Section 8: Common Types of Theft – Liquor Manipulation
Section Goal: Implement internal controls to eliminate employee theft caused by liquor manipulation
Liquor manipulation is the use of liquor to facilitate in theft. Liquor manipulation is especially difficult to catch. If a bartender is using liquor manipulation to steal, it can seem as if nothing strange is occurring. Liquor manipulation can come in forms such as pouring from a bartender’s own bottle, liquor substitutions, over/under pouring, and comp/spill exploitation.
A bartender engaging in this kind of theft has usually planned and practiced the manipulation system. It takes knowledge of liquor costs and inventory techniques to be able to pull of this type of theft. For example, by bringing and pouring liquor from their own, store purchased, bottles, they are essentially opening their own bar in the bar they work in. There will be no change in inventory that is detectable; revenues will just be lower. With liquor substitutions and over/under pouring, it is the slight changes in costs that the bartenders are taking advantage of. Bartenders would either use a lower cost liquor to substitute or pour less liquor in beverages, then take advantage of the excess. Over pouring is normally an attempt to gain higher gratuities.
Internal Controls to prevent liquor manipulation
- Implement a bottle for bottle exchange requisition program to reduce the risk of a bartender pouring from his/her own bottle of liquor. Require bartenders to trade in an empty bottle for a full bottle. Make sure all bottles have a special hotel stamp on them that cannot be duplicated.
- Do not allow personal belongings behind the bar. Require your bartenders to leave any purses, backpacks, and other personal belongings in the locker room or other area. This will help prevent bartenders from bringing in any items used to facilitate theft, such as their own alcohol bottles or smaller jiggers.
- Have the proper logs in place for complimentary or spilled beverages. In addition, require your bartenders to properly log and get approval (if possible) for all spilled or free beverages. With this information, you can properly account for any beverage cost discrepancies. Another method of control for this issue is to close out the necessary checks to the proper administrative accounts and have a manager sign off on the transaction.
- Keep an eye out for a method of counting. If a bartender is under pouring or pouring from their own bottle, they usually need to keep a count of how many pours they are stealing. Look out for straws or picks in abnormal positions or a beverage napkin with numbers on it or with many tears down the side.
- Employ random mystery shopping and inform your bartenders that you are doing so. A good way to present mystery shopping to your team so they do not feel their job is threatened is service improvement. There are some things that bartenders may do that can only be seen by customers and just the thought of possible mystery shoppers will help lower the chances bartenders will take to steal. Mystery shoppers are effective if every bartender is shopped a minimum of once per month.
- Require liquor to be poured first in all mixed beverage. A bartender pouring liquor last into a beverage is usually trying to manipulate the perceived strength of the beverage. They are likely to be under-pouring liquor into each beverage so that he/she can steal. For example, by pouring 50% of the standard recipe into two beverages, they are able to steal one beverage without affecting liquor cost. In this scenario, the bar will still have a low liquor cost, but will still be losing revenues due to theft. The hotel may not notice a missing ounce of alcohol but that missing ounce could easily be worth more than $8 in revenue.
Your progress so far: 1.Introduction, 2.Understanding Budgeted Cost, 3.Inventory Inaccuracies, 4.Perpetual vs. Periodic Inventory, 5.Poor Pour Practices, 6.Causes of Internal Theft, 7.Common Types of Theft, 8.Self Assessment, 9.Review and Conclusion