Starting any new business involves risk, but starting a restaurant holds a bit more risk than most. Restaurant owners can find many ways to limit their risk. From having enough capital saved for a rainy day, identifying risks before they become a problem, and having insurance to cover themselves.
Many different forms of insurance can be beneficial when owning a restaurant. The average restaurant insurance cost changes based on your needs. This means that your next steps will be deciding which coverage is best for your restaurant, and how much coverage you can afford.
According to CNBC, around 60 percent of new restaurants fail within the first year. This horrible statistic gets worse, as nearly 80 percent close before they have been in business for five years. The reason for the high failure rate is due to the many risks involved with running a restaurant. Bad Reputation Management The reputation of a business is incredibly important. Many restaurants can be searched online where unhappy customers write negative reviews. The impact of word of mouth is also important.
When negative feedback occurs, a restaurant must respond to it to protect its reputation. Any bad press or negative reviews warrant a timely response from management. Even if the situation that occurred is not as the customer stated, the repercussions may damage the reputation of your business.
When you open a restaurant, you must maintain different permits and licenses. Restaurants are required to have permits such as business and food handler's permits or an alcohol license. Failure to maintain appropriate certifications and licensure can result in fines, fees, or even worse, business failure.
Although any restaurant wants to stretch its food purchases as far as they can go, it is also important to do so safely. Restaurants must take every precaution to ensure that they receive the best quality products. Management needs to keep a watchful eye on appliances to ensure that they are functioning properly and assess the quality of items received from food suppliers.
All appliances must meet the requirements for proper food storage. Proper food storage eliminates any potential risks that come with serving spoiled food.
Even the smallest piece of tainted meat can compromise the health and wellbeing of customers. Although customers might feel better in a few days, your restaurant’s reputation continues to suffer.
Whether the food you have served is old, there is improper handling, cross-contamination, or unsafe storage methods, all of these can lead to food poisoning. As a business owner, you want to ensure your customers’ safety. That is why running a business involves a high risk.
Fires inside of a restaurant are always extremely dangerous. Train your staff to properly handle these situations. Regardless of how large the fire is, the damage can be huge.
Employees are often injured in the workplace. Also, customers may get injured as well. Whether the injury is a slip and fall accident, an oil burn, or a strained back, many situations exist where injuries can occur in a restaurant.
Injuries in your restaurant can lead to complicated legal problems. Most restaurant owners will want to avoid workplace injury at all costs because they often lead to lawsuits.
Theft and damages can occur due to burglaries, vandalism, and break-ins. Even employees may have a part in theft, the misuse of supplies or funds, and other misappropriations. As a result of a break-in, items may be stolen--cash, expensive equipment, digital technology, kitchen tools, and even your customers’ personal information.
Although things can be replaced, it can still be extremely time-consuming and costly to do so. Any required clean-up and repairs are yet another expense.
Restaurant owners do not believe that digital security presents a threat to their business. However, hackers are everywhere. Malware or unauthorized users may gain access to your business network. Data breaches can make you look terrible in a customer’s eyes, and often ruin your relationship.
Restaurants use websites, online payment options, and allow customers to access Wi-Fi. All of these things put you at risk. Even if you only accept credit cards, you may still need to be concerned about cybersecurity.
Estimating how much time you need to establish a restaurant can be difficult. When underestimating the amount of time needed, you also might be underestimating how much cash you need.
Start-up costs might be expensive, but not having enough working capital can sink you before you even get started. You must understand that you may need a bit longer than planned to generate revenue. Whether that is only to fully cover operating costs or to turn a profit.
The short answer is “Yes.” Restaurants need insurance. Not only are a few forms of insurance a legal obligation, depending on your state, but if you do not have insurance, you open yourself up to risk.
When starting a restaurant, the last thing you need is to add another level of risk. You just read about the risks that come with starting a restaurant. Having insurance helps you to mitigate these risks.
Although not all insurance is required by law, a few types of insurance are mandatory. Typically, Worker’s Compensation and General Liability are required to operate a restaurant legally. Also, a few others are extremely important to have if you are looking to lower your risk.
Also known as BOP, a Business Owner Policy helps to combine all the protection involved with property and liability risks. These policies are also known as Umbrella policies. If you are looking for cheap restaurant insurance, then this can be a great option.
If you are a restaurant owner, you are most likely responsible for holding Workers’ Compensation insurance. This insurance specifically protects your workers if they are injured, get sick, or even die on the job.
Another form of restaurant liability insurance is Liquor Liability. This protects your restaurant if you choose to serve, manufacture, or sell alcohol. This policy is necessary in case you fall into a legal situation. Often, if you hold a liquor license, you will be required to hold this insurance.
This policy will help to cover your legal fees, any settlements, as well as medical costs associated with alcohol, whether this is your personal property that is damaged (caused by an intoxicated person) or someone who was served liquor and caused damage later on.
If you are looking for an Umbrella policy to protect you for a plethora of things, then General Liability is that policy.
Restaurant liability insurance cost comes in a variety of price ranges. There is not one specific cost for every restaurant due to the different risks involved with different establishments.
If you are deciding to open a restaurant, or already own one, then you need insurance. Whether you are looking for the maximum coverage, or enough to cover your business should something happen, there are a variety of options for everyone. The average restaurant insurance cost will not necessarily be the one you pay, but it is a good ballpark to know when shopping for insurance.
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