At its peak in 1935, Clifton’s Cafeteria in Los Angeles served 15,000 diners a day.
Last October, the joint reopened as a five-story restaurant with actual and faux redwood trees rising through all five floors. The eye-popping surroundings include a 250-pound meteorite, a bar fashioned from a century-old church altar and a variety of taxidermy, including a grizzly bear and a bison.
Welcome to the restaurant of the 21st century.
For six years in a row, the restaurant industry has reported significant sales and job creation growth—thanks in large part to restaurants experimenting with new ways to not only draw us to their tables, but also bring their tables to us.
Today’s restaurants are earning new sources of revenue by sending food trucks on the road or distinguishing their brands with novel cuisines, farm-to-table fare and craft cocktails. Many eateries are tech-savvy, offering diners a wide variety of consumer-facing technologies to order steak and fries online for home or office delivery, or to pick their own choices on a tablet located on the table at the establishment.
These days, bartenders are chemists, chefs are celebrities, restaurant interiors are featured in design magazines and feasting is a sociocultural event.
“Dining is as much about the experience as it is about the food,” says Denny Christner, vice president at BayRisk Insurance Brokers, Inc. in Alameda, California, who has carved out a niche serving the restaurant business. “In San Francisco, average food is dead. Fine dining experiences and quality casual dining are excelling. It’s not so much about price as it is quality and food experiences.”
More, More, More
These innovative and evolving iterations of what it means to be a restaurant in the 21st century have coalesced to create boom times for the industry, with revenues on track to rise 3.8% in 2015 to $709.2 billion, according to the National Restaurant Association. The industry is also a major job creator, currently employing 14 million Americans—a figure expected to rise to 15.7 million by 2025. Every U.S. state will see their restaurant industry workforce expand over the next decade.
What’s driving the industry’s spectacular growth? Us.
According to the National Restaurant Association, “consumers continue to have substantial pent-up demand for restaurant services.” A recent survey from the association indicates that 38% of consumers would like to eat more often at restaurants, and 41% would like to purchase more takeout or delivery. Few people seem interested anymore in a home-cooked meal.
From an independent agency standpoint, these factors make restaurants ripe for specialization. “Agents able to provide a broad set of insurance products addressing the complex exposures of the industry will be the most successful at providing value,” says Jamie Luce, senior vice president and chief underwriting officer, business insurance at Liberty Mutual.
Among these agents is Scott Isbell, client executive at Barney & Barney in San Diego. “This is my niche,” he says. Like many agents specializing in serving the insurance and risk management needs of eating and drinking establishments, Isbell drums up business the old-fashioned way.
“I’ll eat at a local restaurant or visit a nightclub and strike up a conversation with the owner or manager,” Isbell says. “We get around to me asking to take a look at their insurance coverages, in return for my honest assessment. That gets the ball rolling.”
Rene Hernandez pursues the same marketing approach. “It’s a relationship-driven business,” explains the producer at Cole, Paine & Carlin Insurance Agency in Oklahoma City. “Word of mouth is really important. When I visit with a prospect and they show me their insurance policies, there are often gaps in coverage that deepen the conversation.”
Plying the Niche
Clearly, specializing in the unique risks and insurance needs of the restaurant market presents opportunity for revenue growth. In this line, building a valuable and growing book of business can be as simple as grabbing a bite and a beer. “My biggest source of advertising is my existing clientele,” Hernandez says.
Christner, who has effectively branded his business through social media and a descriptive domain name—restaurateurinsure.com—agrees that the biggest source of new business is referrals. “The only way to get a great referral is to provide excellent service and products,” he says. “The restaurant community is very tight-knit.”
John Brittain IV, vice president of Hospitality General Insurance Services in Covina, California, follows the same paths in generating his new business. “With workers compensation prices rising, that’s a sore spot for many restaurant owners,” he says. “I’ll visit a pub and chat up the owner or the manager about this obvious pain point, poking and poking at it until they ask me if there is any way I can help. ‘I can try,’ I say.”
And carriers are eager for agents to specialize in this market niche. “First and foremost, this is a growth industry and we can’t say that for all industries—it shows no signs of slowing down,” says Lynn LaGram, assistant vice president of small commercial product at The Hartford. “These businesses need someone who really understands their risks, particularly as their exposures become more complex.”
“An independent agent who really knows the restaurant business and its myriad exposures has an ability to identify the right carriers to piece together an optimum insurance program,” Luce agrees. “It’s all about having a relationship with the customer, which leads back to specialization. We will always value an agent that understands the nuances that go into a particular class of business.”
For more details on unique restaurant coverages and what carriers look for when insuring this niche, keep an eye on IAmagazine.com and upcoming editions of the Markets Pulse e-newsletter.
Russ Banham, a Pulitzer-nominated business journalist, has been an IA contributor for more than 25 years.
