, which helps restaurants reduce their risk of fires by ensuring that minimal grease is collected into equipment, ductwork, and air. To earn this certification, you must have:

  • Fire-extinguishing nozzles in the hood, ducts, and above all, cooking appliances
  • Automatic fuel shut-off capabilities for gas and electric power sources
  • Fuel shut-off for all power sources
  • Wet-chemical fire extinguishing system

NFPA 96 is from the National Fire Prevention Association, which aims to prevent fires in restaurants. It outlines safety guidelines for kitchens, including how much distance should be between exhaust hoods and cooking surfaces, the angle of hoods, and what kind of exhaust filters you should have.

Invest in a POS system

A Point of Sale (POS) system will keep a record of what exactly is going in and out of your restaurant. This system will help you track voids, walk-outs, compensations, claimed tips, and more to ensure nothing is missing. Run daily reports on how your restaurant performs, which employees are late, or what your daily sales are. A POS system is a layer of support in protecting yourself from theft, which can also be accomplished through various insurance policies that we’ll go through below.

Install a security camera

If theft is a concern of yours, install a camera on top of having the correct policies in place. This is an additional layer of protection if you feel customers or employees are stealing from you.

Take control of your inventory

Make sure you control how your inventory is tracked and who has access to it. Inventory should be kept in a controlled place and audited regularly. Regular audits will help you identify if inventory is missing or if you’re buying too much, leading to additional unnecessary costs.

Create a safe working environment for your employees

It’s essential to have safety procedures in place, so your employees know exactly what to do in unsafe situations — what happens if glass breaks in your kitchen? What’s the clean-up procedure for spills? Should your employees be mandated to have non-slip shoes? These are the types of questions your safety policies should answer. Make operation safety procedures a part of ongoing training for both new and current employees to ensure they’re up to date on all safety standards and hang them in the kitchen and employee common areas, so they’re always accessible.

Train your employees on how to serve alcohol properly

Alcohol server training is critical if your restaurant sells alcohol. The goal of alcohol training is to educate your employees about local and state laws and ensure your employees know how to handle and serve alcohol legally. Most restaurants in the United States require a license or certification before your restaurant can legally serve alcohol, so make sure you check in with your state to see what requirements you need. Here’s what to consider when building on an alcohol training program:

  • Does your state legally require alcohol training for employees?
  • How old are your employees? In most states, employees under 18 cannot serve alcohol.
  • How should your employees go about checking IDs for customers?
  • How should employees handle a customer who seems overly intoxicated?  

Find the right insurance to protect you

As a restaurant owner, several insurance coverages can protect you in the event of food contamination, your equipment breaking down, and more. Some of the most popular types of insurance coverages include:

  • Property Insurance: Property insurance is essential for a restaurant since it’s a physical space. This type of insurance policy will cover your business in the event of a fire, theft, and more, and will help protect you financially in an emergency.
  • Food Spoilage Coverage: This type of insurance can protect you in the event of a power outage that affects your food supply.
  • Business Income: Business income insurance, also called business interruption insurance, covers lost income when you have to stop business at your restaurant suddenly. This could be due to a fire, a theft, or another emergency that would cause you to shut your restaurant’s doors temporarily. This type of insurance helps you while you repair damages by helping to pay your lost income.
  • Employee Dishonesty: This type of coverage will protect you from fraud and embezzlement by current or former employees.
  • Worker’s Compensation: This type of insurance coverage is mandatory for all businesses and is especially important in the restaurant industry. If an employee gets hurt — they burn themselves on a grill, they cut themselves and need stitches, etc. — this type of insurance will not only protect them, but it will protect you from potential lawsuits.

When in doubt--reach out to your local independent insurance agent. They can help you navigate different coverages an choose the best one for your restaurant. If you don't know where to look for an agent, reach out to Rainbow! We're happy to connect you with a Rainbow agent in your neck of the woods.

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