Let’s talk about risky business. No, not the Tom Cruise movie. The fact that bar and restaurant risks are a reality for any business owner in this industry. From patrons who drink too much to music licensing snafus, Buzztime Business teamed up with CoverWallet to help you recognize 6 common risks – and gain tips for avoiding them.
Together, we held a webinar on June 27th and now we’re sharing everything we discussed…and more. To get started, there are a few key ways you can protect yourself from bar and restaurant risks:
- Don’t skimp on insurance! We live in a lawsuit-happy environment…prepare for anything
- Consult with an attorney to come up with contracts, legalese for any events, and disclaimers on menu offerings (such as consuming undercooked meats or unpasteurized products)
- Prepare a crisis communications plan to handle negative media attention
- Turn to industry resources like those from the National Restaurant Association
Now, let’s dive into the 6 most common bar and restaurant risks and the tactics for preventing them.
1) Bar and Restaurant Risks Arising from Alcohol Consumption
For businesses that serve alcohol on site, there are many different bar and restaurant risks that can arise, and things can go south quickly.
What Could Go Wrong?
For example, a business could be held liable for their customers’ actions as a result of them consuming alcohol, like fighting with another patron and injuring them. Even if their actions take place in a different location after they’ve left your establishment, you can still be held liable. That makes alcohol consumption one of the top bar and restaurant risks you will face.
Consider this scenario: a customer leaves the restaurant after consuming alcohol and then causes an accident while driving. This could result in a serious lawsuit against the establishment that the customer was at before the accident occurred.
We all know that alcohol is an important revenue driver, but it’s also one of the top bar and restaurant risks. It’s essential to make sure you are doing everything in your ability to create a safe environment and also implement precautions to ensure you aren’t overserving anyone.
“Dram Shop” laws make a business liable if they serve a patron who is clearly intoxicated, and they exist in 43 states. These laws drastically increase bar and restaurant risks because businesses can be sued after patrons cause harm to themselves or someone else.
How Can You Lessen the Risk?
As an owner or manager, how can you mitigate the bar and restaurant risks surrounding alcohol consumption?
The first thing is to conduct regular trainings. Alcohol training is designed for servers and sellers of alcohol with the aim of preventing intoxication, drunk driving, underage driving, and reckless behavior from patrons on and off premises. Basically, this can lessen bar and restaurant risks significantly.
Each state has different standards on the amount of server training that is required to be in compliance and be eligible to serve alcohol. The most widely used training programs are ServSafe Alcohol by the National Restaurant Association and The TIPS ® Program.
Training helps you remain compliant with state and local regulations regarding alcohol service. Secondly, it increases the level of protection and reduces bar and restaurant risks related to alcohol liability litigation. Having a safe alcohol serving certification can serve as a valid evidence of defense.
Plus, good training helps reduce the bar and restaurant risks of patrons drunk driving or your team serving alcohol to minors.
Finally, and this is something that CoverWallet can help businesses with, it’s a good idea to buy Liquor Liability Insurance. This covers businesses in the event of an accident, altercation or other events involving patrons who were served alcohol at the establishment. The insurance will reduce bar and restaurant risks while protecting the assets of the business if damages are awarded in case of a lawsuit.
2) Bar and Restaurant Risks of Employee Injuries
What Could Go Wrong?
First, let’s go over some of the bar and restaurant risks that could involve injury to your team. This is an industry where a significant factor of the customer satisfaction is driven by the speed in which the product (food) is delivered.
As a result, employees often have to operate in a very-high pressure environment and in a rapid pace. This is at the heart of injury-related bar and restaurant risks.
Some of the most common employees injuries that we have seen at CoverWallet include:
- Slips and falls: According to the National Floor Safety Institute (NFSI), more than 3 million employees are injured each year from slip and fall accidents. Each accident of this kind usually results with a claim of an average cost of above $21K, representing substantial bar and restaurant risks.
- Cuts and lacerations: More than 20% of injury claims in restaurants are due to cuts, lacerations and punctures. This includes daily activities of peeling, mincing and dicing that include using equipment in a very condensed kitchen, which significantly increases the bar and restaurant risks of these kind of injuries.
- Then there are also burns and scalds – Working with fire and heat can lead to spilling and splashing of hot oil, food products and beverages, as well as contact with cooking equipment like stoves, grills, ovens and pots. In fact, approximately 13% of injuries claims are burn related.
- Sprains and strains – These typically result from repetitive activities of lifting, bending, slipping or tripping and make up approximately 15% of injury claims in restaurants.
In order to mitigate the bar and restaurant risks of employee injuries, take the following measures:
Do a routine examination following the standards set by the Occupational Safety and Health Administration at the OSHA website. And make sure that you comply with all requirements and include a safety program on your training.
Properly train your employees so they can avoid possible injuries in the workplace. This should include training on safety procedures and how to operate safely in a high-pressure environment and for handling different types of equipment (e.g., knives, ovens).
Finally, and this is required in most states, ensure you have the right Workers Compensation insurance in place!
This insurance provides wage replacement and medical benefits to employees who are injured at work. And in exchange, employees relinquish their right to sue their employer for negligence. This is one of the best ways to reduce your bar and restaurant risks.
Workers Compensation Insurance protects employers from costly lawsuits, while also ensuring employees that they are guaranteed some coverage in case of illness or injury on the job. It can vary by state, but you can learn about your specific state’s rules, here.
3) You’ve Been Hacked! Bar and Restaurant Risks Related to Cybersecurity
What Could Go Wrong?
Picture this: Your restaurant was hacked – customer contact information AND credit card data is now on the “Dark Web.” You must inform your customers of the breach (can you say LOST TRUST!?!). The hackers also stole customer data, and are holding it for ransom…pay up or lose it all!
Recently, the Checkers chain faced these exact bar and restaurant risks. 83 Checkers (and 19 Rally’s Restaurants) in Canada had malware inserted into their ePOS. The malware was funneling info collected by a magnetic strip (swipe) on debit/credit cards. In another example of cybersecurity bar and restaurant risks, The Shed restaurant in Ocean Springs, Mississippi – and thousands of others nationwide were hacked. The hackers decided to post “Hacked by ISIS” at the top of each website. Yikes.
How to Lessen Cybersecurity Bar and Restaurant Risks?
The best thing you can do now is to consult with an IT company to set up a secure network – and prepare protocol for protecting sensitive data. You should also follow these rules to minimize cybersecurity bar and restaurant risks:
- Use strong passwords and change them often.
- Upgrade to chip card readers and mobile payments for PCI compliance, get rid of mag strip readers!
- Never click on links in suspicious emails…it could be a “phishing” email. Once you click on the link, a virus or malware could be downloaded onto your computer.
- Subscribe to a virus and malware protection software, update it often as hackers get more sophisticated everyday.
- If you use WordPress for your website, do not download plug-ins that are not reputable or are created in another country.
- Use a separate server for free wi-fi, store all sensitive data on a different server! Use this guide to setting up secure free wi-fi.
- Don’t overlook internal bar and restaurant risks to cybersecurity. Someone within your own company could access and share sensitive data without the right permissions in place.
4) Protecting Your Reputation: The Bar and Restaurant Risks Related to Review Sites
What Could Go Wrong?
Get ready to face more bar and restaurant risks. This time, the danger is online. Imagine an unhappy guest writing nasty reviews everywhere: Facebook, Google, Yelp…etc. If you lose your cool and post an equally angry response, you might go viral (for all the wrong reasons) like this restaurant in California. Eventually, the restaurant had to shut down because they couldn’t face the bar and restaurant risks related to review sites.
How Can You Lessen the Bar and Restaurant Risks Involving Reviews?
It doesn’t matter whether your restaurant messed up – or the customer is just overacting. It’s 100% all about HOW you respond. Anger creates FIGHT vs. FLIGHT and both are bad. You will be tempted to do both…
FIGHT=leaving an equally nasty review
FLIGHT=ignoring the bad review
Instead, use the 5A Formula for responding to negative reviews.
“I just left your restaurant and I am disgusted. The hostess was too busy on her phone to acknowledge us. Then, I ordered a burger. Yuck. The burger patty was harder than a hockey puck. NEVER going back. I mean never.
The 5A Response
1 Authority: Hi Rachel, this is Sorry McSorrypants, the manager at Big Burgers R Us.
2 Acknowledge: I truly regret that our hostess was rude to you.
3 Action: I had a meeting with her and reviewed what we expect of our staff. Our kitchen staff just underwent a training on how to check for doneness before serving meat.
4 Amends: I’d like to show you that we are eager to earn your business. Please call me directly at 1-800-RLY-SORRY.
5 Ask: Rachel, I truly apologize and I ask you to give me – my staff, and our restaurant one more try.
Prepare now for these serious bar and restaurant risks to your reputation. Write out standard responses that you can customize. Most importantly, be sure that you are receiving instant alerts from review sites so you are aware when a customer is leaving reviews – both good and bad. Most expect a response within 24 hours.
5) Bar and Restaurant Risks Involving Media Copyrights
What Could Go Wrong?
Let’s pretend you knew about bar and restaurant risks surrounding media licenses. But you took the risk anyways…you didn’t pay ASCAP/BMI fees; you rocked your own personal playlist anyways…and now you’re faced with a 6 figure fine.
If you want a real example of these bar and restaurant risks, consider that a cover band played “Bad Moon Rising” in a Cleveland bar. The bar didn’t have the right licensing. The bar – not the band – was hit with a $1.5 million lawsuit.
Or, you know that everyone loves Game of Thrones, so you throw a watch party so people can start from the beginning. Boom, HBO comes at you with a lawsuit.
How to Lessen Copyright-Related Bar and Restaurant Risks
Pay the licensing fees, which can be as $370 a year according to a June 2018 interview with a BMI rep. Only need background music? You can use commercial streaming services like Napster for Business, Soundtrack Your Brand by Spotify, Rockbot, etc. But if you charge a cover fee or let people dance to the music…you’ll need ASCAP/BMI license.
Train your team to never play their personal playlist! You need licenses if you’re hiring cover bands, or musicians that are ASCAP/BMI members. Yes, you need licensing if you run karaoke too. Use this guide to music licensing to stay as safe as possible from bar and restaurant risks involving copyright.
As for TV bar and restaurant risks, you cannot show anything that is specifically indicated for at-home viewing only. That means NO HBO, Netflix, Hulu, Amazon Prime – also, no movies should be shown from DVD/your computer. The best bet is to talk to your cable provider about a commercial license, or stream entertaining and interactive content like Buzztime.
6) The Ultimate Bar and Restaurant Risk…A Foodborne Illness Outbreak
What Could Go Wrong?
This really is your worst nightmare: You get a call from the health inspector, following up on claims from multiple people that they were sickened at your restaurant. By afternoon, your restaurant’s e Coli outbreak is the online newspaper’s top story. After all, food-borne illness is on the rise – the CDC reported the HIGHEST number of cases in 2018!
Foodborne illness is costly: A Johns Hopkins study suggests it can cost up to $1.9 million if up to 250 get sick – and that includes lawsuits, legal fees, lost revenue. It’s proof that you must pay attention to bar and restaurant risks that come with foodborne illnesses.
How to Reduce the Bar and Restaurant Risks of Foodborne Illness
You should train your team using the ServSafe program available through the National Restaurant Association.
It’s important to know what the main bar and restaurant risks are for foodborne illnesses. The FDA released a massive study in 2018 and found that the biggest 2 risk factors that needed improvement to prevent illness are:
- cold holding of foods that need refrigeration (so they don’t grow bacteria)
- employee handwashing (since sick employees can transfer bacteria to foods through fecal-to-oral route)
To reduce bar and restaurant risks, the FDA recommends NEVER letting employees use bare hands to work with ready-to-eat foods. Yes, that means bartenders grabbing lemons. Instead, they should use mini tongs or gloves.
Always cook raw foods to required safe internal temperatures. We know…no one likes well done steak. But at least include boilerplate legal verbiage about “consuming raw or undercooked foods at your own risk.” Consult with an attorney to write this verbiage in a way that at least minimizes your bar and restaurant risks.
These 6 bar and restaurant risks may have you feeling nervous. That’s a good thing. It will motivate you to take action and put measures in place to minimize and mitigate your risks. From all of us at CoverWallet and Buzztime Business, we wish you a successful year ahead!