Terry's Restaurant Insurance Blog


Restaurants Owners Dodging Workers Compensation Insurance – Your Time May Be Running Out

In NC the law clearly states that if you have 3 or more employees then you must either purchase a workers compensation policy or certify to the state that you have the liquid financial assets to cover employee injuries.  And if you fail to meet this requirement?  Well then the state can fine your company up to $100 per day and even charge the business owners with a class H felony.  In addition to all of that, if one of your employees is injured, then you can be held liable for the benefits that a workers compensation policy would have paid out for that injury.  But enforcement of these rules has been lax for many years.   All of that may be about to change.

This week, Governor Bev Perdue indicated that she wants this problem fixed, and fixed quickly.  With this kind of heat on the politicians, we may finally see some movement toward more fairness in this system.  While there are more than 170,000 business in North Carolina with 3 or more employees, only about 140,000 of them have proven financial responsibility to the state, or have purchased a workers compensation insurance policy.

The NC Industrial Commission is tasked with enforcing the rules that require businesses to purchase workers compensation insurance in North Carolina.  Their approach has been to help workers collect from their uninsured employers after they have been injured.  There has been little to no enforcement of the law before an injury or accident.  This approach has led to many businesses skirting the law and not buying workers compensation insurance as required.

If your restaurant has purchased workers compensation insurance, then you should be particularly glad to see some action from your state government on this issue.  After all, the restaurant industry is one of the worst offenders when it comes to a failure to purchase workers compensation insurance.  If you have to work the cost of your policy into your menu pricing, but your nearest competitor doesn’t because he or she doesn’t purchase work comp insurance, then you are being put at a competitive disadvantage.   And beyond that, getting full compliance across all businesses in NC will almost certainly lower workers compensation rates for all businesses in the state.

If your restaurant is one of the many out there that has chosen not to purchase workers compensation insurance, then your time may be running out.  Many restaurants skip workers compensation without realizing that they are putting their own assets on the line if a worker gets hurt.    You may soon be the target of the NC Industrial Commission‘s new strategy for enforcement.  This means that you may be facing huge fines and possible jail time, depending on how this story line plays out.  Of course I would advise that you purchase a workers compensation insurance policy for your restaurant today, but if you are going to keep trying to dodge this requirement, then you had better keep a close watch on this story.

Governmental entities generally move slowly toward change, then with the catalyst of some outside news or social pressure can make changes very quickly.  The story of lax enforcement of NC workers compensation laws may fizzle quickly or may result in some fundamental changes that could impact your restaurant business.  With the state coffers bleeding red, this could be a real revenue enhancer.  Betting against this one might be risky.


Restaurant Insurance And Back To Work Programs

One of the largest chunks of the workers compensation claims cost is the disability portion.   Disability payments for workers compensation injuries make up 40% of the total cost of claims.   Paying your employee a salary while he or she is disabled and nonproductive can add up quickly.  And since your workers compensation insurance rates are based on your past losses, these costs will translate to higher workers compensation insurance rates for your restaurant over the long haul.  You can’t do much about the higher medical and pharmacy costs related to workers compensation insurance but you can have a huge impact on the disability portion of your workers compensation claims.

Let’s start with a look at a few of the numbers related to workers compensation injuries and loss costs.  The National Safety Council reports that a disabling injury occurs every 1 second in the US.  That’s more than 63,000 per day.  They also estimate that a single work related disabling injury costs an average of $48,000.  Now consider that research has shown that injured employees recover faster, return to their full time positions more quickly and are more satisfied with the claims process if they are offered transitional work opportunities.

What does this mean for you?  Well, if you are serious about controlling your workers compensation insurance costs, one area where you have a lot of control is in implementing an effective back to work program.  If you can put your temporarily disabled employee back to work in some capacity then you will have a better chance of reducing the total amount of the disability claim.  The American College of Occupational and Environmental Medicine tells us that the odds of an employee ever returning to work again drop by 50% after the 12th week of disability.  And you do not want a temporary disability monthly payment to turn into a permanent one.

So you need a plan to get your injured workers back to work in some capacity as soon as possible.  This may mean creating work for them that is below their skill level, or perhaps allowing them to work part time during their recovery period.  Another option that has become much more popular is to pay them to provide voluntary work to a local nonprofit.  This type of transitional duty to keep them occupied until they can return to their old job on a full time basis has been proven to be very beneficial, both for the restaurant owner and for the injured employee.

Back to work programs need to be creative and dynamic.  You don’t have to invent the wheel yourself on this.  Instead, choose a dedicated workers compensation insurance company, one that only sells workers compensation insurance.  These companies often have much more creative back to work programs that have been tested and proven to work. 

Restaurant insurance is complicated and if mishandled can be dreadfully expensive for the restaurant owner.  You should hire an insurance agent with experience insuring restaurants just like yours.  At Clinard Insurance Group, located in Winston Salem, NC, we currently insure more than 100 restaurants all across North Carolina and South Carolina, from Charlotte to Wilmington and every small town in between.  Please call us with your restaurant questions; we would love to help you.  You can reach us, toll free, at 877-687-7557 or visit us on the web at


What To Do About The No-Shows….

This week’s blog will focus less on insurance for your restaurant and a bit more on the marketing and management side of the equation.  And the issue at hand this week is the lost revenue that some of you may face due to reservations and no shows.  I want to share with you what a few other restaurant owners are doing to deal with this problem.

First of all, the no shows for reservations are not a problem for every restaurant.  Those hardest hit by this problem are those that have a high per table revenue, limited seating capacity and who stay pretty busy.  Let’s face it, if you are turning people away from your restaurant because you are holding reservations for those who don’t show up, that is clearly a case of lost revenue for you.   Now some restaurants deal with this problem by simply not taking any reservations any time.  I see a few problems with that from a marketing and management perspective.  First of all, you won’t know how many customers you are losing because of the no reservation policy.  There is a new restaurant in my town that I have not yet visited because they don’t take reservations.  They are located in the entertainment district in my town and if I go there to eat, it will be before I attend an event. With the uncertainty of their no reservation policy, I have skipped dining there now several times.  And they don’t have any idea that they have missed my business because of this.  Secondly, their regular clients who may show up on a night that there is a big show nearby may face a long wait time.  Is this the way to treat your customers who keep you in business?

So what are other restaurants doing about this problem?  Well there are those that are using social media to try and punish the no shows.  I have seen a photo on twitter of two waiters holding up their middle fingers with the caption that says this is to the people of two different no show tables last night.  Now, if this can pass for humor, I suppose it is one answer, but it really doesn’t provide a long term solution to this problem.

An approach that is gaining in popularity now is charging diners for a reservation if they don’t show up.  While this may seem a bit drastic on first blush, remember this rule – Your clients will interact with you in the ways that you train them to do so.   If you choose to go this route, use it to your advantage.  Tell them that you are so popular that you have had to create ways to limit the people visiting you each night and this is one of your strategies.  Most restaurants who do this have reported that they rarely have to actually charge a client, rather by explaining this on the front end, they get less reservations from fickle clients who were not that committed to them in the first place.  Some restaurants have even steadily increased the no show fee until they reach the point where they see a significant drop off in no shows.

There is even a restaurant in Chicago that requires you to purchase a nonrefundable ticket in advance in order to dine there.  The tickets are priced under a dynamic pricing model that makes it more expensive to eat during the busiest times and cheaper when the demand is lower.

If you are losing money in your restaurant to no shows, consider thinking outside the box and finding ways to train your customers to behave in ways that benefit you rather than damage your revenue stream.  Don’t be afraid to try something new, but be sure that you have mechanisms in place to measure the results so that over time you can tweak your ideas to make them as profitable as possible.

When it comes to insuring your restaurant, I hope you will call Clinard Insurance Group, toll free at 877-687-7557 for help with your restaurant.  Or you can visit us on the web at


Restaurant Insurance Business Interruption Claims – There Is A Real Devil In These Details

Most restaurant owners purchase a business owners or commercial package policy to protect their restaurant from many of the property and liability risks that they face.  One component of these policies is usually some form of business interruption insurance to protect against lost profits if there is a covered loss to the property owned by the restaurant.  It is fairly easy to describe what this coverage is and why you need it.  But it is rare that a restaurant owner spends any time at all understanding just how he or she will collect for this kind of loss.

The business interruption claims process includes terms like, forensic accounting, analytics, due diligence and statistics.  These issues come into play largely because of the differences in details associated with internally prepared financial information and the analysis that is needed to determine lost profits.  Having a rudimentary understanding of the claims process should help a restaurant owner better manage expectations in the beginning of a business interruption claims process.

Any business interruption claim involves a strong dose of due diligence.  This due diligence takes aim at calculating the impact of a loss on cash flow and profits with a perspective beyond just the empirical accounting data.  The forensic accountant involved in the claim must develop a clear understanding of the market environment for the restaurant, understanding the components that drive restaurant sales as well as profits.

The standard that most business interruption claims examiners are working toward in any claim of this nature is an answer to the following question.  What are the expected earnings, had no loss occurred, minus actual earnings during the time period of the recovery for the restaurant?  This question can be even more difficult to answer for restaurants in their first year of operations that don’t have a previous year month to month comparison to help.  If there is a peak season element to the restaurant’s business, then this calculation gets even more difficult.

Here are just a few of the questions a claims adjuster might be asking about your restaurant after a severe loss has shut you down or limited your ability to do business with your customers.  How are operations planned and scheduled at your restaurant?  To what extent do your customers dictate the planning and scheduling of your operations?  Are budgets available?  If so, how are they used in planning future operations?  How accurate have past budgets been to actual results?  What does the marketplace for your restaurant look like?  What is your present competition?  What is your future competition?  Is there a peak season component to your restaurant’s gross sales?

During the information collection process, the adjuster will probably need to see all of your income statements and balance sheets for the past three to five years, along with any budgets for those time periods as well.  And while this data will present a good picture, the adjuster will still have to verify the causality of the property loss to the lost income.  If your restaurant is located in a place where the highway is about to be closed for the next few years for a bridge building project, perhaps just relying on last year’s gross revenue numbers will not yield a good estimate for the coming year.

Business Interruption claims are by nature very complex and slow moving.  As a restaurant owner it is best for you to purchase this insurance protection with your eyes wide open.  The claims process will be slow and frustrating and if you take a simplistic approach to guessing what you are due from the insurance company, then you may be disappointed with any and all final settlement offers.  If you would like more help understanding your business interruption coverage, or if you need any help with your restaurant insurance policies, please call us, toll free at 877-687-7557 or visit us on the web at


Social Media Content For The Restaurant Owner

I’m taking a different approach with this week’s blog in that I will not be focusing on just an insurance issue for restaurant owners, but rather I want to share some social media strategies that may be helpful to the restaurant entrepreneur.  I will make the assumption that your restaurant is already involved in some social media platforms like Facebook and Twitter and that you hope to engage these platforms to let current and potential customers know what you are doing and help them want to come and spend money at your eating establishment.

Let’s start with an old saying which can be very true in the social media world.  It’s not what you say, but how you say it that is important.  Begin with the understanding that writing for the social media is very different from the formal business writing that you may have learned in school.  This is quick hitting, witty and conversational writing where one sentence may be the only thing by which a potential customer will judging your entire restaurant.  A simple typographic error could give them the impression that you are sloppy and don’t care.  So here are some simple tips that may help you.

First of all, have a plan.  You want to be consistent in your approach and in your delivery.  If you are unable to get a conversation going on one topic, you should still know what your next post will be.  You can develop post topics and reasons to share that have to do with commonality with your customers and that can lead to offers that you may make to induce them to try your restaurant either for the first time or as a repeat customer.  But remember, this is not the place for hard sell, keep your focus on the social aspect of this media. 

Keep it simple, keep it short.  Brevity is the key here.  Twitter enforces that with their 140 character limits but with other sites, long posts will usually discourage readers from reading and thus kill off any chance that you had to start a conversation.  Keeping it simple is also important; this is not the place for long, complex topics, save those for your blogs.  If you want to link to your blogs, just give them enough information to peak their interest, then show a link to the full blog.

Keep it fun.  People don’t generally scan social media sites for hard information, they are usually surfing for fun.  This means you need to keep your topics light and try and introduce a bit of wit as well.  If your proofreader needs you to explain anything about your posting, then you probably have made it too complex.  And if you don’t have a proofreader looking over your posts before you put them online, then you are taking an unnecessary risk.  As I mentioned before, one typo may be all it takes to keep a potential client out of your restaurant.

Be thoughtful in the words you use.  Check your posts before you put them on line to make sure that you haven’t said something that could be misconstrued and perhaps offend someone or perhaps just confuse them.  Earlier I cautioned you to keep it short.  Don’t do so when keeping it short leaves your message unclear.

Make sure that you include some call to action when needed.  If you want readers to like your facebook page, then ask them to do so.  If you want feedback about your restaurant, be sure to ask for it.  People will generally comply with reasonable requests so keep your message clear and be sure to ask for what you want.  If you can write clear, concise messages that are fun, have some wit and a clear call to action, then over time you will enjoy positive results from your social media efforts.  If you ignore these suggestions, then you may find it to be slow going.