Restaurant Insurance Market Trends: Staying Informed as an Insurance Broker

Property and casualty insurance

Beyond its obvious food safety and accident risks, the restaurant industry experiences constant changes that threaten profitability and operations. Insurance brokers who stay attuned to evolving threats and trends are best equipped to guide clients through coverage options, from business liability to property and casualty insurance. This way, you can provide them with the comprehensive protection they need in this fast-paced and ever-changing industry.

Current Challenges for Restaurateurs

While there are common concerns for restaurateurs over food safety and employee accidents, certain industry trends can also disrupt operations. Insurance plans need constant review to check for gaps in coverage, and with your insight, updates can be expedited for better preparedness.

Supply Chain Issues

The global pandemic brought the supply chain to a halt worldwide, and the industry is still experiencing ripple effects from the disruptions. The supply chain brings more than just paper and food products to restaurateurs, who also rely on timely delivery of new machines or parts needed to fix appliances. The demand for paper products due to the surge in takeout and delivery services also contributes to supply chain concerns.

Labor Shortages

Labor shortages for the restaurant industry began long before the pandemic. An aging population is just one concern, with more people leaving the workforce than joining it. This problem worsened when COVID-19 impacted employment, and many who sought other work during this time have yet to return to the industry. Rising childcare costs and accessibility to childcare also keep many people from joining the industry.

The full-service restaurant sector has the most room for recovery. As of August 2023, its employment levels remained 4% below pre-pandemic numbers, according to the National Restaurant Association.

Higher Inflation

The restaurant industry feels the effects of inflation, as food and labor costs continue to rise. These expenses have meant increased restaurant menu prices and more restricted menus, impacting customer satisfaction. Just as many eateries started to return to normal with in-person dining, the increased food costs led to slower growth.

Food and Alcohol Delivery

While a benefit to consumers, home delivery services expanded in several areas during the pandemic. Food and alcohol delivery services are a way to expand the consumer base, but restaurateurs face liability concerns from the use of drivers and personal vehicles. Contract employees present unique risks that aren’t covered by standard restaurant insurance options. Educating your clients on recommended coverages helps protect their businesses from potential losses.

Evolving Risks in the Restaurant Industry

As industry trends bring new challenges, restaurateurs face new risks. Although insurance addresses possible financial losses, many of your clients may need more education on the risks to know what kind of policies to purchase. Risks are both common and unique in the food service industry, depending on the specific operations of your clients.

Shifting Consumer Preferences

In recent years, the consumer preference toward higher quality meals put a new demand on restaurant owners. The type and quality of food became of higher importance, as well as the manner of marketing. Food blogs and social media influences have consumers demanding authentic imagery and experiences, leaving many food venues with no choice but to dramatically change their environment, service model, and menu options.

Health and Safety Concerns

While the fear of contracting COVID-19 was a leading cause of the dramatic drop in dining out during recent years, other health and safety concerns exist in the restaurant industry. High turnover rates lead to inexperienced employees handling food or equipment, increasing the risk of mistakes or accidents that lead to a P&C claim. Labor shortages could also see employees coming to work sick to meet the labor demand.

Cybersecurity Threats

Cybersecurity threats come at a restaurant owner from many angles. In addition to the financial transactions that occur, reservation or delivery platforms and mobile apps also open the door for data breaches and theft.

Leasing of Virtual Kitchens

Roughly one in five restaurants is capitalizing on the increased demand for food delivery by leasing virtual kitchen space, known as a ghost kitchen, or launching a virtual restaurant brand. The trend introduces new risks — making it essential for operators to carry adequate insurance, including property and casualty and other coverages. 

Food and Alcohol Delivery

Bringing in contract partners to handle the food or alcohol delivery services presents unique risks. Third parties injured in an accident by a vehicle working on behalf of the business can bring suit against the company even though the restaurant does not own the vehicle. There are also concerns with liquor liabilities for off-premise delivery.

Changing Coverage Requirements

When following the trends in the industry, it’s crucial for restaurant owners to address any required changes or updates in insurance coverage quickly. These could include mandates for workers’ compensation, unemployment insurance, or automobile liability insurance. With the addition of new services or exposure to new risks, changes in coverage can also cover any gaps.

Best Practices for Brokers

As an insurance broker, you are uniquely positioned to help your clients prepare and adapt to market trends and changes. Your initial response should be informative, educating the client on any current gaps in their coverage. By identifying blind spots, you can help your client understand the importance of fortifying their insurance coverage with custom solutions.

The industry’s challenges make continual reassessment a best practice for limiting financial losses. Coverage needs to address both the scope of the risks and the potential financial costs, and partnering with Cochrane & Company gives you the insight needed to do both. With access to our vast network of insurers, you can broker the right plan for the most diverse restaurant industry needs.

Prepare Your Clients for Changing Trends With Property and Casualty Insurance

Change is inevitable, but you can help your clients be prepared for the risks. When you are aware of the trends and changes in the industry, you can inform and guide your clients through insurance solutions that keep them fully protected. By relying on the expertise of Cochrane & Company, you gain access to quality insurers with a diverse range of policy options to meet your clients’ needs. Take the guesswork out of insurance coverage, whether your clients need to increase their property and casualty insurance or add a line for food and alcohol delivery liabilities. Contact us today to learn more.

About Cochrane & Company For more than six decades, Cochrane & Company has been proudly at the forefront of the insurance industry. Our experience has enabled us to innovate in powerful ways, reimagining the E&S market, and providing technology solutions that make it easy to do business with us. Licensed in all 50 states, we proudly serve clients across the nation, providing personalized and powerful solutions to help you become an even better partner for your clients. Speak to one of our experienced professionals today by calling (855) 967-0069.


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