Made-to-order insurance is vital for the restaurant industry's resilience

Nearly 20% of restaurants are leasing kitchen space to a virtual eatery, a change that brings new risks into play.

Agents should review coverage plans and risk management measures regularly with their restaurant clients to help them maintain adequate protection. (Credit: davit85/Adobe Stock)

The pandemic brought 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 convenience, touch-free experiences and cleanliness are top priorities for them today.

For example, 4 in 10 customers report being more likely to order delivery or take-out than to dine in at a restaurant compared to 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.

Restaurants have moved quickly to meet customers where they’re at:

While customers are responding positively to these changes — 77% say their restaurant experiences today are good or excellent — they also present new or evolving challenges for restaurants. About half (48%) of decision-makers say they’re challenged with third-party delivery services impacting profits or keeping up with the digitalization of their restaurant services. 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 decision-makers in 2023. Over half cite inflation (62%) and supply chain constraints (52%) as 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 decision-makers are optimistic about the future of the industry. According to the survey, over 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.

Linda Stueber of Nationwide. (Credit: Chadwick Fowler)

Agents must play a critical role in helping restaurant owners balance business acceleration with customized protection, ensuring that their insurance coverage keeps up with their latest ordering innovations and equipment. Unfortunately, 32% of restaurant decision-makers 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.

Linda Stueber is senior vice president of the middle market commercial insurance team at Nationwide. She has spent more than 30 years in the commercial property and casualty industry. 

Opinions expressed here are the author’s own.

Related:

Recommended Stories