Insureon Blog

7 risk management strategies for restaurants and other food businesses

14. August 2018 21:01

Chef with flaming pan

Creating a profitable food business is a juggling act. You need to purchase fresh ingredients, create appetizing menu options, and know how to effectively market the business. But even if you have all the raw ingredients for success, you could potentially be only one accident away from being forced to close your doors for good.

A key component of running a successful food business is preparing for the worst – from kitchen fires and food spoilage to allergic reactions and liquor liability lawsuits. That's why it's important for food business owners to conduct a restaurant risk analysis before even opening for business. A comprehensive risk management plan can reduce the likelihood that your food business experiences a serious accident or a liability lawsuit.

In this restaurant risk management checklist we'll offer seven strategies for reducing the chances of an incident occurring, including effective food risk management and providing training to keep employees safe. We'll also cover some common small business insurance policies that can help mitigate your food business's risk.

1. Train your employees

Your employees are the heartbeat of your business, so protecting them from harm in the workplace should be your top priority. And since your employees handle your day-to-day operations, they can often help avert potentially disastrous situations – if they have the proper training. Employee education to consider includes:

If your business sells alcohol or allows patrons to bring their own beverages, you are at risk for a liquor liability lawsuit if someone who drinks at your establishment later causes harm due to being intoxicated. Liquor liability insurance can pay for legal expenses arising from alcohol-related claims.

2. Tap into technology

Running a business in the digital age presents its own set of risks. For instance, if you store customer information, such as credit card numbers, on a computer or point-of-sales device, you are at risk for cyber theft. But you can also use technology to help safeguard your business. Consider using:

Another way to manage digital threats is with cyber liability insurance. If your system is hacked and sensitive information like customer credit card numbers is stolen, cyber liability insurance can help with the costs of customer notification, credit monitoring, and litigation.

3. Maintain your facilities

To reduce the odds of property damage or someone getting hurt on your property, be sure to:

If a customer is injured at your food business, general liability insurance can pay for medical expenses, as well as resulting legal costs if your business is sued.

4. Maintain your equipment

You rely on your equipment to store and prepare food. Without proper maintenance, your equipment could break down, potentially putting both your business and your customers at risk. Be sure you regularly check:

Another way to protect your equipment is with commercial property insurance. If you experience a kitchen fire or your equipment is stolen or vandalized, this policy can pay to repair or replace your property.

5. Adhere to health and safety codes

Familiarize yourself with local health and safety codes so that your establishment isn't caught off-guard by a routine inspection. Regulations vary by county and state, so check with your health department for local rules.

Generally, regulated areas of the commercial kitchen include:

Not only will adhering to safety codes help prevent your restaurant from being charged with violations, it will also create safer conditions for employees and customers and reduce your chances of getting sued.

6. Obtain appropriate licensing

Some licenses you may be required to acquire before opening your restaurant, catering business, or bar include:

Employees who regularly use their own vehicles to conduct company business may not be covered by their personal auto policy if they get into an accident while doing so. You can make sure your employees are covered by purchasing hired and non-owned auto insurance to cover them while they are driving personal vehicles on behalf of the business.

7. Disclose allergens and dietary information

According to Food Allergy Research & Education (FARE), up to 15 million Americans have food allergies. If your business serves a dish with undisclosed food allergens that harm a customer, you could be slapped with a lawsuit. Keep your customers informed (and safe) by offering:

Providing detailed information about ingredients, allergens, and calories allows customers to make informed decisions, and reduces the chance you might be sued by a customer who experiences an allergic reaction at your business. But, if that does happen, the product liability insurance typically included in general liability insurance policies should be able to pay for the resulting medical and legal expenses.

Small business insurance: Your last line of defense

Even with appropriate risk management measures in place, the unexpected can still happen. That's why small business insurance is such an important component of any restaurant’s risk management plan. That way if an elderly customer slips and breaks a hip on your entranceway, or your walk-in refrigerator breaks down, you're covered.

Learn more about how food and beverage business insurance works to protect your restaurant or bar, including how much it might cost.

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Restaurants | Risk Management | Small Business Risk Management

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