Business Transformation Study
Hard Rock Cafe
While evaluating options regarding an effective and efficient cafe audit process after an organizational change, Hard Rock Cafe compared two alternatives — creating an internal audit team versus partnering with an external loss prevention firm with the required expertise and ‘fit’ with Hard Rock’s company culture and objectives.
In 2003, Hard Rock Cafe contracted with DTiQ to provide the required audit services. “The DTiQ value proposition is what first drew our attention to the organization,” said Dave DiPerna, Director of Accounting, Hard Rock Cafe. “Our analysis showed that we were able to get a professional nationwide audit service at a lower cost than if we added and managed our own audit staff. We also like the objectivity and independence that an external audit company provides.”
Compliance & Control Audits are the core services required by Hard Rock Cafe. Initially, DTiQ was contracted to perform a two-day audit at each cafe once a year. Two years later, Hard Rock increased the number of DTiQ audits to two per year for each cafe. The audit program, developed both by Hard Rock Cafe and DTiQ, includes areas that require on-site focus such as cash controls, employee information, accounts payable, food & beverage inventory, merchandise inventory, safety, security, and memorabilia verification.
“Hands down, it was less expensive for us to use DTiQ versus developing comparable internal capabilities. DTiQ has been very flexible and responsive to our needs, which is essential when working with an external partner on such an important process.”
Furthermore, Hard Rock requires that each DTiQ Regional Loss Prevention Auditor (RPLA) conducts three supervised Hard Rock audits before he or she operates on a solo basis.
“I was impressed by DTiQ’s willingness to meet our needs regarding auditor training. One of our requirements is that each auditor walk into their first solo audit already having the experience to properly execute the Hard Rock audit. Our cafe managers are very busy and do not have time to deal with inexperienced auditors, and the DTiQ auditors effectively perform our audits without disrupting cafe operations,” commented DiPerna.
DTiQ also provides their Business Abuse Line to Hard Rock Cafe. This service allows cafe managers and financial assistants to anonymously report fraud, theft, unethical behavior or suspicious activity via a 24-hour/7-day phone service. Investigations are also part of the DTiQ service set used by Hard Rock. Internal investigations are pursued based upon audit discrepancies, information collected via the Business Abuse Line or employee complaints.
“Our loss prevention requirements are very broad based on our unusual business model. We have two distinct and sizable businesses within each cafe – food service and retail merchandise. In addition to that, we have the world’s largest collection of music memorabilia with unique, valuable pieces displayed in each cafe,” remarked DiPerna.
“Our audit arrangement with DTiQ has had a significant impact on our business. We essentially have the flexibility and control of an in-house audit team without the higher overhead cost. Since implementing the audit process with DTiQ, cafe compliance with company policies has improved dramatically and as a result we are able to identify and resolve problem areas more quickly,” stated DiPerna.