WHY F&B FIRMS NEED LOSS PREVENTION STRATEGIES

With Covid-19 causing disruption to the food and beverage industry worldwide, managing costs and reducing waste have become more critical than ever before. Manal Syriani underlines the importance of loss prevention strategies and the variables to consider

F&B is typically characterized by high operational costs and low profit margins compared to other sectors. This is largely due to the wide range of costs involved in running the business and maintaining consistent quality. Building an efficient loss prevention strategy is thus fundamental. Such a strategy focuses on maintaining an ideal cost percentage for the specific type of operation while also reducing the risk of manipulation or abuse by stakeholders involved in the day-to-day operations.

Cost, theft and waste are the key issues to address in managing loss in any operation.

1. Start by running an operational diagnosis to better understand vulnerable areas to address when developing a prevention strategy. These could be linked to operational limitations resulting in high costs associated with certain tasks or duties or to challenges in the physical building that might create blind spots, thus helping to facilitate fraud and abuse by team members. 2. develop internal policies and procedures with your team that reinforce double control measures in order to protect employees and the company from errors or intentional abuse.

3. Refine cash handling and auditing procedures to reduce the temptation of theft, as studies show that the majority of thefts in the industry are mainly due to opportunity.

4. Adopt cost control strategies to reduce waste:

• Implement portion control measures, which will reduce the risk of over production.

• Use a system to manage inventory and conduct periodic physical checks to identify potential variances early on. Adopt corrective measures where necessary.

• Practice yield management and abide by standard recipes developed for food and beverage items produced internally.

• Introduce management procedures for leftovers to help reduce waste. 5. Schedule periodic reports (daily, weekly and monthly) in order to obtain a 360-degree view of the restaurant’s performance (costs, sales and customer feedback).

6. Establish a smart, efficient hiring and retention policy to reduce costs related to turnover and the risks associated with abuse by team members:

• Hire trustworthy personnel to reduce the risk of fraud.

• Employ individuals with the right educational background and relevant experience to reduce the costs associated with training and hands-on shadowing.

• Develop a comprehensive succession plan and ongoing training to ensure a culture of employee engagement.

It is important to note that an increase in sales also plays a role in reducing cost ratios.