Risk Management Strategies for Food Businesses

Creating a profitable food business is a juggling act. You must offer fresh ingredients, create enticing dishes or cocktails, and know how to market yourself. Your equipment must be maintained and your staff members need the right training. Then there are customer expectations to meet and potential injuries to combat.

But even with the raw ingredients for success, a restaurant, catering business, or bar may still be one accident away from closing its doors for good. That's why running a strong food business means preparing for the worst, too – from kitchen fires and food spoilage to allergic reactions and liquor liability lawsuits.

The following risk management strategies can reduce the likelihood that a serious accident or liability lawsuit prevents your business from thriving.

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Risk Management Strategy 1: Thoroughly Train Employees

Risk Management Strategy 1: Thoroughly Train Employees

Your workforce is the heartbeat of your business. And since your employees handle your day-to-day operations, they can often help mitigate potentially disastrous situations – with the right training. That includes training in…

  • Equipment handling. Show your employees how to properly use or handle your equipment, even if it may seem self-explanatory. If you instruct employees not to do something, give them a reason for the rule. Often, sharing the rationale behind a rule boosts compliance.
  • Safety procedures. Walk your employees through your food business's safety protocol, such as how to handle, store, and prepare food items, and what to do in case of a fire or robbery.
  • Customer service. Employees who come in contact with customers should understand how to resolve problems. For example, if a customer is dissatisfied with their meal, your employee should know what to offer the customer to make up for the inconvenience and when to get the manager involved. For more tips on how to handle customer service issues, be sure to read our article, "Customer Service Concerns for Food Businesses."
  • Alcohol service. If your business serves, sells, or furnishes alcohol, you could be liable for liquor-related accidents caused by an intoxicated guest. That's why it's essential for liquor-selling establishments to ensure their employees are trained in alcohol service. (Some states even mandate this training.) Proper training can help your employees detect the signs of intoxication, know the steps for refusing service, and understand how to handle intoxicated patrons. For more information about alcohol service training, visit the Training for Intervention Procedures (TIPS) website.
Risk Management Strategy 2: Use Technology

Risk Management Strategy 2: Use Technology

Running a business in the digital age brings its own set of risks. For instance, if you store your customers' information on your computers or media devices, you have to worry about leaks or cyber thefts. But you can also use technology to help safeguard your business. Consider using…

  • Anti-virus software. Keep malware, phishing, and viruses at bay with the appropriate firewalls and software.
  • Password protection for your Wi-Fi network. Offering your place as an Internet hotspot is a good way to get customers through your doors, but you want to keep your network safe, too. Be sure to use secure networks and give your patrons the password at the register.
  • Security cameras. Though security cameras aren't exactly cutting-edge technology, they can help deter potential criminal activity and theft.
Risk Management Strategy 3: Maintain Your Facilities

Risk Management Strategy 3: Maintain Your Facilities

To reduce the chances of someone getting hurt on your property or suffering extensive property damage, be sure to…

  • Keep a clean kitchen. A tidy kitchen isn't just a matter of following health codes – it can also reduce the risk of grease fires and employee injuries. Ovens and stoves should be clean (inside and out), wet spots should be mopped immediately, and knives should be properly stored when not in use.
  • Clear the clutter. Walkways inside your establishment should always be clear of any obstacles to reduce trip-and-fall hazards. Also, always keep exits and entrances clear in case of emergency.
  • Shore up indoor and outdoor railings. If you have railings indoors and outdoors, be sure that they're secure. After all, you want them to hold up when someone is trying to steady their balance on their way into or out of your establishment.
  • Take extra precautions in winter. If your food business is located somewhere with harsh winters, be sure you always keep your walkways and parking lots shoveled and salted. This way, you can minimize the chance of someone slipping and falling on your premises and suing your business for medical expenses.
Risk Management Strategy 4: Maintain Your Equipment

Risk Management Strategy 4: Maintain Your Equipment

You rely on your equipment to prepare and store your food. Without proper equipment maintenance, you could put both your business and your customers at risk if your gear breaks down and spoils your food products. Be sure you regularly check…

  • Refrigeration units. Food spoilage can cost your business big time in destroyed inventory and ingredients – and it could lead to food-borne illnesses. Keep your food and customers safe by ensuring your fridges work properly and are regularly inspected.
  • Heating equipment. A malfunctioning heating unit can be a fire hazard. At the first sign of trouble, have a professional check out your range, stove, or heating lamps.
  • Food trucks. If you are a food truck owner, be sure your truck is up-to-date on its inspections so it can keep running smoothly and safely.
Risk Management Strategy 5: Adhere to Health and Safety Codes

Risk Management Strategy 5: Adhere to Health and Safety Codes

Be sure you know your local health and safety codes so that your establishment isn't caught off-guard during routine inspections. Regulations vary by county and state, so be sure to check with your health department for specific rules.

Generally, regulated areas of the commercial kitchen include…

  • Employee hygiene. Most health codes demand that employees wash hands and wear disposable gloves before handling food. Some counties require food service workers to wear hairnets or hats when around food.
  • Health inspections. Before you can open your food business to the public, you'll have to pass a health inspection by your local health department. Usually, restaurants are inspected twice a year. If you remodel your establishment, you may have to have pass another health inspection before reopening. If your business has a certain number of violations, it can be shut down.
  • Facilities and surfaces. Health codes may outline which cleaners are acceptable to use on equipment that comes in contact with food. The codes may also specify how frequently equipment and food contact surfaces should be cleaned.
  • Food handling, storage, and preparation. Once food supplies are in your possession, your business is responsible for their freshness and safety. Your local health codes will likely stipulate how you must store different kinds of food. And many health departments require employees to wear disposable gloves when handling prepared, ready-to-eat foods.
  • Equipment and supplies. Your county health department may regulate the equipment you can use for cleaning dishes and glasses, including sinks, drain boards, and more. Check with your local department to learn about its equipment specifications.
  • Safety equipment. You may be required to keep certain safety equipment on hand to comply with Occupational Safety and Health Administration (OSHA) regulations. For instance, in case of fire, restaurants are required to have fire extinguishers near all cooking equipment.
Risk Management Strategy 6: Have Appropriate Licensing

Risk Management Strategy 6: Have Appropriate Licensing

Any kind of business must have the proper licensure in order to run. Be sure your restaurant, catering business, or tavern has a…

  • Liquor license. You can apply for a liquor license from your state's Alcohol Beverage Control Board. In the United States, you need a liquor license in order to sell or serve alcoholic beverages at your place of business. Some states may even require your servers to carry permits before they can legally serve the public.
  • Food service license. If your restaurant or bar passes health inspections, your local health department will issue your food service license.
  • Business license. In most counties, your business must have a commercial license in order to legally operate. To learn more about business licenses and permits, be sure to read, "Launching a Food Services Business."
  • Driver's license. If you operate a food truck, shuttle food and equipment for off-premises events, or rely on your employees to run errands on behalf of your business in their own vehicles, your drivers will need to have the appropriate licensing.
Risk Management Strategy 7: Update Allergen and Dietary Disclosures

Risk Management Strategy 7: Update Allergen and Dietary Disclosures

According to Food Allergy Research and Education (FARE), up to 15 million Americans have food allergies. And if your business serves a dish with undisclosed ingredients that harm a customer, you could be slapped with a lawsuit. Keep your patrons and clients informed by offering…

  • Allergen disclosures. List potential allergens on your physical and online menu. Common allergens include nuts, shellfish, dairy, and meat products.
  • Dietary disclosures. If you offer gluten-, dairy-, or meat-free dishes, make note of these items on your digital and physical menus. That way, your customers can make informed decisions about their selections.
  • Nutrition information. If you can, create brochures and a page on your website with your products' nutrition facts.
Small Business Insurance: Your Restaurant or Bar's Last Line of Defense

Small Business Insurance: Your Restaurant or Bar's Last Line of Defense

Even with the appropriate risk management measures in place, disaster can strike. After all, there's no accounting for acts of nature or happenstance accidents.

That's why small business insurance is the final component of any risk management plan. To learn more about how insurance works to protect your restaurant or bar, read our article, "Insurance Products for Food Businesses."

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