Since the COVID-19 shutdowns, restaurateurs have taken bold steps that have redefined the food service industry. For example:
- Outdoor dining alongside or in converted roadways
- Robotic servers
- Kiosk ordering
- Online menus patrons pull up on their phones
- Dynamic pricing, where the price of food changes based on supplies or demand for seating
These innovations, along with the persistent labor shortage, make it more important than ever to develop a solid risk management program. This should include training employees on workplace safety, keeping track of hours and wages, managing worker stress, and protecting credit card information and cash receipts.
With the broad scope of restaurant risks, it’s helpful to consider them by category.
Premises risks include all the usual concerns of owning or renting a property, such as storm damage and vandalism, plus three risks that are especially acute in food service:
- Damage and injuries from kitchen fires and smoke: Keeping ventilation ducts clear of soot and grease is critical. Commercial property insurance can help with recovery if your property is damaged.
- Patron injuries from slips and falls within the restaurant or on adjoining sidewalks or parking areas: For restaurants offering outdoor dining, it’s important to manage traffic and natural risks. Using concrete planters as vehicle barriers and trimming nearby trees are two principal risk reduction actions. A good general liability policy is key.
- Power outages, extreme weather and equipment breakdowns: Business interruption and equipment breakdown insurance can protect your income. If you are concerned about food spoilage, you may also want to add that coverage if it’s not included in your business owners policy, restaurant program insurance or commercial property policy.
Food service risk has expanded in recent years. Customers now expect to be informed of any allergens in your food products, such as peanuts or gluten, even if the food is handled and prepared properly. Your staff might have to take special training on food allergens, depending on local and state laws. It’s also a good idea to have a food allergen response plan in case of anaphylaxis.
Depending on the jurisdiction and circumstances of the incident, you may be liable for an illness if a patron was uninformed or misinformed about the presence of an allergen. Restaurant food contamination insurance can help. Check with your insurance professional since this might not be covered in a general liability policy.
Alcoholic beverage risks include liquor-related damage and injuries. Your establishment could be sued if an imbibing patron harms someone, even after leaving your premises. Train your employees to avoid overserving. Liquor liability insurance is essential.
Staffing risks are a major problem, and high turnover plagues the industry. With employees calling out at the last minute and customers making demands, stress levels rise and mistakes are made. Make stress and labor management a prime focus, and carry solid employment practices liability insurance.
You may also wish to add workplace violence coverage to your suite of policies. Additionally, employee theft is a concern. Many restaurants secure fidelity bonds to cover employees who have access to cash or credit card information.
Workers’ compensation is one of the most important protections you can obtain. It covers your employees for medical payments and lost wages if they are injured on the job. In most states, it also ensures your business will not be sued over a worker injury unless the worker can prove grave negligence on your part.
Cyber insurance is important for companies that do business online. It can help your restaurant recover if your credit card system suffers a breach. If you rely on an online menu, you should ask your insurance professional about failures of that system to disclose allergens or present accurate information about ingredients.
Commercial auto and valet liability are essential if you offer delivery or parking services. Commercial auto insurance can cover liability for harm your drivers cause, even if they use their own vehicles for your business.
Success is often a matter of timing, luck and other factors outside of your control. But there is one thing you can do to manage restaurant risks more effectively: enlist the advice and guidance of a trusted insurance professional.
You may find a business owners policy or restaurant program is a perfect fit, or you might want a more customized suite of insurance. Either way, give us a call and we can help you find the right coverage for your restaurant.
