Everybody knows that the hospitality business is a tough industry to succeed in. You face unprecedented risks whether you run a simple dive bar or a sprawling downtown restaurant.
There are more than two million restaurants across the country, and the majority will fail within one year. You need to be aware of the top risks for bar and restaurant owners and how to face them.
Cash Flow Problems
Cash flow is the biggest threat faced by small businesses in every industry. Approximately 82% of businesses fail due to insufficient cash flow.
Establishing profitability takes time, and most small business owners underestimate how long it takes. Startup costs are considerable, but failing to raise enough to achieve the right amount of liquidity could be your business’s nail in the coffin.
Successful bars and restaurants may be forced to operate for years before generating sufficient revenue to stand on their own two feet.
Fire, Theft, and Vandalism
Fire issues, theft, and vandalism are all issues your small business may struggle to cope with. Unfortunately, bars and restaurants are magnets for these types of problems. While there’s only so much you can do to stop it; you can better cope with the aftermath.
Holding a comprehensive restaurant insurance policy is critical for any restaurant or bar. This coverage will cover any costs you incur due to an accident or crime.
Make sure you shop around for the most affordable insurance deal for your business. Note that you should also take the time to investigate the level of coverage you’re getting. Check for any loopholes to ensure your insurer will pay out when the time comes.
Poor Marketing
Your brand is everything. It’s the one thing that separates you from everybody else. Think about how many bars and restaurants are in the average city. You have to compete for all of them.
Remember, patrons are incredibly loyal, and when they find a good place to spend their leisure time, they’re likely to stay. One of your greatest challenges is pulling them away and encouraging them to give your establishment a try.
Failing to market yourself effectively is one of the biggest risks any burgeoning bar or restaurant faces. Getting your business on the map quickly is critical because you’re still paying the bills while your seats are empty.
Certifications and Licenses
Bars and restaurants serving food and drink need far more than a simple business license. You need to account for liquor and food safety licenses, among other things.
You’re vulnerable to fines and additional complications when you neglect to ensure your permits and licenses are current. It’s simple enough to forget to renew since most municipalities will not have an automated process.
In some circumstances, you may also need to submit to an inspection to get your license renewed.
Foodborne Illnesses
The worst nightmare for anywhere that serves food is an outbreak of illness among its customers. Even minor instances of food poisoning can destroy your business’s reputation and ensure that people never give you a second chance.
Improper food handling procedures, unsafe storage methods, and spoiled foods increase the risk of an outbreak of illness. Business owners must make safety their top priority.
Assess your food safety policies and go out of your way to ensure that your staff is following them. It’s not just the threat of fines. It’s the irreparable damage to your reputation.
Outlet Security
A business that serves alcohol as part of its menu must account for security. Drunk people are unreasonable people. Unfortunately, bars and restaurants must have procedures in place to adequately deal with drunk patrons.
It may include employing a security team during the weekends or simply having policies on when you will stop serving alcoholic beverages to visibly intoxicated customers.
While there’s no way to stop this problem, you can take steps to minimize the disruption to other patrons and any damage to your establishment.
Workplace Injuries
Employees, contractors, and customers who sustain an injury on the premises could lead to serious legal problems. It underlines the importance of possessing both a workers’ compensation and business liability policy.
Accidents happen, but they shouldn’t cost you your business. You can take action to mitigate the risk of injury.
Install a full range of safety equipment, review the layout of your establishment, and make sure employees have been fully trained in workplace safety policies.
High Employee Turnover
The National Restaurant Association put the average annual employee turnover in the restaurant industry at 75%. The numbers are similar in the bar trade, meaning you will constantly be hunting for new staff to fill in the gaps.
Combatting high employee turnover means creating a workplace where staff members are happy to be there. Ensure you create a culture of transparency where staff concerns are listened to. Promote from within, and don’t be afraid to pay a little more to encourage people to stay.
Possess a policy for hiring new faces at short notice. Don’t be caught out because someone walked out without giving you advance notice.
Cybersecurity
Digital security is one risk that small business owners often overlook. The inconvenience, ambiguity, and confusion over your obligations can mean not having a cybersecurity policy at all. Yet you could be found liable if you’re the victim of a data breach.
Review the way you store, access, and manage your files. Establish a comprehensive cybersecurity policy to ensure that you have everything to mitigate the risk of becoming another statistic.
You may even want to consider taking out cybersecurity insurance to protect your organization if something does happen.
Conclusion
Bar and restaurant owners face tremendous risk every time they open their doors. However, the biggest risk is not preparing for the accidents that could occur in your place of business. Make sure you have policies in place to confront the most common risks these types of companies face.
Paying attention to the safety, security, and future of your business will give you a greater chance of staying in business for years to come.
What are you doing to prepare your bar or restaurant to face its greatest challenges?
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