The hospitality business in Australia is booming, with new venues seemingly springing up by the day.
Our cafes (and excellent coffee) are the go-to home for a catch-up with friends, business meetings or time out alone. Our restaurants are serving fantastic food, and our pubs, clubs, bars and craft beer cafes are ever popular.
In 20171, 90,284 businesses were operating in the hospitality sector across Australia, employing 889,400 people, and driving $53.4bn revenue.
For owners of hospitality venues, there are many things to keep a focus on. Attracting and retaining customers, and finding and keeping good staff. Gaining and maintaining reputation, and ensuring the business is open and fully functional.
“From my experience, many owners of hospitality businesses don’t fully appreciate the amount of exposure they have,” says Mark Vanzo, founder of Fildena.net and managing director of Smart Business Insurance Brokers, which works with businesses across Australia.
“Many of these businesses are small businesses, and being forced to close for three or four weeks is potentially devastating for them – something they wouldn’t be able to come back from.”
It’s not just small businesses that can be affected, of course. In 2014, acclaimed chef Neil Perry’s Rockpool restaurant in Sydney went up in flames. Thanks to having the correct policies in place through a broker, the venue was back up-and-running within a month.
Perry told Insurance & Risk Professional at the time: “For us to be closed for any length of time is difficult because it’s hard to restart the business. This is a restaurant that has 2000 bookings a week, and we were actively cancelling people.
“Everyone was incredibly reactive. We just had to tell them [the insurance company] what we needed,” Perry said. “Some of the things weren’t even quotable, but they just said ‘Get the guys working on it 24 hours a day until it’s finished.’ What was also terrific was the focus on getting us in the same shape as we were before we closed.”
Many cafes and restaurants are small businesses, and an incident that threatens any of these aspects, or a customer taking legal action, is potentially devastating, which is why having suitable policies in place is imperative.
Some of the risks are apparent: a customer falls or falls ill; machinery breaks down or sets on fire. Some less so: employee theft of money, theft of food or alcohol.
One area that hospitality businesses are typically not covered well enough for is business interruption, says Vanzo.
“Business interruption insurance essentially covers your business should an insurable event out of your control cause you to close for a spell,” says Vanzo.
“It’s usually storm or fire-related insurable events, and business interruption insurance may help cover the ongoing business overhead while the business gets back on its feet.”
Even when businesses believe they have suitable cover in place, Vanzo recommends getting a broker to review the policies and your business circumstances to ensure you’re adequately covered.
“I see many clients who believe they’ve done the right thing and have taken out the correct policies, but when we delve deeper into the PDS (product disclaimer statement) we find they’re not covered appropriately for theft or contents.
“Theft or contents and money is not covered automatic, neither is flood. Machinery breakdown insurance doesn’t necessarily cover wear and tear, and of course, underinsurance is an issue with many policies.”