Skimming and Scamming the Night Away
By Jane Mundy

Restaurant rip-offs are rampant, and I don’t mean your amateur dine and dash. Not only are employees stealing from owners; customers are getting ripped off by servers and customers are scamming restaurants. Then there are owners ripping off customers, their own staff and the government (many restaurant employees have come to work only to find the doors padlocked, the owner steaming and swearing on the sidewalk after getting busted for not paying sales taxes).
 
In Kitchen Confidential, Anthony Bourdain’s bestseller about the “sordid” restaurant business, Ecuadorian busboys have homes filled with Riedel glassware and linen napkins. No matter if it’s New York or Vancouver, “In most servers’ houses, you will find beautiful crystal glasses and silver coffee sets,” says Andrew Morrison, a waiter for 17 years.

John Kinninmont provides financial services to restaurants and hotels but increasingly the bulk of his work — 80 percent — focuses on fraud. He has reviewed 1,500 Point of Sale (POS) transactions from computer terminals in the past eight years for approximately 300 restaurants and hotels to discover whether or not fraud is taking place. Business is booming, mainly thanks to unscrupulous and devious restaurant employees providing their employers with an “almost unlimited demand” for Kinninmont’s services. And almost all owners who hire the Vancouver-based fraud investigator call his company back for regular reviews.

Chances are that once Kinninmont has been called in, something is amiss, often thousands of dollars. Unfortunately, the owner hasn’t usually clued in to the situation until months after sales costs have skyrocketed. First to blame when the cost of sales rises is the chef, last to suspect is faithful management. Poor managers. They don’t make as much as waiters but work longer hours, have more responsibility, and put up with more flack from the owner, employees and customers combined — sometimes for as little as $20,000 per year.

“If anything goes wrong, a server can just drop the problem on the manager’s lap and walk away  he has tables to serve. So that can grind someone down very easily,” says waiter Morrison. Combine this ongoing stress with opportunity and it’s no wonder that many rip-offs come from management.

But servers are just as guilty. Morrison says that “If you are under- appreciated and overqualified with a predictable job, theft can add an element of excitement–Just as Enron execs pad accounting, it is essentially the same but on a minimal level and occurring more frequently.”

Kinninmont agrees, but adds that few employees come into the business with the intention to steal. In fact he has only caught one “pro,” a crook from another line of business. He cites cash opportunities as the biggest reason to steal, along with poor tips and — a major incentive — the soaring cost of living. Most wait- staff are young, have just left home and are out partying every night. “They don’t save and can’t pay the rent, so they start to ‘borrow’ from petty cash or the daily float and replace it a few days later,” he says. “Then they find out that nobody says anything, so they borrow a few more times and then don’t return it.” Ah, the downward spiral.

Kinninmont believes that fraud and theft are on the rise for several other reasons. “There are more restaurants and servers, more need for money and Vancouver is an expensive place to live. Combine those reasons with more staff flow, which means less loyalty. And many servers work two jobs so getting caught is no big deal, they just jump from one place to another.”

Before POS systems became the norm, it was open season for scammers. The first cash register rang a little bell with each transaction, alerting the owner that a sale had taken place. Bills were written manually or weren’t rung in at all, and customers generally paid by cash.

But isn’t it harder to steal with POS systems, which track sales on a computer?  Theoretically, yes. Unless the food or drink item appears on the computer screen, it cannot be made kitchen staff, but if the bartender is in cahoots with the cook, the kitchen can turn into a vending machine.

Dave Halstead, Sales Director at Squirrel Systems (providers of POS systems to the foodservice industry), has approximately 1,200 customers in B.C. alone, but no matter how sophisticated a computer system is, “There’s always a human element and there’s nothing to stop a bartender holding hands with the waitress,” says Halstead. Collusion always beats the system.

Halstead agrees that management fraud is the biggest problem especially when an establishment has an absentee owner. “The manager can go into the system and change data, and an elaborate scheme can amount to thousands of dollars,” he says.  And servers are constantly trying to beat the system, especially if management is not checking reports, but it can always be traced. “We laugh about how long [scams] go on for,” says Halstead. At one establishment, “the bar printer hadn’t worked for two years, so the servers were calling drinks to the bar and pocketing the cash.” Halstead suggests that having a manager who is sleeping on the job is just as dangerous as not having a working POS system.

Halstead remembers a time when POS installers would walk into a restaurant to install the equipment as the waiters walked out the back door for the last time — they knew the jig was up. “One guy in northern B.C. paid a fortune to put in a POS system and the staff all threatened to leave so he sent it back,” recalls Halstead. Not only did the restaurant owner forfeit the deposit and training, “To this day he is living with the same problem…. When your staff is driving better cars than the owner, you have to wonder,” he says. Halstead wished the owner good luck and advised him to keep his business card, as he might need it later.

The vast majority of rip-offs in restaurants now involves the copying of credit cards. Geoffrey Howes, past president of the BC Restaurant Association, can’t understand why we have been so slow to accept hand-held authorization terminals.

“In Europe, the credit card never leaves the customer’s side,”he says. “You swipe it in front of the customer. Most rip-offs come from scanners — about the size of a matchbox.” A thief will pay a waiter, usually in a marginal kind of place, for $20 per swipe. He takes the credit card from the waiter and then gives it back, to return to the customer. It only takes a few seconds for the customer to have his identity stolen in this fashion. The identity thief downloads the information from the credit card to Asia, for example, and encode another credit card under that customer’s name. The restaurant is the only place where your credit card can leave your site.

Credit cards are generally not welcome to the server on this side of the pond.
“Credit cards are a drag –you have to wait for the restaurant’s accountants to pay you back in cash what you made in tips,” Morrison says, and payment can often take weeks. So waiters have more incentive to steal. Still, he believes that you either have a criminal mind or you don’t.

 

THE SPOTTER
Kinninmont is also hired as a “spotter.” Let’s say Joe’s bar sales are down and Joe suspects the bartender. He hires a spotter.  Kinninmont strolls in, orders a beer and pays cash. The bartender doesn’t ring the order in. Next day, Kinninmont comes in acting tipsy and orders a double Grey Goose vodka martini from same bartender. This one’s a double whammy: Not only is he short-poured (he doesn’t get a full ounce) the Grey Goose is low-end vodka. Busted twice and guilty as charged.

Neil Wyles, owner of Hamilton Street Grill, has called in spotters twice. “Two times each, and I paid $200 [for each visit.] Both times the employee in question was caught red-handed and it was the bartender in both cases with cash in their pockets. The spotter sits down, orders two beers, and it’s not rung in.”

It’s Sunday night and I join Kinninmont in action at a chain restaurant in Yaletown. I’m feeling quite furtive but am soon disappointed; it’s not at all “cloak and dagger.” We don’t even have to watch the bartenders. Instead, Kinninmont turns his back to the bar and orders two gin and tonics. The server delivers them to our table along with the bill, and Kinninmont pays cash with a few dollars’ tip. We have two more rounds, don’t get the last bill and leave cash on the table. Next day, Kinninmont reports to the owner that we had six gin and tonics and paid $15 per round. Bingo.  Nothing has shown up on the daily report.

But wait, it gets worse. That same night, two more “shoppers” from Kinninmont’s company went “shopping” just as we did, at other bars. All three places “failed,” as Kinninmont politely calls it. Next day, three people were fired.

 

THE SCAM SCALE

#1 The Personal Pantry or Loading up the Larder

I have firsthand experience with employee theft. It doesn’t matter how much they make — caterers in Reel Appetites, my film catering company, were making up to $2,000 a week — if the opportunity presents itself, it is nothing short of amazing how many people will take advantage of you and their job. They feel a sense of entitlement. I was taken for a chump. Even worse than that, I’m the one with the big ‘M’ for mark” on my forehead because when the Reel Appetites scam occurred, I’d already had experience at catching a thief who nevertheless got away.

Many years ago I managed Woodlands restaurant at the foot of Robson Street. It was a small eatery and business was slow; consequently, we didn’t have a large inventory. I suspected something was fishy when the two Art Deco paintings I had brought from home to liven up the place disappeared overnight. Other, smaller-ticket items — a case of dried mushrooms here, a block of mozzarella there — mysteriously vanished. So I decided to play Sherlock.

One night I left the restaurant early, leaving it in the capable hands of my assistant manager. It was around 11 p.m. and there was snow on the ground; I stinctly remember this because I slunk under the driver’s wheel for several hours, shivering with cold. Eventually the assistant manager skulked out the back door, carrying a large container. I waited until he started to walk down the alley, jumped out of my car and confronted him. (He wasn’t the intimidating type).  He had a five kg. container of pine nuts, worth about $150 on the street –assuming he was trading for crack– or $50 cash to another restaurant. (I found out later, through a snitch, that he was selling food on a regular basis to an establishment in the same block.) So what happened? Nothing. He yelled something like “Shove this f***ing job,” and I never saw him again.

Fast forward five years and I now own a large film catering company, but I’m still a sucker. I was raking in the dough with seven catering trucks, but my profit margin was miniscule. Food cost was 60 percent (it should be under 40 percent in a catering company, ideally under 25 percent in a restaurant). My first clue came in the form of a phone call by a loyal (and she may have been the only one) employee. M. told me that she had just found several sides of smoked salmon, a case of frozen pesto and a whole slab of prosciutto in her freezer at home.In addition, she had also discovered a few Martha Sturdy platters and silverware that she had recognized as mine. Sid, my former receptionist and M’s former roommate, knows who was responsible for that heist. Of course Sid denied everything. I fired him anyway.

My most brazen chef was Q. (He is still working in the film industry: caveat emptor). Q. invited a friend of mine to a barbecue at his place. Neatly stacked by his garage wall were empty produce boxes from Yen Brothers, my food supplier. On top of one of the boxes was an invoice for steaks and sundries that all his friends were enjoying, billed to Reel Appetites. Double whammy to my company.

Greg Hayes at Café Brio remembers an incident years ago when he was co-owner of Herald Street Café in Victoria. He was close to his loyal dishwashers, a husband and wife team who had been with him for years; he had even attended a family wedding. “A guy on my cleaning crew came in early one morning and saw them carting out garbage bags but placing them by the dumpster, not inside,” says Hayes. When the dishwashers went back inside, the cleaner found plates, cutlery and loads of fresh food in the garbage bags. He left the bags there and phoned Hayes later that day.

“We were floored,” Hayes recalls, “so we set up a sting. One night after work, two of my staff parked the car a block away from the dishwashers’ truck and watched the back door. Sure enough, at 6 a.m. they staggered down the alleyway with garbage bags so full they couldn’t see over the top of them. They put them gently in the back of their truck.”

So what happened? Not much. Hayes’s staff was too afraid to confront the thieves and they didn’t call the cops, although in hindsight, Hayes says that “I should’ve called the cops right then and there.” When Hayes brought the matter up the next day, the couple denied everything. He fired them nevertheless. Six months after their departure, he got a call from another restaurateur who suspected that the pair were stealing. “I felt guilty about that. We should’ve turned them in,” says Hayes.

#2 Bartender scams

Cash transactions over the bar are often referred to as “over the wood.” Short pulls on liquor taps, adding unpoured drinks to the bill to bump up tips, especially when you have a large party of 20 or 30, are all in a day’s duties for the less ethical bartender.Kinninmont knows of one eatery where the general manager instructed the entire bar staff to short pour (pouring less booze in drinks).

“Staff members would often bring in their own booze,” says Neil Wyles, owner of Hamilton Street Grill. He also remembers one of restaurateur Umberto Menghi’s managers scamming both Menghi and the liquor store. ” Manager R. would refill expensive bottles with cheap wine. He would take it back to the liquor store complaining that the wine was corked. The liquor store would replace the expensive wine at no charge and R. added the wine to his expansive home collection. He eventually got caught but the reason he got fired was because he was stealing Umberto’s cheap booze to refill those bottles,” recalls Wyles.

If the restaurant is tracking how much alcohol a bartender pours, i.e. 
It has a system where every ounce sold is accounted for, the usual scam is ringing in a double for two singles– it’s cheaper than two singles. A bartender can make cash on a few rounds by turning singles into doubles.

Most everyone in the restaurant industry knows about the former maitre d’ from (now defunct) 900 West. He would take bottles of wine back to the liquor store and get cash back, pocketing the dough. It was hardly small change, considering that a case of wine can easily cost $400. Apparently this was went on for sometime before he was nabbed.

 

#3 The recycled bill scam
A customer orders something popular, such as asalad and pasta combination.The server makes a copy of the bill and when the customer pays, she pockets the bill and the money. The next customer to order salad and pasta is presented with the previous customer’s bill, ad infinitum.

“I’ve seen double checking but some resourceful waiters can do quadruples,” says Morrison. “But you have to work in a place without a computerized POS system, and it’s best to work in a casual restaurant.” He explains that this scam is “old school.”
If the bill goes into the kitchen to alert the cooks to the order, the scam may get complicated and kitchen staff may need a piece of the action. It works best with buffets because everyone is ordering the same thing: a table orders two buffet lunches and two coffees, they pay cash and leave. Next table of four comes in, they order four buffet lunches, two coffees and two glasses of wine. The waiter serves the coffee drinkers the same bill as the previous table. They pay and leave. The waiter keeps their cash plus tips and just rings in two buffets with wine. In other words, the table of two replaces a table of two. Kinninmont caught one server who had “earned” $32,00 by reprinting buffet bills.

#3a Recycling the credit card

Neil Wyles caught a waiter doing this scam five years ago. He did it about six times and got away with about $300. Wyles says the rip-off went like this. “I have a cash table of $50 and I have Joe’s credit card number in my pocket. He was drunk last time he dined here. I take Joe’s credit card number and use it to ring in current customers. Then I pocket the cash from the current customer,” he explains. This is easy as long as you don’t have to swipe the credit card. “the waiter can punch the card number manually into the computer when the magnetic card is shot, but I [owner or manager] can tell which ones are swiped manually.”  So how does this kind of scam artist get away with it? It takes a long time for the credit card company to respond to a customer’s complaints and the customer has to discover the theft and report it both to the restaurant and the credit card company. “It’s usually not worth it and generally gets eaten by the restaurant,” says Wyles. Not to mention the credit card company. Or the customer.

 

#4 Padding the bill

Michael Mitton, owner of Lucy Mae Brown and Crime Lab, caught a waiter adding charges to the customers’ bills. “Two people come in and their bill is low, say $40, and they pay cash. The table of 10 beside them is drinking heavily, their bill is high. Waiter receives cash from the couple and transfers it to the table of 10, and pockets the $40.”  

The table of 10 isn’t scrutinizing the bill, especially when one person is picking up the entire tab. “In one restaurant where I worked, the same scam went on but more elaborate,” says Mitton. “The waiter had tables in the lounge. Table 10 is a large party, so he does a ‘cash and carry’ for the lounge tables–billed the lounge drinks to table 10 and pocketed all the lounge bills.”

And another thing, says Mitton. “If a bill is at $598, you want it to be over $600 so there will be a mental addition in customers’ heads to get a better tip. So you add a few extra coffees and cocktails to make a big fat number. Most waiters will look at a bill and if it is $199, they go ‘damn’ and need to push above the number.”

Morrison remembers yet another clever, if illegal, money-making scheme. “I worked at Overtime Restaurant in Victoria in the early ’90s and it was a manual system. We had a computer but all the cheques were manual: we had a double-checking system and verbal cheques. Waiter quotes the customer an arbitrary amount, say $57.28. Customer gives you $70, waiter tears up the cheque because it was never entered into the computer and waiter makes $70 on one table. One waiter bragged to me that he made several hundred dollars in one night … He is now working somewhere in Europe.”

 #5 Petty (Pesky) Cash and Employee Credit Cards

Unfortunately for me at Reel Appetites, Sid wasn’t the only one with both hands in the cookie jar. Pam (real name) thought she would never get caught with her gas credit card scam.

First, I have to explain something about the film catering company. There are usually two caterers per production or show; the chef drives the catering truck and the sous-chef drives the van to film locations. I gave every chef a Petro-Canada credit card that was used for propane and gas and they all used it almost on a daily basis, especially Pam. I received the statement totals and billed them to the film production company. At one point, I realized that Pam’s transactions occurred when she wasn’t even working. And they were for large amounts, $50, sometimes more. So I got detailed statements from Petro-Canada and there were enough cigarette cartons to open a bustling corner store. When confronted, Pam denied everything, of course, and blamed it on her no-good son–he must have taken her card. Every day.

 

#6 Entertainment card scam and promotional items

 Neil Wyles says that at one point, “People at the entertainment book company changed their card format. They used to have a something like a credit card with raised numbers and one year they came out with a completely flat card so it couldn’t be rung through a machine. Staff don’t have a way of duplicating the card so it just has to be taken on faith. So when I left for the day, the manager would do a few extra entertainment card discounts a night on cash tables, because there was no physical proof that the card wasn’t in the building. Obviously there was an uproar and now entertainment cards have raised numbers. My manager was taking off about $40 per day, just on cash tables. I fired five people over that one, all at once. We ring in about 3,500 cards a year.”

Gift certificates can be extra-generous for some dishonest customers. According to Mikel Kanter, some crafty patrons will write in their own amounts, changing $50 to $150 by simply writing “one hundred and.” Sometimes they caught forgetting to change the numerals…

Coupons
“Two for One” coupons can translate to easy money for certain servers. All the waiter has to do is purchase a few dozen newspapers and clip the coupons. Customers order two meals and pay for two meals but the waiter rings in one meal and attaches a coupon to every bill, slipping the money for the second meal into his own billfold.

#7 The travelling customer

If a server is attentive and asks the right questions, he may soon find out that his customer is travelling on business and is on the road for a few weeks or more.  The customer leaves a $10 tip on a $50 bill and the server changes the numeral one to the numeral four. He now has a $40 tip. The chance of this customer returning is zero. On top of that, nowadays in many restaurants you don’t get a chit back unless you ask. So back home, the customer just sees the statement and after figuring out the exchange rate, etc., it’s too bothersome to do anything about it. It’s easier just to pay.

#8 Recycling the Bill

Halstead’s favourite rip-off story occurred during Expo, and is ideally suited to buffets.”The server starts her shift on the POS system by creating a check for two people, four people, and six people and saves the tickets, and keeps using the same bills all day long.”  Not everyone is going to drink the same thing or pay cash, but the deception can still net a tidy profit, including tips.

#9 The First Nations tax 

If you have a First Nations identity card, you are tax exempt. “The waiter would be presented with a card from a First Nations customer and keep that number, so he would use it again and again. A table of 10 has a bill for $700; waiter writes this number on the bill and pockets the seven percent GST and ten percent PST,” says Michael Mitton.

#10 Void and Delete

A manager with the power to void and delete has the potential to unwittingly help servers (or herself) bring home big, tax-free bucks. The customer orders a half-litre of wine, then orders another. The waiter asks the manager to void the order and add one bottle instead–a better deal for the customer. But the bottle doesn’t get rung in, and the servers absorbs the difference into her bank account.

“There’s always the line about the wine lost in the ice bucket,” says Kanter, where a supposedly spilled bottle of wine is rung in as a void.

And then there’s the one-cent special. The manager programs a special in for one cent (order one steak and lobster, have another for one cent) and invites all his friends over to the restaurant for dinner, ringing in one cent per friend.

 

Employees scamming owners

When Michael Mitton owned Allegro restaurant, someone phoned from the Holiday Inn around the corner asking to borrow a box of prawns. “We lent their cook the prawns, the hotel sent us business so it was the reciprocation factor, but we never saw cook again,” he said. And The Holiday Inn never got the prawns.

“This girl I knew worked at a place where the owner/chef was terrible. One day she was two minutes late and he said she wasn’t allowed to keep her tips that night. She decided to quit that same night. When customers ordered, she didn’t give him the order. Eventually customers started to ask where the food was. ‘The owner is the cook and he has a drinking problem, I’m afraid to go back and bother him,’ she said. Then she arranged to have her boyfriend pick her up, just when the order of take-out for 20 was ready. She gave the order to her boyfriend and told the owner she was leaving now. He asked where all the orders were. ‘Oh yeah, they ordered these hours ago,’ she said. Shortly after this, her apartment was broken into three times,” says Mitton.

“They do all sorts of things,” says Michael Kanter. A waiter orders something that sounds close to something else, claims an innocent mistake. The customer can’t eat it so the waiter has another steak dinner.”

Customers scamming owners

Kanter elaborates on a current scheme practiced by some tourists from Washington State. It may not be intentional — they could be afraid of identity theft.  “You have six people on a table with three credit cards. We swipe the cards, the bill goes back to the table for the customer to add the tip and sign. So now we have a piece of paper and we have to match the credit card numbers to the sales. But the customer blanks out the reference card number on the bill. The waiter needs to feed this number into the system to get the tip.”

”Some customers are either dumb or drunk and leave both the tip and the total lines on their credit card blank, sign on the dotted line, and leave both copies of their receipt behind. The waiter almost deserves to make a 50 percent tip,” says Kanter. Meaning that the waiter can add anything to the tip line and then total.

Kanter knows a few more sneaky tricks by customers. Some have defiled their credit cards by subtly pounding down one number so that a ‘four’ turns into a ‘one’. Even celebrities cheat simply by saying they were never at the restaurant that their credit card statement says they visitedAnd say a guy is trying to impress his date. He pays the $100 bill and adds a generous tip, such as $25, making sure she sees it. But he totals the bill to $105.

And one more from Kanter:” A customer complains that his wife had a mink coat and now it’s gone. What’s the restaurant going to do about it? But there she is on camera, coming into the restaurant without a coat. Oops, she must have left it in the car.  Okay, the last one: “Old people play at dementia. You get six old timers with three cards. They eat and drink and leave with all the paperwork —no signature, no tip. All the restaurant can bill them for is whatever they ordered. It’s illegal to insist that they add (or we add) a tip.”

 

CONCLUSION …
Next time you dine out, smile at your servers, and try not to stare at them too hard, but do scrutinize your bill and tip well.

 

SIDEBARS

BE NICE TO YOUR SERVER

Never try to scam a waiter. Visit www.waiters-revenge.com and you’ll think twice before complaining that your steak isn’t rare enough. After reading some of the revenge stories on this site, you may want to tip 15 percent even when the service isn’t that good.

Longtime server Andrew Morrison explains that waiters are subject to the ebb and flow of customers’ generosity on a daily basis, so there is a Robin Hood mentality with some. Stories abound how a waiter will “take down a nasty customer,” he says. “If you are a career bad tipper, the waiter will pad your bill, and there are various ways to do this, such as ordering top shelf vodka but getting a “rail” — a shot of the cheap stuff.” (See below for bartender scams.)

TIMING
The best time for servers to scam is when they are “in the weeds,” or “in the shit”  —in other words, extremely busy. Morrison describes how reservations work in a busy restaurant by quoting Carl von Clausewitz, a prominent 19th century Prussian military strategist:  “No battle plan survives first contact with the enemy.” 
Reservations are booked with a plan: the party of five goes to table 26, the “deuce” (pair) is seated at table seven, etc. and the restaurant staff develops a battle plan as to how to attack the evening. But the party of five may not want to sit at table 26 so after about an hour, the battle plan goes out the window and it’s every man for himself.
 
The “zone” is the opposite of the weeds — like the eye of the hurricane. It’s where everything can run smoothly and a server can be cruising blissfully for 15 minutes or all night. You don’t steal at this time because someone else might also be in the zone and is watching you. “When you are in the weeds, this is the most opportune time to steal,” says Morrison. “When the restaurant is busy, every night from 7 p.m. to 9 p.m., it’s gonna be a cluster fuck and this presents a perfect opportunity to steal.”

 

Customer Pranks
Karri Scheurman, co-owner of Chambar restaurant, is on the look-out for customer tricks.”With the never-ending wait for our new billfolds to arrive, we have tried to be creative in presenting our bills by using little silver dishes to present the bill, with a rock on top.  Within two weeks all the rocks were gone. I had used the same rocks to cover the dirt on plants, which we started stealing to use with bills. Again they continued to disappear. 

”Turns out customers thought they were somehow special, spiritual, or just nice to touch. I dare not ask what they do with them, but they are available at Figaro’s Garden for $5 a bag.”

Chambar has also stopped putting out patio furniture until summer because the local street people took a fancy to it. “Hope they are enjoying their designer Italian patio chairs,” says Scheurman. “While setting up the restaurant we had chairs in the hallway ready to be arranged. Someone in the building took a liking to 6 of our chairs. At least they have good taste.”

Cate Simpson,Culinary & Hospitality Marketing, Public Relations & Special Events,says a major theft might be uncovered by asking everyone under the age of 35 how big their set of Earls cutlery is. Or maybe their flock of paper maché penguins. My friends (I of course could not admit being involved in the midnight raid) stole a massive parrot off the side of an Earls Restaurant that took up half of our apartment. The Fullers will know which location.”