Restaurant Risk Management Plan : Guide for Restaurant Owners

Opening a restaurant can be an exciting, albeit risky, enterprise. Its success or failure lies in how well risks have been planned for and controlled. Up to 60% of new restaurants may close in the first year of operation, according to a recent report, while almost 80% can close in the first five years. These are the kinds of statistics that reveal the great many perils there are in this industry, stretching from financial instability to health code violations. Thus, proactive restaurant risk management strategies could be very instrumental in safeguarding you from these challenges.

Protect your investment and ensure compliance with regulations; ensure a safe environment for your staff and customers by implementing a comprehensive restaurant risk management plan.

The blog will walk you through the major steps to develop a robust risk management plan that is specific to the restaurant sector.

What is Restaurant Risk Management?

Risk management in restaurants involves the identification, assessment, and prioritization of potential risks that may negatively impact the operation, together with strategies to mitigate or prevent these risks. A proactive risk management approach is important for restaurant safety, stability, and success.

Common Risk Factors in Restaurant Operations

Foodborne illnesses: These have serious health consequences, and legal liabilities, and can affect the reputation of a restaurant.
Kitchen accidents: All health risks are caused by burns, cuts, and slips, the environment, and the associated health issues. Such a condition may disable the routine processes.
Malfunction of Equipment: Failure of essential devices can cause idle production and food wastage.
Interruption of Supply Chain: A problem from the manufacturer or any other global incident can lead to scarcity and escalation of price.
Economic: Changes in economic conditions will affect customer spending and lead to price hikes, so it may also have an impact on profitability.

Significance of Considering the Potential Impact and Likelihood of Each Risk

It is important for an organization to evaluate both the possible impact and likelihood of such risks in order to effectively manage potential risks. This helps in the prioritization of risks that require immediate attention and which risks can be monitored.

Impact Assessment: How serious the consequence of each risk would be if it happened, for example, an outbreak of foodborne illness that could be catastrophic both to customer health and the reputation of the restaurant itself.
Likelihood Assessment: This consists of giving an idea of the likelihood the risk might be suffered from. Where some risks, such as kitchen accidents, might be of higher likelihood due to their nature and the environment in which one is working, others, like economic cycles, might be less frequent but with huge potential adverse impacts.

This will put restaurant owners and managers in a better position to come up with specific strategies for mitigating key risks. This could be through ensuring strenuous food safety measures, regular staff training in relation to kitchen safety, proactive equipment maintenance, diversified supplies, and drawing up finance contingency plans.

How to Create a Restaurant Risk Management Plan?

restaurant risk management plan

Risk management is an assessment of the various risks that can affect your restaurant and drafting practical strategies that would be efficient in mitigating them. With such a well-designed plan, it will not only be useful in the mitigation of risks but also the smooth running of your restaurant. The following is a step-by-step guide to help you through. This will be a great restaurant risk management checklist that can be useful.

Educate the Restaurant’s Staff

This would also be carried out through employee training as part of an overarching restaurant risk management program. If the staff is well-trained, then there are fewer chances of an accident, food safety problems, and poor service to customers. Some of the critical aspects to focus on during training of your employees in the restaurant include:

Work Safety Training

Conduct regular training sessions on appropriate lifting techniques and supply adequate safety equipment. Emphasize PPE and cleanliness so workers are organized while at work to guarantee their safety.
Training on Safety Procedures

Train employees in cleanliness, the importance of communication in terms of food safety and preservation, and how to handle a crisis. This includes the topics “better safe than sorry”, “food is handled in two ways”, “temperature controls before serving food”, and “steps taken in the event of a fire or medical problem”.
Customer Service Training

Be sure to train your employees in properly attempting to take care of customer complaints/product returns and questions not just in your point to be made but also with receiving the information from your customer. Train the employees on active listening, empathizing, and solving problems.
Alcohol Service Education

Provide training about Responsible Serving which includes how to identify if a person is intoxicated and the proper procedure of denying service. This will consider the safety of the customer as well as observe the legalities involved with service.

Incorporating such training in your restaurant risk management checklist ensures your employees work in a much safer, more efficient environment.

Make Use of Technology

Blending technology into the restaurant’s risk management plan will be well taken care of and bring efficiency in handling the restaurant’s operations. Risks of many kinds, from cyber threats to physical security issues, can be drastically minimized with the proper tools. Follow these tips for effectively integrating technology into risk management in a restaurant.

Install an Anti-virus Program

What is, therefore, of importance is the installation and strong maintenance of the anti-virus software, which will keep off any cyber threat from your restaurant’s digital infrastructure. This is to mean it will do the necessary follow-ups on debit and credit records and any other information that you may regard as confidential. Malware, ransomware, and other malicious attacks will be kept away by regular updating and scanning of the digital systems to safeguard the systems and enable them to function properly.
Secure Wi-Fi Networks

Risk management is rampant among restaurants. Ensure your Wi-Fi network is password-protected and used by paying customers only. Certainly, this will deter unauthorized use and it will reduce the chances of cyber-attacks. Additional network security measures, for example, firewalls, will improve and enhance even more to secure the data.
Install Security Cameras

Putting up CCTV cameras in areas of your restaurant that are prone to different activities will greatly deter criminal activities and will buck up watching over the same. These systems should be regularly examined to ensure that they function correctly. The security cameras will play a bigger role, such as in preventing theft, and vandalism, and may as well help in a happening situation.

Optimize the Restaurant’s Facilities

Proper facility maintenance is a crucial restaurant risk management checklist. This is because it ensures that you can give both employees and customers the confidence to operate safely. Another added advantage includes compliance with regulations that are bound to aid in the running of your business. The following are some key steps in maintaining your restaurant facilities:

Keep it Clean

One of the most basic requirements is cleanliness; this not only keeps your environment free of accidents but also from health code violations. Cleaning of the walls, floors, tables, and other compartments or equipment used in preparing and serving food. A daily cleaning schedule must be implemented that incorporates deep cleaning tasks to be done regularly to avoid grease build-up, reduce the risk of slips and falls, and generally keep the kitchen area clean, including dining areas and restrooms. It should be kept immaculately clean to add to the enjoyment of dining and to minimize the health risks.
Clear Walkways

Keep indoor and outdoor walkways free of obstacles to prevent potential tripping hazards. Aisles, hallways, and entryways should be free of clutter, spills, and debris. Overcrowded, littered, or obstructed areas need to receive regular oversight and be promptly set back in a safe condition for staff and patrons. Outdoor walkways should also be free of hazards and well-lit, including ice, snow, or rough walking surfaces.
Secure Railings

Indoor and outdoor railings must be safe to help prevent accidents. Check to see that the railings and the columns or pillars holding them are fastened and not starting to weaken. This applies to stair and balcony railings, as well as any other raised area. If railings are loose or have become brittle in some way, repair and replace them immediately to prevent falls and accidents.

Maintaining the Restaurant’s Equipment

Restaurant equipment maintenance is key to any quality restaurant risk management plan. Adequate maintenance ensures the equipment is working at a reasonably efficient level and lowers the chances of breakdowns that can affect service or create an unsafe condition. Here is how to ensure that your restaurant equipment is maintained:

Regular Inspection

You should inspect all equipment on a frequent basis, from refrigeration units, heating equipment, ovens, and dishwashers to others. Look for any signs of potential issues, like wearing-out parts, leaks, malfunctioning equipment parts, and more. Addressing these in time can forestall really expensive breakdowns and probable hazards.
Consider Equipment Breakdown Coverage

The insurance taken out should include this particular coverage for your restaurant. This specialized coverage protects your business against financial losses associated with equipment failures. Commonly, it will pay for repairs or replacements in the event of mechanical or electrical breakdown, ensuring that intensification of downtime and financial strain are minimized in operations for your restaurant.
Train Staff on Equipment Use and Maintenance

Educate your employees on how to work with the equipment appropriately and how to carry out basic maintenance. Provide them with instructions on operating procedures, cleaning procedures, and troubleshooting of common problems. Encourage your employees to report any problem with any equipment promptly. This will make it easier for management to make repairs promptly.
Professional Maintenance Scheduling

Apart from regular checking, book professional maintenance for equipment that is complex within the stipulated time. For example, HVAC equipment needs to be serviced yearly, which ensures efficiency and prevents breakdowns. Engage providers who are competent technicians in the restaurant equipment to provide well-regulated maintenance.

Complying with Health and Safety Standards

Proper adherence to health and safety codes is vital in restaurant risk management. Legal compliance ensures not only the safety of customers and staff but also avoids legal tussles that may put jeopardy the continued existence of the business. Here are the basic practices that will ensure adherence to health and safety standards:

Employee Hygiene

Practice tight hygiene by the staff; this will involve constant hand washing with soap and running water. In handling the foodstuffs, gloves can also be used, and also neat uniforms. Conduct training programs that would enlighten them of hygiene measures; have frequent inspections to attest to their observation.
Facility Maintenance

Keep all parts of the restaurant clean and in good condition at all times. Design a cleaning schedule with daily, weekly, and monthly tasks aimed at different areas, such as kitchens and food preparation areas, dining rooms, bathrooms, and storage facilities. The greatest attention should be given to high-touch surface areas and areas where food is prepared to avert contamination and ensure a clean surrounding.
Safety Equipment

Keep all necessary safety equipment, which also complies with the Occupational Safety and Health Administration (OSHA) requirements on fire extinguishers, first aid kits, emergency exits, and signs. Inspect the safety equipment with enough frequency to ensure reliability in case of emergency. Train the staff to utilize the safety equipment in the case of an emergency.

Get all Necessary Permits

Licenses are a must for it to be a legally running restaurant and also to stay safe from governmental regulatory risks. Here’s what you need to add to your restaurant risk management checklist:

Business License

Obtain it legally from the local government to run the restaurant, generally on a commercial basis. The needs vary from place to place. Research and comply with all local regulations regarding business licensing.
Food Service License

Achieve health inspection clearance by local departments of health. This validates that your restaurant matches all necessary standards to ensure food safety is guaranteed. Implement food safety rules within your business, e.g., maintaining good temperatures and high standards of cleanliness and passing many inspections.
Liquor License

If you will be serving alcohol at your event, obtain a liquor license from the state or your local alcohol beverage control board. Servers who will be serving alcohol must be appropriately permitted and trained in responsible alcohol service techniques and, especially, in understanding how to identify signs of intoxication—from which a server should never initiate service to whom as well as when to stop serving the person if need be.

Be Up Front About Allergens and Dietary Info

Customer satisfaction and safety depend on clear allergen and dietary information embedded within the restaurant’s operations. Such proactive disclosure will serve two purposes: effective service as per the diverse dietary needs of people and minimization of risks that will arise from any kind of allergy incident. Here is how to manage this effectively under the restaurant risk management plan:

Allergen Disclosures

Clearly indicate peanuts, shellfish, and gluten on menus and signage as potential allergens. Check that team members are equipped to communicate clearly with customers about allergen information and are attentive to allergenic-specific requests.
Dietary Disclosures

Explicitly identify dietary options, e.g. gluten-free, dairy-free, and vegetarian/vegan on menus. Such clarity enables customers to make a proper choice in light of their dietary preferences and restrictions.
Nutrition Information

Provide nutrition information on menu items, including calorie counts, and ingredient lists. These help the customer to lead a healthy lifestyle and take care of dietary needs like low-sodium or low-fat diets.

Forced Closures Planning

The need to anticipate and plan for the forced closure due to an unforeseeable event or emergency is a critical part of your restaurant risk management plan. Hence, it reduces loss of income in these times and ensures business protection by:

Business Interruption Insurance

Have adequate business interruption insurance coverage in place. This insurance protects and covers any loss of income and the additional costs incurred during enforced closures due to property damage, such as fire or flood, or other covered perils. Regularly review your policy to ensure that it meets your risk landscape and current needs satisfactorily.
Maintain Insurance Coverage

Maintain active insurance coverage, even during periods when you are closed. This should include general liability insurance, property insurance, and other specialized coverage that pertains to your specific type of restaurant operation, such as liquor liability insurance if you are running a restaurant that serves liquor. Insurance coverage helps to avoid many risks like litigation, claims, damages, and issues regarding employees.

How does the KNOW app help with restaurant risk management?

restaurant risk management

KNOW offers rich features that significantly enhance safety and functioning at the restaurant in the aspects discussed below:

Checklists – For Anything and Everything

KNOW checklists of significance at the restaurant operation under the following circumstances:

Kitchen Handovers: This facilitates a smoother process during the change of shifts among kitchen staff and outlines the tasks and responsibilities.
Opening/Closing Checklists: These ensure the smooth operation of the restaurant every single day. Dwells on structured lists of tasks during openings and closings known to include; the condition of kitchen equipment, the loading of inventory and even locking of the building.
Daily Sales and Wastage Logs: Follows up on the sales performance and controls the wastages of food efficiently to maintain inventory levels for less waste and cost reduction.

Food Safety Hygiene

KNOW allows controlling food safety and hygiene measures end-to-end with the help of the following:

HACCP Checks: Help food businesses establish and manage Hazard Analysis Critical Control Point checks, including the hazard to food, thereby complying with food safety law.
Hygiene Audits: Regular audits are done to assess and ensure high standards of cleanliness and hygiene throughout the restaurant.
Food and Equipment Temperatures: Monitors and logs temperatures of food storage units and equipment to prevent spoilage and ensure food safety compliance.

Audits and Compliance

KNOW enables digitization and streamlined management of audits and compliance requirements:

Pest Control: Documents the schedules and activities related to pest control in order to ensure an area remains clean from pests and health and safety standards are adhered to.
Fire Safety: Records and implementation of checks on fire safety, completion of drills, and that the preparation is in place as well as fire safety regulations.
Equipment Checks: Organizes scheduled equipment checks and maintenance to reduce downtime and ensure the peak performance of equipment in the restaurant.
Facility Quality Checks: Monitor the facility’s condition and cleanliness for quality standards and to continue to maintain the level of quality expected by customers.

Faults, Maintenance & Incident Resolution

KNOW makes it simple to track and follow up on faults, maintenance tasks, and incident resolution:

Equipment Faults: KNOW issues reports of all equipment faults and traces them to ensure little running disruption of the restaurant and timely repairs.
Repair Management: Plans the maintenance schedule and tracks the progress of repairs to ensure that the equipment is running reliably and that the time it takes to rectify operational time lost is reduced.
Incident Reporting: Logging and management of incidents such as accidents or customer complaints happen efficiently for their investigation and resolution on time.
IT Issues: Streamline the reporting of IT issues and the related resolution that allows for the efficient operation of restaurant technology systems.

The Bottom Line

Good, strong strategic risk management for restaurants inherently involves safety, compliance, and operational efficiencies—pretty important to thrive in the long term. From standardizing checklists and ensuring cleanliness in regard to food safety to streamlining your audit, maintenance, and incident resolution, KNOW can help you follow restaurant risk management best practices and ensure your customers have exceptional dining experiences.

Ready to see it in action? Book a KNOW app demo today.