Hospitality – Cafes, Restaurants and Takeaway

The hospitality industry continues to be one of the growth industries in the Australian market. But like any other industry, it faces its own unique set of challenges ranging from turnover of staff, issues surrounding penalty rates, changing consumer trends, fierce competition and changes in the law such as tobacco or drinking regulations.

An essential business continuance plan is a necessity to these businesses, irrespective of size and management needs, businesses needs hospitality insurance so they are prepared to respond to unforeseeable circumstances and ensure they can still deliver a positive customer experience and maintain their reputation. Hospitality insurance can help protect your restaurant, hotel or resort from losses that are not covered by other insurance policies.

What are the exposures?

Whether you operate a cafe in Melbourne or a restaurant in Sydney, some exposures will be similar. Insurers will generally look at the location, construction and age of the premises and where the business is located. More importantly, they will pay specific attention to the fire prevention and cooking aspects of the premises.

Some of the questions insurers ask before providing restaurant business insurance cover are:

• Are extinguishers serviced?
• Does the premises have deep fryers?
• Do the fryers have a mechanical or electronic temperature control?
• Is the cooking flue system cleaned by a qualified external cleaner?

In effect, any aspect of the business that can result in a potential fire. Should you be unfortunate and suffer a water or fire incident, the possibility of closure of the business becomes real. It is important to ensure your hospitality business is insured for Business Interruption Loss and you are adequately covered.

Liability claims, and in particular food related incidents such as poorly maintained electrical equipment, burns and scalds from hot food, food poisoning due to inadequate refrigeration, hygiene or poor food preparation such as foreign objects in food, are common in the industry.

Machinery Breakdown claims are inevitable, with fridges and cool rooms operating 24 hours a day, 7 days a week, breakdowns will occur. A maintenance agreement will help to extend the life of these machines with regular inspections and cleaning.

It is simple to buy insurance for hospitality industry, but getting the right advice is crucial. What happens if you do have a major loss, have you allowed for additional costs that you are likely to experience? Have you considered the rebuilding phase? What happens to your good will?

These are some of the questions you need to discuss with your insurance advisor to ensure you have an adequate hospitality insurance and continuance plan.

What can go wrong?

An accidental spill of oil on a hot cooktop resulted in a kitchen fire at a well known restaurant in Brisbane.

The fire damage was established at $65,000 and took 15 weeks to settle. The business interruption from the loss of revenue was an additional $63,000 during this period.

In another instance, an elderly patron slipped one evening at a restaurant car park in Cheltenham, Victoria. The paint on the car bumps in the car park were faint and the patron did not see the raised path. The patron claimed there was inadequate lighting and the restaurateur had a duty to provide safe premises. The claim was lodged 2 years after the incident. The patron was awarded over $45,000 in damages.