STORES Magazine - February 2008 - (Page 42) NUTS AND BOLTS / LOSS PREVENTION Working in Concert Outsourcing compliance auditing means fewer roadies for Hard Rock BY LAURI GIESEN uditing for compliance related to the management of cash, merchandise and employees is not an easy task for any retailer. But it is even harder if a business is both a restaurant and a retail operation. A That is the situation at Hard Rock Café, which derives one-third of its sales from the retail operations that sell Tshirts and other memorabilia. “We’re unique in that we are both a restaurant and a retail operation,” says Dave DiPerna, Hard Rock director of accounting. “Our restaurant managers are used to running a food and beverage operation, but most have little retail experience.” That issue becomes even more complicated when it comes to auditing and compliance control. “Restaurant managers focus on issues like sanitation and food spoilage,” DiPerna says. “They’re not familiar with all the issues associat- improvement in compliance and control RETAIL: “because we had ob• Personnel compliance • Quality of guest services jective third parties • Cash management policies ed with shrinkage, auditing each opera• Physical security compliance which is a big issue tion,” DiPerna says. • Inventory control for a retail operaOne of the most imtion.” pressive improveRESTAURANT: Further complicatments was seen in • Food handling/sanitation ing matters is the fact merchandise shrinkcompliance that Hard Rock opage. “It wasn’t that erates 47 locations across North Amerwe had a big problem before, but havica: It is expensive and time-consuming ing an outsider with experience in this field examine our operations allowed us to have auditors flying all over the counto see a significant reduction,” DiPerna try to keep tabs on its operations. says. Several years ago, Hard Rock decided Among the things LP Innovations is to outsource the auditing function to LP Innovations, a Milford, Mass.-based examining at the retail operations are company. personnel compliance, quality of guest In addition to conducting audits, LP services, cash management policies, Innovations would provide investigative physical security compliance and invenservices and provide a business abuse tory control. The restaurant operations line that allowed are examined for compliance with food handling and sanitation policies. employees to reThe first year working with LP Innoport suspected cases of fraud or vations “was a real learning experipersonnel violaence,” DiPerna says. “They were able to tions. find problem areas that we had not idenHard Rock’s initified before. The level of compliance to tial goal was to reour rules has improved dramatically duce the costs assosince we brought in outside auditors.” ciated with auditLP Innovations conducts twice-yearly, related travel. two-day audits of Hard Rock’s North Because LP InnovaAmerica operations. Audits must be at tions had experileast four months apart, and operations enced auditors lomanagement is not given advance notice cated close to most as to when they will occur, though Hard restaurants, Hard Rock provides a list of blackout dates Rock achieved that that includes holidays and days when goal. It also saw an operations management is on vacation. WWW.STORES.ORG AUDIT MENU ITEMS 42 STORES / FEBRUARY 2008 http://WWW.STORES.ORG
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