Revised: June 2003

The Company requires that restaurant management immediately report crime-related serious injuries or deaths, crimes committed against the Company, or property damage to the Support Office and, if applicable, to local authorities in accordance with established procedures. The purpose of these procedures is to ensure that crime-related injuries are investigated on a priority basis, that cash losses are properly accounted for, and that accurate insurance claims are made in the event of a casualty loss. These policies are designed to deter crimes against the Company and its property and to establish a record of such crimes.

Following are the responsibilities of the restaurant manager in the event of crime-related serious injuries or death, crimes against the Company, or property damage. Such circumstances include, but are not limited to, fire, weather damage, acts of vandalism, theft, burglary, armed robbery, employee dishonesty, or cash register shortages exceeding $25 per occurrence.

Report to Local Authorities

The manager must immediately report crimes to the appropriate local authorities. Report cash shortages caused by employee dishonesty to local authorities only if the loss amount exceeds $100 per occurrence. In reporting thefts, the restaurant manager should not give the amount of cash loss, unless required by state law. Publicizing the amount of the loss might encourage additional crimes against the Company.

Report to the Support Office

The Support Office in Lexington, Kentucky, is to be advised immediately of any crime committed against the Company or its employees or Guests. The manager or Area Supervisor should complete an electronic cash loss report within 24 hours of the loss and forward it electronically to the HR, Risk Management, and Accounting departments.

The manager must immediately report crimes and losses to the Human Resources department at the Support Office, except for cash shortages under $100. Cash shortages are to be reported only if the loss per occurrence or the cumulative monthly loss exceeds $100 or if circumstances indicate a particular suspect. If the loss involves a deposit of $300 or more, it is essential that the loss be reported to the Support Office by 10 a.m. on the following business day so that the Company will not transfer the reported deposit from the restaurant’s bank account to the Corporate Cash account in Lexington.

The manager or Area Supervisor must immediately contact the Human Resources department at the Support Office concerning casualty losses, with the following information. Franchise operators should develop a similar system of reporting.

1.    Manager’s name

2.    Restaurant number, address, and phone number

3.    Manager’s schedule (when and how he or she can be contacted)

4.    Supervisor’s schedule (when and how he or she can be contacted)

5.    Date and time of loss

6.    Division of police to whom the loss was reported

7.    Type of loss (theft, vandalism, robbery, burglary etc.)

8.    Amount of loss ($________, state whether actual or estimated)

9.    Description of loss, property damage, and injuries (Include witnesses accounts, if available, for injuries)

10. Steps taken to protect any exposed property

11. Sequence of events and individuals involved (For cash losses only)

Forward a copy of the police report and any newspaper articles concerning the loss to the Human Resources department.

Notifying the Area Supervisor and Director of Operations

The manager must immediately report the loss to the Area Supervisor and the Director of Operations and provide them with the same information provided to the Support Office. Losses to be reported include all daily cash shortages or cumulative monthly cash shortages exceeding $25.

Accounts Payable

All invoices related to property losses are to be recorded in the Casualty Loss Account (621-00) or the Purchase Journal and submitted to the Accounting department for payment. The Cash Paid Out or Transmittal should be completed as usual. Expenses that are to be recorded in the Casualty Loss Account include the following:

¨    Equipment

¨    Reconstruction costs

¨    Repairs

¨    Cleanup costs

¨    Polygraph services

Ordering Equipment

When ordering equipment, the manager should indicate on the order form that the equipment is for replacement of items destroyed by the casualty.

Transferring Equipment

Before equipment is transferred from another restaurant to the restaurant that experienced the damage, the insurance administrator should be consulted. It may be advantageous to purchase new equipment and avoid transportation and breakdown costs involved in a transfer. If the loss was insured, the Company’s insurance coverage pays complete replacement value on new equipment but may only pay actual cash value on used items. A final decision will be coordinated by the insurance administrator and communicated through the Director of Operations.

Cleanup Costs

If a restaurant employee performs cleanup duties, the manager must designate on the payroll input sheet the number of hours the employee performs duties related to the cleanup of property damage.

Cash Losses

In the event of a loss of cash collected from sales, the Daily Financial Report is to be submitted as follows:

¨    If the loss occurs before the register is closed out for the day, enter the actual deposits for the day (if any) on the Daily Financial Report and compute the loss as cash short.

¨    If the loss occurs after the register is closed out for the day, manually adjust the Daily Financial Report to reflect the actual deposit and shortage for the day.

The Accounting department makes the necessary adjustments to properly record the cash loss expense. Unexplained losses or employee dishonesty are reflected in the Cash Short and Over account (619-00). All other losses are recorded in the Casualty Loss account (621-00).

Change Fund Losses

In the event of a loss from the change fund, the change fund should be replenished up to the authorized amount from the following day’s sales. The amount needed to replenish the change fund should be recorded as a Cash Paid Out to Account 621-00. No adjustments to the Daily Financial Report are necessary to reflect the loss of the change fund.

If it is not feasible to begin operation with the remaining change fund, the Area Supervisor should cash a personal check for an amount necessary to make change until sufficient sales have been made to replenish the change fund. Once the change fund is replenished, the Area Supervisor may be paid back with a Cash Paid Out from accrued sales. This expense will be charged to the applicable restaurant’s Casualty Loss account.

Third Party Damages

When third parties damage Company property, the manager is responsible for obtaining two estimates of the damage and a copy of any investigative report and forwarding these documents to the insurance administrator. If documentation is not received within 10 days, the insurance administrator will follow up with the manager to ensure that proper procedures are being followed.

Responsibilities of the Area Supervisor

The Area Supervisor is responsible for notifying the Director of Operations of all property damage and all daily cash losses or cumulative monthly cash losses exceeding $100.

The Area Supervisor must ensure that all crime-related serious injuries or deaths, crimes against the Company, and property damage are reported immediately to the Support Office in Lexington and that the manager has followed the correct reporting procedures.

The Area Supervisor must send the Director of Operations a copy of all police reports, newspaper articles, polygraphs, etc. This is required for all losses including theft and fire.

Responsibilities of the Director of Operations

The Director of Operations shall ensure that the required procedures are followed and administered on a timely basis. This includes ensuring that seriously injured employees or their next of kin (in the event of death) are informed of their benefits and that the Company’s concern or condolences are properly expressed.

The legal department should be consulted before discussing with victims or their families the Company’s responses to their situation, including investigations, preventive measures, etc.

The Director of Operations is responsible for notifying the Vice President of Operations of any crime-related serious injury or death, crime losses exceeding $500, or major property damage.