Restaurant and Food Service Loss Prevention

Providing Best Practices to the Food Service Industry

Don’t let kindness “nibble away” at your food costs

Posted by LP Innovations

Jan 11, 2012 9:45:00 AM

When it comes to watching over food cost, restaurant operators keep a keen eye on inventory ordering, food preparation and waste control. These areas of the business are often monitored, measured and calculated weekly to see what their contribution is to the overall cost of food. What happens when food costs continue to rise? Could it be theft or poor operational controls? Sure it could be. But, what if it was something non-theft related and operationally allowed?

Some food service or restaurant environments allow the eating or discounting of food to employees or specific customers. Although it may be allowed, understanding how it will affect your food costs and potential profitability may have you re-think this behavior, or at the very least monitor it for an accurate cost calculation.


Grazing is defined as simply consuming products, normally smaller items, while working and not paying for said consumption.

Yes, at times it is important for a chef, cook or manager to taste ingredients to ensure freshness. It is also a good practice to allow servers to taste meals so they may be able to recommend or describe meals to customers. When we talk about grazing, we aren’t talking about this type of eating.

When we talk about grazing, we are talking about restaurant employees snacking on a crouton, grabbing a slice of bread or roll, topping off a foundation drink or even eating a small piece of meat that may have not have been too much to put on the plate. It is the casual snacking of food throughout a shift.  While conducting restaurant audits, we have even seen this behavior done by various staff in restaurants including the owners, operators and managers themselves.

Although they may be little “nibbles” if it is common practice, done by several people, things could really add up. Depending on your menu items (slice of pepperoni or deli meat, slice of cheese) it could be higher priced items being snacked on by employees on a regular basis.

Allowing this behavior is up to management an ownership, however just know that every item eaten is removed from inventory. If you do set a policy to prohibit unauthorized eating, make certain you spell out approved reasons to be eating food, and if you are management or ownership, make sure you follow that policy too!

Employee Meals

Employee meals, either free or discounted, provided during shift is a great benefit to your employees. Those that have an employee meal program, but do not have an established policy often find themselves with higher food cost ratios. Every free meal, whether it be for an employee or customer will affect your overall food cost.

Establish a policy for employee meals. Policies should consist of the following at a minimum;

  • How meals are provided (based on number of hours worked per shift, based on time of day, etc.)
  • Are certain meals allowed or restricted (one entrée v. one sandwich, any sides, specific beverages, refills, etc.)
  • How meals are prepared and distributed (should employees order meals through management and eaten in an area away from other food areas?)

It is also good management to keep an employee meal log that tracks the distribution of meals for each employee. Meals made for employees will affect your inventory and a log allows you to keep track of what items were distributed to employees in the event you need to research increasing food costs.

Comp Meals & Discounts

Outside of employees, there are occasions where a restaurant will provide complimentary or discounted meals or menu items. Comps can be distributed for various reasons, including valued customers, law enforcement personnel (often a practice to increase safety and visibility with officers eating in your establishment), or even due to a poor dining experience.

Comp meals can typically represent 3-6% of total sales. If not properly controlled or recorded, the cost of comp meals could “eat up” more than their intended value.

  • Create a policy on the approval process of comp meals and discounts. Written policies are best, communicated to the entire team and integrated into new hire training.
  • Record comp meals are part of your financial and inventory accounting procedures. Inventory as part of your food cost calculation, financial accounting in the event that you need to pay any required taxes on free meals (depending on where you are located).
  • Manage comp programs and analyze your costs of comp food items to see how it does affect your overall inventory and food cost.

The inadequate management and measurement of these areas can result in both fraudulent and inadvertent actions by both employees and customers, resulting in increased food cost. Establishing proper polices, maintaining good recordkeeping and analyzing your costs in these areas will give you a better means of reviewing food cost in the event of unexpected increases.


Interested in an article that examines employee discount abuse? Read our best practice titled,Employee Discount Abuse: Violation or Theft?”


Want to learn the Hard Truth about Restaurant Theft? Download our Free eBook


describe the image

Topics: improving food costs, policies and procedures




Follow LPI