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When Gifts Become Kickbacks and Lead to Problems for Restaurant Owners

It's fairly common practice for suppliers in this industry to give away "gifts" to their restaurant owner and manager customers, particularly if those folks make purchasing decisions on their products.

At the low end of the gift spectrum are things like concert and sports tickets, however, I've seen situations where chefs and managers have received items of much higher value like exotic vacations, high-end merchandise and even cash.

I recall my first seminar in New York City several years ago when a gentleman raised his hand and asked what he should do with the cash his meat vendor gives him? Well, I suppose if he's the owner, he can do what he pleases, but be aware that employees doing your purchasing can be offered these same "sweet" deals in return for their continued patronage, of course. Over time and even right away, the restaurant or owner will end up paying for these so-called "gifts" in the form of higher prices on the supplier's products.

Every restaurant should have a straightforward and well- communicated policy regarding what's appropriate and not appropriate to receive from suppliers in the form of gifts. You may think that a few free hockey tickets are no big deal but here' s Wal-Mart's policy: Wal-Mart employees cannot accept anything from a supplier, not even a free cup of coffee. If they do, and the company finds out, its grounds for immediate termination.

Another smart thing to do is rotate people out of the purchasing function occasionally. Don't have the same people control your purchasing decisions year after year. The longer they deal with the same suppliers, the warmer and cozier the relationships, and potential for abuse, can become.

If you suspect someone on your staff is receiving kickbacks, check to see if any suspected supplier's prices are excessive. Have someone outside of purchasing, like a bookkeeper, do some competitive bidding on a few of your key products with those suppliers. If you're paying premium prices, it should be fairly evident.


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Download: Restaurant Employee Handbook Template


Use this template to develop one of the most important documents in any restaurant. Put your own unique set of employee policies, procedures and practices in writing so that everyone on your staff knows the rules and what to expect.

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Download: Restaurant Employee Handbook Template


Four Views on How to Lower Your Food Cost Through Effective Vendor Relationships

Here are four viewpoints on purchasing offered by experienced and respected restaurant advisors and operators. Take this opportunity to focus on how you are managing your vendor relationships to determine if you are leaving any money on the table at a time when you can use every penny.

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Four Views on How to Lower Your Food Cost Through Effective Vendor Relationships


Webcast: How to Protect Your Restaurant From Theft & Fraud

Employee fraud - from check-forgery schemes to product going out the back door, tend to rise during tough economic times, when workers are feeling financial stress in their personal lives. Even more than many other types of small businesses, restaurants are particularly ripe for the potential of fraud and abuse. What do restaurants usually have in plentiful supplies? Answer: cash, food and alcoholic beverages that are overseen by an owner who is often naturally trusting of others and not well versed in basic business controls.

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Webcast: How to Protect Your Restaurant From Theft & Fraud


Four Things Every Restaurant Operator Should Know About Restaurant Finance


Here are four viewpoints on purchasing offered by experienced and respected restaurant advisors and operators. Take this opportunity to focus on how you are managing your vendor relationships to determine if you are leaving any money on the table at a time when you can use every penny.

Members click here to access:
Four Things Every Restaurant Operator Should Know About Restaurant Finance




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