While starting any new business always entails some element of risk, there are plenty of ways that both current and future restaurant owners may be able to protect themselves better. From amassing the finances needed to cover operational costs until a restaurant is ready to start turning a profit to defending against cyber attack, identifying and addressing the most significant risks facing their business is a concern that no owner can afford to take lightly. The following list highlights some of the most common and costly issues that could place the very survival of a restaurant at risk.
1. Insufficient Cash Flow
Underestimating the amount of time needed for a restaurant to establish itself in order to become profitable is often the single biggest mistake that new owners can make. While startup costs can be considerable, failing to raise sufficient capital can be nothing short of a disaster. Even the most promising restaurants may be forced to operate for months or even years before they start generating enough revenue to cover their operational costs.
2. Inadequate Marketing
Promotional efforts are of critical importance for any new business. Restaurants that are forced to deal with countless competitors may quickly find themselves getting lost in the crowd, especially in situations where owners fail to make advertising a top priority. An effective marketing or promotional campaign can be a key asset, one that no business owner can afford to overlook. Getting your new business on the map and buzzing as soon as possible is important.
3. Poor Brand or Reputation Management
Finding ways to manage a business's brand or reputation better can also go a long way towards ensuring that restaurants are more likely to succeed. Bad press, poor word-of-mouth reviews and customers who have had a negative experience in the past are all issues that business owners would do well to avoid. Successful reputation management is an essential concern, one that has the potential to make or break a new business. Restaurants increasingly rely on reviews online to drive foot traffic and should be treated as an important revenue channel.
4. Certification and Licencing
Failure to maintain all relevant permits and licenses can be a recipe for disaster. The potential fines and additional complications that may arise when businesses choose to neglect such concerns often have dire consequences. From a business or food handler's permit to an alcohol license, business owners would be wise to ensure that their paperwork and licensing can be maintained without issue. Talking with an expert risk manager will bring up a lot of these necessary precautions.
5. Food Storage
Ensuring that all food purchases can be stretched as far as possible can go a long way towards minimizing day to day costs. Dealing with appliance outlets and restaurant suppliers who can provide access to the full range of food storage and preservation options is often a worthwhile undertaking. From walk-in freezers to serving stations, the resources needed to ensure that all foods and ingredients can be safely and conveniently stored can allow restaurant owners to eliminate many potential issues or complications which might otherwise crop up.
6. Foodborne Illnesses
Even seemingly minor foodborne illnesses can threaten the health and well being of customers as well as doing irreparable harm to a restaurant's image and reputation.
Tainted food, improper handling or unsafe storage methods can drastically increase the risk of foodborne illness. Business owners would do well to make safety their top priority. Assessing existing food-handling policies and making any changes that may be needed as well as working with restaurant suppliers who have the equipment options and other resources that may be required in order to deal with a broader range of issues and concerns can be a smart move.
7. Fire Safety
A fire within the restaurant is never a minor issue. Taking steps to prevent fires or to ensure that all staff and employees have been appropriately trained to deal with a fire should one break out can be a matter of paramount importance. Even a small fire that may occur after hours in a vacant restaurant could create extensive damage. Fire safety is an important responsibility, one that no restaurant owner can afford to discount.
8. Workplace Injuries
Employees, associates and even customers who suffer an injury on the premises could lead to all sorts of legal problems that business owners would do well to avoid. Restaurant suppliers are typically able to provide a full range of safety equipment in order to ensure that business owners can reduce the likelihood of an accident or injury. While effective policies and safety equipment can make a key difference, even the most vigilant business owners may not be able to identify and address every potential hazard. Investing in an insurance policy or coverage option that can help to mitigate the long-term financial risks that may be caused by an on-the-job accident. Workers compensation will be your peace of mind here to cover any employee risks.
9. Burglaries, Vandalism and Break-Ins
Property theft and damages that may be caused following a break-in could be a more significant risk than many owners might imagine. From terminals and on-site cash to high-end equipment, there are any number of assets that could be targeted by intruders who manage to gain access to the environment. Taking steps to protect a restaurant from a break-in can often be done for a fraction of the costs needed to replace stolen items or to deal with cleanup and repairs. Security systems could help you save on your premium too.
10. Cybersecurity
Digital security is another concern that business owners often overlook. In addition to the confusion, and inconvenience that malware or unauthorized users may cause should they gain access to a business's network and computer systems, the lasting harm that a data breach may cause to customer relations can often have dire consequences. From websites and online payment portals to on-site networks and customer WiFi access, digital security is no longer a concern that restaurant owners can afford to take lightly. If your business takes credit card transactions, you may need to consider cyber insurance as well.
Addressing Future Risks
Risk is always a factor when it comes to running a business, but that does not mean restaurant owners may be powerless to protect themselves. Assessing current day to day operations to identify any underlying liabilities, issues or risk factors that may need to be addressed is often just the beginning. Keeping an eye out for emerging threats and ensuring that future risks are able to be dealt with as they develop can go a long way towards ensuring that restaurants can enjoy greater success in the days to come.
Here are a couple of other great articles which discuss different risks in the restaurant business:
Different Industries Require Different Insurance Protections
3 of the Top Liability Issues Restaurant & Bar Owners Face
Sources:
Planning for a Restaurant Tips
If You're In Business, You Care About Your Reputation
Fire Prevention 101