The restaurant and bar industry is a tough one during any regular year, and there’s no denying the pandemic put a lot of extra pressure on these types of small business owners in Alberta.
As an industry, restaurant and bar ownership is incredibly difficult. Three out of five new restaurants do not last a year, while 80% more fail within the next five. That means 60% of businesses in the restaurant industry will run into major difficulties within a year, and four out of five will keep running into challenges that may lead to them closing down after four more.
On top if it being a field that comes with some inherent risk, detailed numbers from StatsCan from 2020 show that the restaurant and bar industry was especially hard-hit by the pandemic. More than 86% of food services and drinking places experienced a decrease in revenue in 2020, compared to 60.5% of all businesses. Close to 43% of food services and drinking places reported a decline in revenue of 40%. Only 5.5% of restaurants and bars were able to report unchanged revenues.
Restaurant and bar owners can protect themselves from specific perils with smartly chosen restaurant insurance and from a challenging field by staying on top of market trends and keeping a close eye on operations.
Definite improvement shown over past year
People have been enjoying getting out more and more, and 2023 started out strong for the restaurant and bar industry. Sales spiked by 6.6% for an all-time high for monthly sales in January, but have been slowly ebbing off since then.
Experts attribute fewer people dining out to the pressures of inflation, but despite many having to tighten their bootstraps, bar and restaurant sales are still way up over 2022. Year-over-year sales have increased 27 months in a row, with full-service restaurants being the greatest growth area. Total sales were 10.6% higher in May than in the same month last year, but are showing some signs of slowing. Things are better, but remain slightly unstable.
Different types of restaurant insurance
The experienced insurance brokers here at Lane’s can help you pick the perfect coverage for your restaurant or bar. As all businesses are different, restaurant insurance is highly customizable and provides a number of options.
Commercial general liability insurance
Commercial general liability insurance is an essential part of any restaurant insurance policy, and every business insurance policy. Without liability coverage, you would be on the hook to pay if your business’s actions — or lack of appropriate actions — cause injury, illness, death, or other losses.
An example of when a restaurant owner may be found liable is if someone gets sick after eating improperly prepared food, or if someone slips and falls on your property and injures themselves. A commercial general liability policy is your way of mitigating the expenses associated with settling for damages.
Insurance for your restaurant’s building and contents
If you own the building in which your restaurant or bar is housed, we can help you put together a commercial property insurance package based on the structure, its contents, your equipment, and everything else in it.
Food spoilage insurance
Restaurant owners spend thousands and thousands of dollars purchasing quality food and drinks to serve to their valued customers. Power outages, floods, and fires can result in huge losses, as food cannot be refrigerated or stored properly. Food spoilage insurance is the restaurant owner’s safeguard against these occurrences.
Equipment breakdown insurance
Even with regular maintenance, there’s no telling when essential equipment will break down. When you have tables full of customers, a broken oven is a disaster. Equipment breakdown insurance covers for losses incurred due to the electrical or mechanical breakdown of nearly every type of machine, and will cover the cost to repair or replace said equipment and any property that may have been damaged. Also covered is income lost and expenses sustained.
Business interruption insurance
Business interruption insurance provides compensation for financial losses resulting from unexpected circumstances that cause temporary or long-term interruptions to your business operations. Examples of such situations include, but are not limited to, power outages, fire damage, property damage, equipment failures, breakdowns, sabotages, and thefts.
Signs your restaurant or bar may be failing
The most common reasons that a restaurant or bar may fail include bad locations, inexperience, inflated costs, improper pricing, failure to market properly, and poor employee management. Bar and restaurant owners are often so wrapped up in the day-to-day that they may not realize the gravity of the situation until it’s too late.
Thankfully, however, if the right changes are made in time, restaurants are quite resilient. Signs your food or liquor business may be in trouble include:
- A high rate of turnover. This indicates that your employees are not happy, and every time you have to hire and train a new person, it costs the business in time and resources.
- An inability to pay the bills. Although restaurant or bar ownership means profits that fluctuate, you should always have enough in reserve to pay the bills and your employees.
- A decline in food quality is a clear sign of a lack of leadership, apathy among employees, and poor decision-making.
- A shrinking menu, or ingredients that are often unavailable, is another sign that you haven’t made the proper choices for food and that a revamp may be in order.
Business insurance options from Lane’s
There are a number of options for restaurant insurance and business insurance in Alberta that can be tailored to meet the needs of companies big and small. If you are just starting out, the experienced brokers here at Lane’s are trained to ask the right questions about what you do and who you are so that you can begin your entrepreneurial journey knowing you are completely covered.
For additional information about business insurance, have a look at our Most Commonly Asked Business Insurance Questions. Contact us at: