If you own/operate or plan on entering the fast food restaurant industry, the Insurance Coverage you need largely depends on the type of fast food restaurant set-up you operate, and the food or products you sell.

It is our opinion that General Liability Insurance alone does not provide adequate protection for fast food restaurants.  Read on to see the details; we are going to break down and explain the different types of coverage best suited for your fast food operation. You can then decide on whether you agree with us or not!

With people constantly on the move and juggling their busy schedules, Fast Food Restaurants or Quick Service Restaurants (QSR) as they are known in the Industry, are growing in popularity every day & it comes as no surprise that this segment is responsible for more than 50% sales in the entire restaurant industry.

Globally, fast food generates revenue of over $570 billion - that is bigger than the economic value of most countries. In the United States revenue was a whopping $200 billion in 2015… There are over 200,000 fast food restaurants in the United States and it is estimated that 50 million Americans eat at one of them every single day. The industry employs over 4 million people and counting - restaurant franchises added over 200,000 jobs in 2015, according to FranchiseHelp.com  

There are 3 main categories of Fast Food Restaurant Set-ups –

1. Brick and Mortar Fast Food Restaurants
2. Mobile Fast Food Restaurants
3. Fast Food Delivery

We cover insurance options available for each of these types of fast food restaurants below in detail.

Brick and Mortar Fast Food Restaurants

• Traditional "Sit down" Fast Food Restaurant/ "Family Style" Or "Formal"
• Diners
• Take-away
• Drive-through/Drive-thru

Common insurance coverages for Fast Food Restaurants

General Risk Coverage

This is a broad based insurance coverage that basically protects assets like your physical location, kitchen equipment, furniture, lighting & décor and electronic fixtures like televisions & table-top tablets. 

This coverage can also include exterior assets like your business signage and landscaping.

Fast Food Restaurant Liability Insurance

Liability Insurance protects your business from claims arising out of damage to property or body injury or harm.  It consists of two categories:

• Premise Liability Insurance

Covers your customers from accidents, slips and falls in your restaurant or other incidents arising out of daily restaurant operations.

• Product Liability Insurance

Any business that manufactures, handles, distributes or sells products is at risk.  A customer could fall sick and blame it on the food he consumed at your eatery.  Legal expenses are covered by this insurance.

Fast Food Employee Practices Liability Insurance (EPLI)

Working in Fast Food Restaurants can be pretty hectic. Employees always feel pushed for time, especially during 'rush hour'. Use of technology like algorithmic scheduling could result in employees working irregular shifts or longer hours, raising stress levels. Conflict between workers or with the management is inevitable and even if allegations turned out to be false, your restaurant could lose a lot of money on legal proceedings. EPLI is something every Fast Food Restaurant Owner must consider.

Business Owner's Property Insurance (BOP)

This coverage offers you the flexibility and convenience of 'bundling' all major property and liability risks into one insurance package.  It is very popular among Fast Food Restaurants, as it is more economical than taking out individual policies.

Other optional coverages that your fast food restaurant needs:

Fast Food Business Interruption Insurance

You need protection in the form of 'Income Insurance', especially in the aftermath of a fire or a natural disaster. It could take a while to get your business 'back on its feet'. Financial obligations like rent, salaries, loan re-payments, taxes and utilities need to be met & this policy provides you with the financial assistance to tide you over these difficult periods.

Sometimes a disaster might strike a major raw material supplier to your fast food restaurant. How do you remain in business if you cannot serve food to your customers? You might want to think of additional coverage known as 'supply chain coverage' or contingent business interruption coverage.

Business Auto Insurance

Running a small business may make it difficult for you to differentiate between your personal vehicle and a commercial vehicle, because sometimes you make deliveries, meet business clients, transport employees or equipment in your car or van.

Personal insurance coverage generally offers you protection when you use your vehicle for personal commute & not for business purposes.  Your business could lose a lot of hard earned revenue in the event of an accident.

Commercial auto insurance offers you greater protection and policies may include;

• Bodily Insurance Liability
• Personal Injury Coverage
• Collision Coverage
• Comprehensive Coverage
• Un-insured or Under-insured motorist coverage

Non- owned / Hired Auto Coverage

Often employees use their own vehicles to run office errands or make sales calls. This type of coverage protects your business in case an employee owned vehicle is involved in an accident while he/she is on the job.

Fast Food Spoilage Coverage

The objective of this coverage is to prevent spoilage of perishable stock resulting in lost business and revenue. Power outages, disruptions in power supply or mechanical failure of your commercial food refrigeration equipment could wipe out your perishable inventory.

Fast Food Property and Sewer and Drain Coverage

A sewer and drain coverage endorsement covers your restaurant from direct physical damage as a result of clogged drains, plumbing mishaps or sump pump failures.

Employee Dishonesty Coverage

The profitability of your fast food restaurant may be badly hit due to internal as well as external theft. Smaller establishments are at high risk from fraudulent activity by its employees as they may not be able to afford to put in place systems to safeguard their cash, food and products.            

Employees at all levels throughout your restaurant are capable of theft.  Your vendors too, may not spare an opportunity to defraud you.

Theft could be in various forms, cash taken directly from registers, receipt manipulation, credit card skimming or even theft of intellectual property such as your closely guarded recipes!  Such acts can also tarnish your brand image or betray customer trust. 

You could try to limit opportunity for fraud but the best way forward is to buy peace of mind knowing that you have coverage.

Fast Food Business Cyber Liability Insurance

Cyber-attacks on businesses big and small, data breaches and computer systems being infected with malicious software, is not news anymore.  That's why Cyber Liability Insurance is no longer optional for your fast food restaurant.

Data breach is common and can actually be avoided if employees are more careful in storing data safely and securely.

However, the result of a security breach can be catastrophic for the company in terms of lost revenues, hefty legal fees & settlements, not to mention loss in customer trust & loyalty and damage to your brand.

Fast Food Commercial Umbrella Insurance

An umbrella insurance provides your business with additional coverage beyond your current policy limits.  An expensive accident or a long drawn legal battle could exhaust your primary insurance limits.

Our experts can help keep you and your fast food operation secure by customizing policies that offer you the level of protection your business needs.

Mobile Fast Food Restaurants

If you haven't noticed there is a food revolution happening, with fast food restaurants taking their food to the streets. Restaurants on wheels and mobile kitchens are hitting cities & towns across America, as street food is gaining popularity.

Fast food restaurant owners are benefited with low startup costs, lower overheads and the mobility to move their business to where their customers are.

For the customers or 'foodies' as they are now called, delicious, moderately priced meals are available "just around the corner".

Types of Mobile Food Vehicles

• Food Trucks
• Food Trailers
• Bustaurant – a restaurant within a bus

The fact that these are mobile businesses exposes their owners to distinctive risks.  From an insurance perspective you need to know that you are dealing with a business, and a commercial vehicle and you need adequate insurance for both.

What type of Business Insurance do you require for your Mobile Food Vehicles?

Commercial Property Insurance

This policy will cover your kitchen equipment like gas ranges, fryers and grills, ovens, refrigerators, computers and food in the event of an auto accident, fire, theft and vandalism or damage due to extreme weather.

General Commercial Liability Insurance

This coverage not only covers the food you sell but also protects you from claims by your customers arising from property damage or bodily harm.

Workers' Compensation Insurance

This insurance covers your employees, and helps pay medical bills or lost wages if they are injured on the job.

Commercial Auto Insurance

This policy is specially designed for your vehicle during your business operation.  If you own a traditional food truck that is an all-in-one kitchen and vehicle combination, you are provided with liability coverage as well as collision and comprehensive coverage for your vehicle.

If you run your restaurant in a food trailer, that is separate from the kitchen portion, the vehicle used for towing has to be insured on a commercial policy.  Additionally an endorsement on the same policy will cover the food trailer for comprehensive and collision coverage while it is being towed.

Other Mobile Fast Food Restaurants

Pop-up Fast Food Restaurants

Pop-up restaurants are becoming increasingly popular in the industry — according to the National Restaurant Association's What's Hot 2019 Culinary Forecast, pop-up temporary restaurants are the second-most popular restaurant concept.

Pop-up restaurants are trendy, temporary restaurants that could be hosted in existing restaurants, bowling alleys, theatres or local outdoor markets.

Considering the phenomenal growth of pop-up restaurants in recent years, insurance companies have been slow in coming up with specific policies for this segment.

Just like permanent restaurants, pop-up restaurants need business insurance.

Fast Food Carts & Stands

These outlets sell ready-to-eat food and drink. With lower operating costs they are able to serve up quality meals at affordable prices. Simplicity and accessibility is definitely their selling point.    

With Americans gravitating towards ethnic fast food these days, the risk of introducing global street fast food to an American audience has decreased, making this a very profitable business.

As with any food business, operation of food carts and stands are regulated and require licensing.

Fast food cart operators are exposed to risks as well.  A mobile food cart business coverage will protect you in the event your equipment gets stolen, your cart is vandalized or if a customer claims to have fallen sick after eating food at your cart

Home Food Business Insurance

Cottage Food Laws allow individuals or small businesses to legally bake & prepare certain food products in their home kitchens and allows them to sell this food directly to consumers and sometimes to restaurants and grocery shops.

What is generally allowed?

• Baked goods (cakes, cookies, pies, and breads)
• Jams and jellies
• Dry cake and cookie mixes, dry nut mixes, dry cereals, granola, popcorn

The food may be cooked at home but that doesn't protect you from the risk of a customer suing you for falling sick or developing an allergic reaction after eating your cake or jelly.  With adequate coverage, your home food business is financially protected.

Fast Food Delivery

As delivery wars escalate with Fast Food Restaurants vying with each other for 'delivery dominance', we are witnessing a new era of fast food.

Food delivery - primarily online orders - is set to become a $75.9 billion business by 2022, according to a 2018 Cowen & Company report.

Your business is at risk unless you look in the following areas that require insurance coverage:

Commercial Auto Insurance

For restaurant owners that provide company owned cars or trucks to their employees, commercial auto insurance is a must.

Hired & Non-Owned Auto Coverage

Restaurant owners who hire employees with their own private vehicles need to maintain a business insurance policy with hired & non-owned auto coverage.          

Fast Food Takeaway Insurance

Any fast food takeaway that supplies food and has contact with members of the public, must consider public and product liability insurance.

A fast food takeaway insurance policy is a comprehensive insurance package that protects your business against the following risks:

• Property and Material Damage
• Business Interruption
• Public Liability
• Product Liability
• Employers Liability