The million-plus restaurants that operate in the U.S. generated $799 billion and employed 14.7 million people in 2017—about one in 10 working Americans, according to the National Restaurant Association.
And the association predicts that by 2027, more than 16 million Americans will work at a restaurant.
“Restaurants can really be what drives a local economy,” observes Lynn LaGram, assistant vice president of small commercial product at The Hartford, who notes that insurance pricing remains competitive for commercial in general, with slight firming from both a property and liability perspective. “We continue to see restaurants fueling local growth.”
But booming growth brings its own set of challenges, says Matt Marcella, director of product, commercial accounts at Travelers. Although restaurant insurance rates ultimately depend on “a number of factors, both in the marketplace as well as the individual risk,” the number of brick and mortar buildings opening up across the industry “are outpacing population growth,” he points out.
In a price-sensitive industry that operates on fairly compressed margins, “a large number of restaurants are now competing for a relatively stagnant number of dollars,” Marcella explains. “That can be challenging for those restaurant owners.”
To effectively compete in 2018 and beyond, your restaurant clients need to focus on one area in particular: their employees.
In the midst of the ongoing #MeToo campaign, employment practices liability insurance should be a primary talking point with all commercial clients. But that’s especially true in the restaurant industry, which has long been notorious for fielding a plethora of sexual misconduct-related allegations and claims.
“EPLI is a terrific example of an area where a small business owner may not be thinking about those types of exposures, and may not understand where they might find coverage for that,” says LaGram, who notes that a typical BOP includes a built-in limit for EPLI with the option to increase limits.
Among all small businesses, LaGram says The Hartford has noticed a “pretty steady take-up rate” on EPLI endorsements and increased limits over the last five years, as well as a slight increase in inquiries over the last three to six months.
But beyond rounding out their coverage package with EPLI, it’s also important to help your restaurant client implement appropriate risk management and training procedures for their staff. “Staff at different style restaurants have different levels of experience,” Marcella points out. “For employees at a fine dining restaurant, working there is more of a career than just a job.”
By contrast, at a fast-casual restaurant, “you may have more part-time workers, college students or even high-school students working after school,” Marcella says. “Certainly, you need to make sure your staff is qualified regardless of what type of operation you’re running, but that level of expertise about the hazards they’re going to encounter on a day-to-day basis is vastly different for a teenager than for somebody who’s been in the industry 30 years.”
It may be difficult to profile a restaurant prospect, but Marcella encourages agents to seek out restaurant owners “who are not only committed to their food, but also committed to the quality of their employees. People go to a restaurant because the food is good, but the quality of the staff is just as important, not only because of the customer interaction but also because of their ability to affect the day-to-day operations.”
Whether that means cleaning the kitchen properly so the floors aren’t slippery or making sure the ducts and vents are serviced properly, “that all boils down to having a well-oiled staff,” Marcella explains. “The owner isn’t going to be able to do everything in the restaurant. Identifying someone who is committed to ensuring their staff has all the tools that they need to run a successful operation is really going to make a great customer for an agent.”
Jacquelyn Connelly is IA senior editor.