Risk is an inherent part of running a business, and restaurants are no exceptions. As with most food and foodservice industry enterprises, numerous factors could result in potential liabilities for owners, any of which could put their business and assets at risk. This is why implementing a risk management strategy is so essential.
Now, more than ever, Commercial Package Insurance NY serves an increasingly crucial role in an effective risk management strategy. But many restaurant owners aren’t convinced of the importance of insurance and its benefits for risk management. For some, the added cost outweighs the risks of not having any coverage.
Common risks in the restaurant industry
Why is it so important for restaurant owners to manage risks? Accidents and criminal actions could affect any business, and there are also natural calamities to consider. Restaurant owners should be prepared for these risks and any untoward incidents that may occur.
Some of the common risks inherent in the restaurant industry are:
- Kitchen accidents. The kitchen is one of the most crucial areas of any restaurant. Unfortunately, it is also where most accidents tend to happen. According to a report by Beaumont Emergency Hospital, kitchen-related incidents affect as many as 350,000 individuals every year, most of whom suffered burns and lacerations. Damage to equipment and restaurant facilities are also frequent occurrences.
- Food poisoning. Another common risk is food poisoning, which can occur in restaurants of any size. One large food chain‒ Chipotle‒wasn’t exempt from such incidents. In 2016, an E.coli O26 outbreak at one of its branches left 55 people infected. In the wake of the controversy, the company agreed to pay a total of $25 million to settle the charges.
- Service mishaps. Minor mistakes occur daily in almost every restaurant. But incidents that result in severe injuries‒such as spilling a pot of hot coffee on a customer‒can result in a costly lawsuit.
- Cybersecurity issues. In 2016, 1,025 branches of Wendy’s experienced a cyber-breach that resulted in the theft of customers’ debit and credit card information. Restaurants are popular targets for such malicious crimes. This particular incident is only one of many similar attacks that have occurred over the years.
How restaurant owners can minimize risk
There are many ways restaurant owners could manage risks, including offering employee training and education, instituting internal control mechanisms, and implementing appropriate corporate policies. Here’s how each of these strategies could minimize risk or at least reduce the damage they could potentially cost:
- Providing employee training and education. Training and educating workers on proper safety practices and operating procedures can minimize the risk of accidents. It is imperative to keep employees updated on current safety standards in the restaurant industry and train them to use kitchen and restaurant equipment safely. Part of their training should also include hygienic food handling and property customer interaction.
- Establishing internal control mechanisms. Control mechanisms ensure proper monitoring and assessment of employee activities and work procedures. It would be helpful to assign senior workers to supervisory and management roles to ensure that everything is done according to safety and hygiene standards.
- Implementing appropriate corporate policies. Risk management always begins at the top. As the owner, you have a responsibility to ensure conformance to industry standards and guidelines. This includes making sure that all the equipment is working correctly and that safety measures are in place. It is also necessary to establish safety measures and ensure that your workers aren’t overworked or overextended.
Why CCPs are an essential risk management strategy for restaurants
Even with all these risk management strategies in place, there is no guarantee that an accident won’t happen or that a third party won’t cause property damage or personal injury. There are also natural calamities to consider, which can be unpredictable.
Insurance could help you deal with the uncertainties of these risks. But the unique circumstances of operating a restaurant require more flexible coverage than what standard insurance provides. This is why a commercial package policy is so essential.
Commercial package policies (CPPs) consist of insurance coverages ideally suited for small- to medium-sized enterprises, such as restaurants. They commonly include protection against liability, property damage, crime, and more.
This type of insurance is more appropriate for restaurants, given their specific inherent risks. In most cases, they provide better coverage than dedicated liability and property risk plans.
About Snyder Specialty
Snyder Specialty, LLC is a New York-based underwriting facility that provides a range of property and liability solutions for personal and commercial lines. Specializing in coastal properties and hard-to-place risks, Snyder Specialty expands your current capabilities with proven solutions for complex risks. Find out more about the company’s range of services by calling (718) 362-8039.
