Starting and maintaing a successful restaurant operation is no easy task. It’s no secret that most restaurants do not survive beyond three years. There are a multitude of factors to consider when starting or running a restaurant, such as menu items, interior decorations, marketing, and location. Even with all of those elements perfected, a single mishap can lead to the permenant closure of the business.
A key factor to success is to be ready for emergencies such as fires, food spoilage and liquor-related lawsuits. You can prepare by completing a risk analysis to determine what areas need attention. A carefully thought out risk management plan can decrease the chances of experiencing a devastating claim.
In the list below, we will go over risk management strategies for restaurants.
1. Follow Safety and Health Codes
Regulations and codes may vary from city to city, so verify with your local health department first. Make sure to be familiar with the codes so you are prepared for possible inspections.
Most common areas to consider are:
- Health inspections – Passing health inspections is crucial to staying open for business.
- Safety equipment – Equipment can include the AES (Automatic Extinguishing System), portable extinguishing system, wet floor signs, etc.
- Food storage – Codes may lay out how certain types of food must be stored. Be sure to know what they necessitate.
- Employee cleanliness – Simple acts such as washing hands and covering mouths while sneezing go a long way to maintain proper hygiene
- Cleaning supplies – Codes may outline which cleaners can be used on various surfaces. They may also note how often they must be cleaned.
Creating a safe and clean environment for your employees and customers will help avoid being charged with violations, or worse, sued.
2. Equipment maintenance
Being stuck with a broken piece of equipment when it really matters can be frustrating. Non-functioning equipment could also potentially lead to lost business or more serious problems, like fires.
Check the following equipment regularly:
- Kitchen exhaust hoods – Regular maintance and cleaning of the exhaust hood can reduce grease build-up. Reducing grease build-up may increase the hood’s efficiency and reduce the chances of a fire spreading beyond the kitchen area.
- Refrigeration equipment – Properly operating refrigerators are important to minimizing food spoilage, which can lead to downtime for the business. Additionally, it can lead to foodborne illnesses which can result in costly lawsuits.
- Cooking equipment – A malfunctioning fryer or griddle can be a fire hazard and lead to customer or employee injury.
You can also protect equipment with commercial property coverage. If you equipment is stolen or damaged from a fire, commercial property insurance can pay to replace or fix the piece of equipment.
3. Premises maintenance
Injury can be caused by poor maintenance of the facility. Take these steps to reduce the chances of a customer or employee getting hurt:
- Keep floors clean and dry – Spilt fluids can pose a slipping hazard which can cause serious injury to customers or employees. Taking steps to make sure floors are clean and dry will reduce slip and fall incidents.
- Keep kitchens clean – A kitchen free of clutter will minimize chances for employee injury or possible kitchen fires. Make sure knives and other utensils are properly stored to minimize possible injury. Clean ovens and grills may reduce chances of fires, so check these regularly.
If an employee is injured while on the job, workers compensation insurance can pay for medical expenses and more.
On the other hand, if a customer is injured while at your restaurant, the commercial general liability insurance can pay for legal costs arising from lawsuits in addition to medical bills.
4. Leverage Technology
Modern technology gives provides us with convenience and security. However, operating them presents new exposures to risks. For example, a restaurant’s POS (point-of-sales) device may be a source of risk for customer information theft. Take these steps to minimize cyber related crimes:
- Protected Wi-Fi network – Offering public wireless interenet access is a great way to get customers into your establishment. However, this can be a security weak point. You can keep your network safe from criminals by offering Wi-Fi access to paying customers only.
- Anti-virus protection – Firewalls and anti-virus software can help prevent malware or viruses from attacking business computer systems.
Cyber risks can also be met with cyber liability insurance. Cyber liability insurance can pay for notifications to victims, legal costs related to lawsuits, and more.
5. Train Employees
Employees can be a restaurant business’ largest expense and is critical to the business’ success. Therefore, you want to make certain that they are operating at their best while keeping them safe. Employees also can help avoid potential problems quickly with proper training. These areas to focus on include:
- Food handling procedure – Hold regular training sessions going over proper food handling procedures.
- Customer service procedure – Problem resolution is important to keeping patrons satisified. Employees should be trained to handle complaints in addition to if and when the problem needs to be escalated to a manager.
- Alcohol serving procedure – If alcohol is served on your premises, having alcohol serving training in place is important because your business may be responsible for intoxicated customers. Take steps to train employees on identifying intoxication, refusing service and handling intoxicated customers. Use available resources, such as TIPS, to set-up procedures for your alcohol-serving business.
- Safety procedure – Create and share steps taken in the event of an emergency, such as a robbery, fire injury.
A properly trained employee will increase customer satisfaction and safety and reduce chances of litigation.
Taking precaution by setting up risk management techniques can still result in unexpected events. As a result, business insurance is an important piece of the restaurant risk management plan. Insuring your restaurant business with a tailored insurance policy can cover a customer’s food sickness incident or an employee’s slip and fall.
You can learn more about restaurant insurance here.