What is Loss Prevention in Hospitality and how can smart business security help to protect your profits against shrinkage?
The hospitality sector has been one of the hardest hit in this pandemic. For small bar, restaurant, and coffee shop owners, in particular, every penny counts more than ever before. Managing overheads, and preventing loss have never been so important.
In this post we'll cover:
- How can I identify shrinkage?
- How can Video Surveillance help in Loss Prevention?
- Is there a quick and easy solution for Restaurant Security?
- How can I improve productivity in my Hospitality Business?
Firstly, what are we talking about when we refer to Loss Prevention in Hospitality? Collins defines it as, "... any actions taken to reduce the amount of theft, breakage, or wastage in a business." Those activities that can negatively impact your business are categorised as 'Shrinkage'.
How Can I Identify Shrinkage?
Although there has been an accelerated move to cashless payments, the hospitality sector traditionally handles large amounts of cash on a daily basis. Most businesses have a clear understanding of the need to safeguard cash and will have measures in place. However, what’s less appreciated is that stock is just important to your business and highly susceptible to shrinkage; quite possibly more so than cash.
Research suggests that up to 75% of shrinkage is due to insider theft. A member of staff having an unauthorised drink at your expense is unlikely to be seen as theft, whereas if they were taking the equivalent in cash out of the till that may be viewed in a very different light; but both actions result in a direct loss to you, the business owner.
Knowledge is power, the saying goes, so the first step is to identify what the losses are and where they are coming from. Periodic stocktaking will provide you with this information and help you to decide what steps to take next. Addressing the issue with staff is the starting point, explaining the impact this has on the business and also reminding them of the rules in place for what they can and cannot do/consume.
If this doesn’t improve the shrinkage rate to a point that you find acceptable you need to consider other options, including methods to help you identify the culprit(s). Many larger hospitality premises employ integrated EPoS and CCTV systems which can be used to identify fraudulent till activities, but this comes at a price that smaller business owners can’t always afford. It also only covers the tills so if the shrinkage is happening elsewhere you are none the wiser.
Can Video Surveillance Help in Loss Prevention?
Whilst a fully integrated EPoS and CCTV solution may not be within everyone’s budget, a basic video surveillance system certainly can be.
Although originally very expensive (back in the '70s), CCTV systems have come down dramatically in price whilst transforming with new technology, and now good quality video surveillance systems are available that even the smallest new coffee shop can afford. Our latest STANLEY Interactive solution provides a professional-grade video surveillance system from as little as £35 per month, with a one-off installation cost of just £299.
CCTV is a proven crime deterrent and is highly effective in providing vital evidence. According to latest crime statistics, video surveillance is useful in about 65% of crimes where footage was available.
The Met Police recommends restaurants install CCTV as a crime prevention measure and that cameras are situated to cover all exits. Depending on what your stocktake has revealed you might also want to position a camera on a bar area or even a stockroom. STANLEY Interactive comes with two cameras as standard which is normally sufficient for small hospitality premises, but further cameras can be easily added to the smart system.
Is There a Quick and Easy Security Solution?
One aspect that is frequently overlooked by many security providers is the ease of use of a security system.
Small business owners in the hospitality sector are typically time-poor. You work long hours – both in and out of the business premises - and perform such a wide range of roles, you can't realistically add security guard and security manager to add to that list and remain focused on all other essential areas.
A security system in this environment has to be intuitive and immediate to support your unique needs. In other words, it needs to be easy to use, right from the start, and be available at your fingertips whenever you want to access it from wherever you may be. Taking inspiration from consumer electronics, modern smart security systems are able to offer you awareness and control like never before.
STANLEY Interactive’s Video Surveillance package, for example, enables bar, restaurant, and coffee shop owners to view live and recorded footage from their premises at any time and anywhere, using a dedicated mobile app. It might not give you eyes in the back of your head but does give you eyes on your most valuable asset: your business.
Intruder Detection is also available through STANLEY Interactive to meet your business insurance requirements and alert you to an unwanted visitor outside of business hours.
How Can I Improve Productivity in My Business?
Whilst CCTV is primarily seen as a security solution, you may be shocked to discover it can also provide valuable business insights that can be used to improve productivity and support Loss Prevention.
Technology may never replace great people and good customer service in the hospitality sector (friendly and knowledgeable staff were deemed as essential by consumers as part of eating out, according to CGA Brand Track, as is a safe venue), but it can certainly help improve key areas of productivity.
June 2019’s Business Confidence Survey from CGA - a data and research consultancy specialising in the out of home food and drinks market – shows that 81% of leading pub, bar and restaurant business leaders measure productivity in some way, and 91% consider technology to be important in improving employee productivity - 54% said it was fundamental. However, the cost of such technology is frequently a barrier to adoption; all the more so with small owner-managed hospitality businesses.
STANLEY Interactive’s Video Surveillance package features cameras with data analytics at no extra cost. But what sort of data can video surveillance provide to help you prevent loss?
Data can be provided on footfall, for example, to help determine the busiest times of day to ensure optimal staffing and can even be used to track the success of a campaign. And if data analytics sounds scary, then fear not: such business insights are automatically delivered in the form of daily and weekly reports with easy to understand graphics.
COVID-19 and the subsequent restrictions have resulted in a huge loss of revenue for the hospitality sector and some may sadly not be in a position to open their doors again. Keeping a tight control on outgoings and Loss Prevention has never been so important.
A traditional stand-alone security system with a large upfront cost is not a viable option for many bar, restaurant, and coffee shop owners. A smart business security system that has multiple functions and can add value to a business beyond just security provision can help hospitality businesses by putting the spotlight on shrinkage, productivity, and potential opportunities.