Snoops for Hire

- Undercover Investigators Working for Licensees

From Licence Line Magazine

Licensees testifying in their own defense at Board hearings some times say that they had no idea of the problems in their establishments. They thought they had hired good staff, and they trusted their servers and managers to perform honestly and professionally. Unfortunately, sometimes that trust is misplaced. And whether an employee is intentionally dishonest or simply ignorant of the law, it is the licensee whose business is jeopardized.

For example, a restaurant in Thunder Bay recently had its license suspended because a waitress allowed a customer to become intoxicated. The customer was the waitress's friend and was celebrating his bachelor party so normal procedures and cautions were ignored. Both the manager, who was busy all evening with a broken kitchen fan, and the owner, who had taken the night off, were unaware of what was going on.

In this particular case, the infraction was discovered by a liquor inspector making a routine spot check. Some licensees are not waiting for the authorities to find their problems. They are hiring undercover investigators to spot potential trouble before LLBO inspectors or the police find liquor infractions and lay charges.

Firms such as Sensors Quality Management of Toronto and Apex Investigations and Security of Thunder Bay specialize in helping licensees find out what's happening in their own bars and restaurants. Investigators pose as customers and carefully observe the establishment's operations. Depending on the licensee's needs, the investigators scrutinize the quality of customer service, how cash and liquor are controlled and/or whether staff are obeying all liquor laws.

David Lipton, president of Sensors Quality Management says that his company is hired by two types of operations. LLBO Inspector Andrew Romu says that when he reports liquor infractions to a licensee who is unaware that laws are being broken, the smart operator begins to wonder that else is going on in the establishment. "While liquor inspectors specifically look for infractions of the Liquor Licence Act, private investigators can be useful in helping licensees discover other types of problems," says Romu.

He recalls a recent case where the licensee called Apex after the LLBO issued a warning regarding service to intoxicated and underaged patrons. Ron Bourret, director of investigations with Apex, reports, "The licensee brought us in to follow up on the LLBO's findings. Our undercover staff investigated and found that the problems were actually far worse than originally suspected." In addition to the liquor infractions found by the LLBO, Apex discovered staff involved in the theft of cash and liquor. On a busy night, it's easy for a bartender to partake of a little 'profit-sharing' by charging a customer $4 for a $3.50 drink and pocketing the difference," he says.

By seating themselves near the bar over the course of several evenings, investigators are able to determine whether servers are failing to ring in drinks, dipping into the communal tip jar, or "sweet hearting" (whereby servers offer drinks at discount prices to their regular customers, thereby guarantying themselves a larger tip). Investigators also note whether bartenders give away free liquor, drink on the job, or freepour drinks rather than measuring (and if so, whether they are over or under pouring).

These types of activities have both financial and legal implications for licensees. According to Lipton, a small operator can easily lose $25 to $50 an evening due to freepouring alone. Intentional fraud and theft can destroy what would otherwise be a profitable operation. Legally, licensee holders are responsible for the actions of their staff, even if they are unaware of the illegal activity. Price discounting and free drinks often result in intoxicated patrons - and disciplinary action by the LLBO.

Licensees can't depend entirely on their managers to recognize a problem, both Bourret and Lipton caution. "It's physically impossible for a manager to be everywhere at once," says Bourret. Besides, says Lipton, "staff act differently when the boss is around." Even if managers do spot illegal or improper activity, they may hesitate to report it. "Bars and restaurants are such social environments," explains Bourret. "Managers frequently befriend the staff and don't want to take action when something is wrong because they don't want to be the bad guy."

Apex investigator Bob Prouse says licensees should make a commitment to training servers and front-line manager and giving positive reinforcement when they do the job right. "Employees will do what is the accepted practice at the worksite," says Prouse. "If you just post a policy on the bulletin board without any training or follow-up, those rules will quickly fall by the wayside." He recommends training all staff with the new Smart Serve program and developing a set of house policies that all employees must read and sign. "If there's a problem, let's not just get rid of staff," Prouse advises, "let's train them."

Most investigations firms include a written report as part of their service. A report from Sensors Quality Management includes the details of the investigation but does not make specific recommendations to the licensee. "We don't tell people how to run their business," says Lipton. "We just tell them whether their business is being run according to their own standards. Then it's up to the operations to discuss the report with their staff and take appropriate measures." Many firms also offer a consultation service, advising licensees how to fix the problems the investigators discovered.

Both Sensors and Apex emphasize the importance of following up on the initial investigation. Lipton suggests quarterly reviews, although his experience has shown that most establishments improve considerably after licensees review the initial report with their employees. "It's kind of scary what goes on in some establishments," he says, "but things can get turned around very quickly after even just one report. For some establishments, it's meant the difference between staying open or getting closed down."

Lipton adds that he sees undercover services as benefiting everyone in the hospitality industry. "We can help licensees save money that might be going into someone else's pocket; licensees are motivated to train their servers; and maybe, somewhere, we help keep a drunk driver off the road," he says. "I really think we help make the community safer."

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