Employee Theft? Here’s my story.
In the early 90’s, my brothers and I distributed packaged ice cream (Haagen-Dazs, Ben & Jerry’s and Edy’s) to supermarkets across St. Thomas, St. John and St. Croix (US Virgin Islands).
In addition to our distribution business, we operated 2 ice cream concession stands at the airport in St. Thomas. I drove a truck and made deliveries to stores and was also the concession manager. Business was great. We had a captive audience and flight delays were the norm. People loved to eat ice cream while passing the time and we sold a ton of novelties, cups and cones.
I was 24, single and paying only $250 a month rent for a room with an ocean view. Our distribution business was struggling, but the concession stands were making a solid profit and I felt “rich”. This scenario left the door wide open to become a lazy concession manager. Why do anything different when things are going so well?
My older brother John was also enjoying his share of our lucrative little stands. But John seemed to think that we should have been making more. He would mention this and I would sort of look at him sideways and tell him he was crazy.
I would say “Come on John, my employees?……my girls go to church on Sunday and are God fearing. I treat them great and they do a great job. No way they’re stealing from me”.
John wasn’t convinced, but he left it alone for a few months. Things continued to chug along and we continued to make good money consistently. Then I started to notice that my employees were wearing nicer jewelry, getting their hair done, and in general showing signs of doing better than the $6/hr they were making (min wage was around $5 at the time). I started to wonder, but could still not believe that they would steal from me. I really tried not to think about it too much. The thought of approaching them and somehow sounding “accusatory” freaked me out. It was a lot easier to simply ignore it and keep working hard on our distribution business.
John did not leave it alone. When I took a vacation, John took over the duties of opening and closing the concessions. We had a very simple operation. Each stand had a 16 drum cabinet. We had 8 tubs on one side for scooped ice cream and the other side was all ice cream novelties, primarily Haagen-Dazs Bars. We sold everything for $2 each.
John decided that he would inventory the novelties. In the morning, he had 200 bars and at the end of the day he had 80. Simple math says we sold 120 bars. At $2 each, we should have $240 in the register for those sales. Well, there was about $260 in the register at the end of the day. But……. a quick look at how much ice cream was scooped out of the tubs told him that we sold a lot more than $20 in ice cream scoops. So…..John was 100% right. My girls were not only stealing, but stealing big.
We ended up doing a secret inventory on each employee and it turned out that they were all pocketing cash. Some a lot more than others. We eventually got rid of all of them and established ways to measure inventories at opening and closing and let each and every employee know the policy. We counted all the cups and cones and novelties twice a day, without fail. Our profits went up considerably. I was embarrassed that I didn’t see it coming, but was happy that John followed his instincts.
I’m sure most of you that are reading this story have had inventory controls in place since day one. Today, technology makes it easier to keep track and manage inventories. But for those that don’t have solid controls in place, you can only blame yourself if people take advantage of you. My dad used to always say “don’t leave money sitting out in the open. If someone steals it, you can’t blame them”.
If you have an employee theft story, please comment below and let me how you handled it. If you have good controls in place to keep employees honest, please share that too. Or, simply let me know what you think of my story.
Thanks for reading this post!
President – KeyWord Farm, LLC