2021 Restaurant Insurance Outlook: Updated

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Call it a tale of two scenarios – one with upside and the other mostly downside – on the U.S. restaurant scene. 

On the upside, U.S. restaurant sales experienced a “healthy” increase in total sales in July, 2021, according to Restaurant.org. U.S. eating and drinking outfits saw sales stand at approximately $4.4 billion in June, 2021, the organization estimated. That’s 6.6% ahead of the February, 2020 pre-pandemic timeframe ($70.6 billion versus $66.2 billion.)

On the downside, Restaurant.org states that over eight million U.S. restaurant staffers were either laid off or furloughed, with the entire industry losing $280 billion in sales during the first 13 months of the pandemic.

With restaurants clawing back and facing new challenges like vaccine credentials and new COVID variants, it’s a good time to check on an equally important, if less prioritized corner of the American dining and drinking sector – restaurant insurance.

“The pandemic hit restaurants across the U.S. hard with many having to shut their doors altogether,” said Julia Howell, product marketing manager for NEXT Insurance. “But now, as COVID-19 recedes, we’re starting to see restaurants bounce back. In fact, nearly 16,500 restaurant reopen in April 2021 just as restrictions began to start being lifted, according to recent data from

Key Insurance Issues for Restaurant Owners

In the “great reopening”, many restaurants adjusted their business plans in order to survive the pandemic, adding outdoor seating, serving takeout and delivery, or consolidating staff. “All of these changes can affect business insurance needs,” Howell said. “As life returns to some semblance of normalcy and customers return to in-person dining, now is the time for restaurant owners to carefully review their coverage.”

Insurance experts point to these “must do” action items for restaurants unsure of what insurance policies their eateries need in a dynamically-changing new business world order.

Vaccine mandates. No doubt, the restaurant industry is on the edge of a boom, or likely even in one already, as millions of Americans venture out into restaurants, diners, and bars. With so many Americans still unvaccinated (as of mid-July 2021, the U.S. has fully vaccinated approximately 160 million Americans, according to Johns Hopkins University, restaurant owners may have to get more aggressive about barring unvaxed Americans from their establishments.

“A lot of restaurants are making it compulsory for the guests to be fully vaccinated, this is in tune with World Health Organization guidelines,” said Brad Cummins, founder of Insurance Geek, an insurance services platform. “That said, there aren't any strict rules being employed, even as the trend does favor vaccinations heavily and rightfully so.”

“Expect vaccinations to be made compulsory for staff, as more and more insurance companies are making it a norm for commercial safety and to avoid an unprecedented threat to other employees and guests,” Cummins added.

Recheck your restaurant model – then recheck your insurance. Restaurant owners should prioritize their updated coverage needs in ways that reflect the industry “new normal” for the second half of 2021.

“That means focusing on how your restaurant may change in a post-COVID world,” Howell said. “Insurance should now focus on general liability, liquor liability, commercial property, workers’ compensation and commercial auto to ensure their restaurant is not over or underinsured.”

For instance, if your restaurant is now serving more takeout meals, the business should have a general liability policy that includes product liability to cover deliveries and food consumed off premises. “Or, if you’ve added delivery or catering services and/or use a vehicle for your restaurant, you’ll need commercial auto insurance,” Howell said. “

Look into capacity limits. During the pandemic, many cities reallocated sidewalk and parking space into public use to help support restaurants accommodate outdoor dining. 

“This has led to increased parklets, food trucks and dining-to-go options for customers,” Howell noted. “For restaurants that have made parklets and outdoordining a permanent addition, they should ensure their commercial property insurance provides coverage for this added outdoor area.”

Take a realistic approach to restaurant insurance moving forward. Restaurant owners say they’re exercising both caution and common sense as they open back up. They’re focusing on their own unique needs and pursuing insurance policies that work for those unique needs.

“We’re fortunate that our business is 95 percent take-out and delivery,” said John Stetson, chief executive officer at Stoner’s Pizza Joint, a pizza chain with outlets across the Southeastern U.S. “This has allowed us to avoid taking a firm stance on customer vaccination. We request patrons wear masks when entering the pizzeria and in the common areas.”

One area of concern is addressing vaccination with restaurant staff. 

“We request that all of our employees get vaccinated, but due to the massive shortage in the labor force for our industry, we are in a “take what you can get” position many times and cannot make it mandatory,” Stetson added. “We continue to monitor U.S. Center for Disease Control and state guidelines to ensure the safety of our customers and staff. Additionally, we’re still doing contactless pickup and delivery, which I believe will continue into the future.”

The Takeaway on Restaurant Insurance for the Rest of 2021

There is some good news for the restaurant industry.

Business insurance has largely remained stable through 2021. According to data from TheCostGuys.com, restaurant owners can expect to pay between $2,000 and $8,000 annually for coverage, dependent on their size and scope and on the unique polices the may require.

According to The Cost Guys, each individual policy has an annual average cost which can be added together, as follows:

  • General Liability Insurance: $500
  • Property Liability Insurance: $755
  • Liquor Liability Insurance: $1,000
  • Workers Compensation Insurance (Workman’s Comp): $2,500
  • Commercial Auto Insurance: $1,500 per vehicle
  • Product Liability Insurance: $0.25 per $100 in revenue
  • Employment Practices Liability Insurance (EPLI): $1,100
  • Business Interruption Insurance: $1,200

Past that, U.S. restaurants, like many small businesses, are on the comeback trail in 2021 and they’re confident the worst is in the rear-view mirror.

“Though small businesses are bearing the brunt of the current worker shortage, a recent survey by NEXT found that 84% of small business owners said they were somewhat, very or extremely optimistic about the broader economy’s recovery,” Howell said. “As for their own businesses, 94% of respondents expressedoptimism about a recovery.”

As the economy and individual businesses continue to rebound, insurance cost issues should recede, Howell added. “Recovery also means more new restaurants, as recent Yelp data revealed new restaurant openings spiked during the first quarter of 2021,” she said.