A Broker’s Guide to Fast-Casual Restaurant Insurance

The fast-casual restaurant sector is projected to be valued at $209 billion by 2027 and is among the fastest-growing food chain types in the industry, according to Allied Market Research. Fast-casual restaurants fall somewhere between fast-food operations and restaurants with full-table service. At a fast-casual restaurant, you typically order at the counter either to sit in the restaurant or take the food home.

These restaurants appeal to the growing consumer demand for quick, inexpensive, and healthier meals than what you find at fast-food operations. Their concepts are innovative, serving up the perfect vehicle for delivering high-quality food at affordable prices. These restaurants include anything from the local deli to gourmet pizza restaurants and franchises like Panera and Chipotle.

In this article, we examine the ins and outs of fast-casual restaurant insurance including key coverages to look for in a policy.

Industry Trends

The fast-casual industry is resilient and able to pivot when challenges arise, as we saw play out in 2020 and 2021 during the height of the pandemic. The sector embraced contactless takeout and the use of QR codes, and, because many establishments already had third-party delivery services in place, they were able to meet the increased demand for home delivery.

Additionally, because fast-casual restaurants have limited table service, they can reduce their front-of-house staff and labor costs – important in this tight job market.

What Insurance Coverages Do Fast-Casual Restaurants Need?

Like any type of restaurant, a fast-casual restaurant must protect its operation against property and liability losses.

Property Insurance

Typically, owners of a fast-casual restaurant are tenants in the space where they operate, although some may own the building. Determining the values of the building and business contents is key in ensuring that an insured is properly covered. Kitchen fires and water damage are restaurants’ most common causes of property losses.

Business Interruption coverage is critical in helping a fast-casual restaurant pay ongoing expenses, recoup loss of income, and get back up and running in the event of a covered property loss.

Equipment Breakdown insurance is needed to protect the establishment’s financial health from harm to equipment – from the walk-in cooler to the AC – caused by hazards such as power surges, short circuits, centrifugal force, boiler overheating or cracking, and mechanical breakdown. For example, a power outage could prevent a restaurant from preparing and cooking food for its patrons as well as shut down its online order service, resulting in a significant loss of income. Or, if the compressors in a restaurant’s refrigeration unit short out overnight, all its food provisions will have to be discarded. Not only does the restaurant have the cost to repair or replace the refrigeration unit, but it also may bear the cost to replace the spoiled food. Additionally, there may be lost income while the refrigerator and its contents are replaced.

Food Spoilage coverage protects against financial losses if a refrigeration system fails due to covered loss, damaging supplies and ingredients. It will help pay for the cost of replacing the damaged goods.

Crime insurance is important to protect against employee theft.

General Liability Insurance

Of course, premises liability exposures are of great concern for fast-casual restaurants due to the number of visitors coming in and out of an establishment. Slips, trips, and falls are the most common causes of restaurant claims. Identifying hazards that increase a restaurant’s exposure in this area is critical.

While fast-casual restaurants don’t have a full bar, many serve beer and wine. For those that have liquor sales, Liquor Liability coverage is a must.

Employment Practices Liability Insurance (EPLI)

Protecting a restaurant against allegations related to employment practices such as discrimination, harassment, wrongful termination, and other mistreatment is essential to its ongoing success. EPLI provides defense coverage and will pay out if the insured is found liable for these types of claims.

Cyber Liability Insurance

Fast-casual restaurants are at the forefront of utilizing technology for online ordering, with customers providing credit card information into their systems. Cyber Liability insurance protects establishments in the event of a data breach or other type of cyberattack.

Umbrella Insurance

Primary Liability policies go only so far in protecting a restaurant from financial loss. Consider the ramifications of a significant loss involving a restaurant’s actual or alleged negligence. Restaurant umbrella insurance supplements the coverage provided by the underlying policies and provides additional limits that may be needed in the event of a large loss.

We’re Here for All Your Fast-Casual Restaurant Insurance Needs

Distinguished Programs offers a Package policy for fast-casual restaurants that includes Property and Liability insurance along with enhanced specialty coverages such as food spoilage, food contamination business interruption, employee theft, backup of sewers and drains, and other features.

You can also write EPLI, Cyber, and Umbrella insurance with Distinguished. Our Umbrella policies are available with limits up to $140 million.

We Say “Yes” to New Ventures

Distinguished is a great market for new ventures, providing you with an opportunity to expand your footprint in the growing fast-casual restaurant market. As long as the management behind the new venture has restaurant experience, we will accept submissions for new ventures/start-ups for review.

Our Package policy is also customizable, which is in sync with the innovative approach behind today’s fast-casual restaurants. We can work with you to meet the insurance needs of an individual’s operation.

Why Partner with Us?

  • You have access to a one-stop shop for comprehensive restaurant coverage.
  • You get the benefit of working with a team with more than 30 years of restaurant insurance experience.
  • You can write restaurants throughout the country.
  • Your clients’ Package Policy is written on A+XV paper, providing the stability they want in a program.

About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Real Estate, Community Associations, Hotels, and Restaurants. Property and liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished Programs’ high-limit umbrella programs remain the clear choice in its areas of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

View a full list of our programs and submit business with Distinguished.

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