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Customizable Insurance is Critical to the Success of Restaurant Owners

Overhead View of Restaurant Bar & Dining Room
To ensure adequate protection is in place, Restaurant owners should review coverage plans and risk management measures regularly with their Insurance Agent.

The pandemic brought about unprecedented changes to the restaurant industry, prompting restaurant owners and decision-makers to adapt to evolving customer demands and preferences in order to survive. In a recent Nationwide Agency Forward survey, customers shared that (1) convenience, (2) touch-free experiences and (3) cleanliness are top priorities for them today.

For example, 4 in 10 customers report being more likely to order delivery or take-out rather than dine in at the beginning of the pandemic. More than a third (38%) are now more likely to request outside seating where possible. And 20% say a restaurant’s cleanliness influences their tipping amount.

In order to meet customer demands, Owners had to move quickly to implement new systems for ordering:

  • Convenience: A quarter of restaurant owners / managers added or expanded food delivery / take-out at their restaurant due to COVID-19.
  • Touch-free experiences: More than a quarter of owners introduced or increased outdoor seating (26%) or utilized new mobile ordering/payment devices (30%) since the beginning of the pandemic.
  • Cleanliness: 33% improved cleaning and sanitation practices at their restaurant.

77% of those who who regularly frequent or order take out agree that their overall experiences are either good or excellent. Due to the extreme change from dine-in to dine-out, nearly 50% of restaurant owners experienced a decline in profitability due to third-party or internal technologies needed to meet / exceed client take out demands. And about 1 in 5 say they’ve taken advantage of online ordering preferences during COVID-19 by launching a virtual brand/restaurant (20%) or leasing kitchen space to one (19%) — a change that may bring different business risks into play.

The industry is also not out of the woods yet. Inflation, supply chain issues, and labor shortages continue to burden restaurant owners in 2023. 62% struggle with inflationary event and 52% say that supply chain constraints are their top challenges.

Double-sided grills, for example, had a three-month waiting period due to equipment manufacturing slowdowns caused by low labor levels during the pandemic. And 62% face difficulty acquiring food or supplies, with fresh seafood and fruits/veggies being the most difficult to acquire and experiencing the largest price increases over the past six months.

Despite these challenges, restaurant owners are optimistic about the future of the industry. According to the survey, 8 in 10 say they are doing better financially than expected, nearly 3 in 4 report an increase in revenue over the past six months, and 44% say the pandemic had a positive impact on their financial situation.

By offering customized protection, P&C Insurance Agents play a critical role in helping restaurant owners balance business acceleration requirements… ensuring that their insurance products meet or exceed the latest ordering innovations and equipment. Unfortunately, 32% of restaurant owners are considering reducing coverage, which could be costly if an uncovered loss occurs.

The restaurant industry is poised to continue shining through a potential recession with the right considerations and business decisions. In 2023, the industry is projected to reach $997 billion in sales, over $100 billion higher than 2019 before the pandemic. The industry outlook is looking up, but restaurant owners must remain vigilant to protect their businesses.

Bottom Line: Agents should review coverage plans and risk management measures regularly with their restaurant clients to help them maintain adequate protection. Working with carriers with food services-specific expertise and resources can help you bring a full menu of protection solutions to the table.

Toni Wesen is Principal Agent at Ohio Ark Insurance. She has 13+ years experience taking care of both Personal Lines and Commercial Line property and casualty industry. 

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