Every business owner, including restauranteurs, wants to save money anywhere possible to help ensure healthy profits. Many well-intentioned restaurant owners who are looking for insurance savings may not realize that the first coverage they delete from their insurance policy may be protection related to food borne illnesses.
Restaurants face unique insurance issues derived from their product which involves the handling and preparation of food. In addition to the usual liability exposures, derived from accidents and/or injuries resulting from slips and falls, food spoilage can result from any number of causes. Power failure, equipment malfunction and temperature change are just a few of the predicaments that can be attributed to food borne illnesses. As such, this is a key area of exposure that can come back to haunt restaurant owners if their businesses aren’t fully protected. This is just one of the many reasons that you should always discuss your coverage options with a trusted insurance professional, like Schaefer Enterprises, Inc., who has experience and expertise in all areas relating to restaurants.
Food Contamination in the News
A recent cluster of E. coli illnesses in the New York Metro area, and elsewhere in the country, implicated a national chain of restaurants that served contaminated produce supplied by a distributor. Despite the fact that the restaurant chain had nothing to do with growing, supplying or the distributing of the contaminated produce, the restaurant was sued by a plaintiff who endured a two-week hospital stay and multiple blood transfusions due to an alleged food poisoning incident. That was just the first of many claims brought against the restaurant chain and it probably wasn’t the last.
Costs Related to Food Illnesses are Significant
According to a report on CNBC.com, a study by researchers at Johns Hopkins revealed that the cost of a single outbreak of a food borne illness at a fast, casual restaurant could cost between $6,330 and $2.1 million, depending on the severity. These costs encompassed fines, defense costs and legal fees as well as the actual adjudication of claims.
Additionally, the costs go higher for casual dining chains with full-table service, where such costs can increase to $8,030 – $2.2 million; and for fine dining upscale venues, $8,273 – $2.6 million. The study suggests these outbreaks can cost restaurants between 10% – 5,790% of what they spend on marketing each year and between 0.3% – 101% of their annual revenue. Numbers like this are sure to sicken any restaurant owner.
Keeping Your Own House Clean
Incidents such as the E. coli example above show that, even if a restaurant follows its food preparation techniques to the letter, it can still be sued. Moreover, there are plenty of internal, on-site processes, that can leave a restaurant exposed to claims related to illnesses and diseases transmitted through food. The most common basis for these claims is negligence. Claims of negligence can encompass everything from cutting corners by the kitchen staff, during food prep, to a disgruntled employee intentionally contaminating food out of anger or spite.
In situations where a restaurant worker feels ill but is determined to stay on the job do yourself a favor and send them home. If that sick worker has a bacterial, a viral or a staph infection and skimps on hand washing or spreads germs in any other way, they can pass their illness on to a room full of customers. Play it safe and send your sick workers home!
Food storage is an equally important factor in preventing claims. Ingredients used in food preparation should never be mixed with other chemicals or cleaning products. A sick customer here or there may never rise to the level of a lawsuit, but with restaurant review apps like ‘Yelp’ and ‘OpenTable’ a negative review resulting from customer illness doesn’t enhance a restaurant’s reputation.
If You Don’t Display a Kitchen Inspection Checklist, Get One!
Considering what can go wrong in a restaurant – from the kitchen to the wait station and beyond – it is important that every restaurant have a kitchen inspection checklist prominently displayed to help protect customers and staff. Your checklist should act as a constant reminder for your entire staff regarding standard safety procedures. The checklist should be easy to update as local, state and national health department standards change.
SEI Offers Restaurant Insurance Coverage Options
As a restaurant owner you face unique insurance exposures. SEI New York specializes in assisting restaurant owners by finding them the insurance coverage which is best tailored to their individual needs. Knowing that you are protected allows you to continue doing what you enjoy doing most. Preparing and serving great food!
Contact us to discuss your restaurant insurance needs. We’ll make sure you’re covered from first course to last, and everywhere in between.
