Food Delivery Is Hot and So Are the Risks

Restaurants are jumping on the food delivery bandwagon to take advantage of changing consumer expectations. While this may seem convenient for customers and profitable for business owners, there are significant risks involved.

Injuries and Crashes

Offering delivery means having delivery drivers, and that means having commercial auto liability. Drivers who are in a hurry to make deliveries may face an even higher risk. According to the National Highway Traffic Safety Administration, the estimated number of police-reported crashes increased from 6.74 million in 2018 to 6.76 million in 2019. Speeding is a common factor in crashes, linked to 26 percent of traffic fatalities in 2019.

But the risk for injury doesn’t stop when the car does. Delivery drivers could also face injuries due to slip and fall accidents while walking to the customer’s door. Because muggers may assume that delivery drivers carry cash, drivers can also become the victims of crime.

Employment Practices and Labor Laws

These days, many delivery drivers are part of the “gig economy” and are classified as independent contractors. As a result, they may not receive many of the benefits that employees have a legal right to, including workers’ compensation coverage and wage and hour protections..

However, this classification has faced recent legal challenges. In California, for example, Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) involved a dispute over the classification of drivers. The California Supreme Court issued a ruling that used a very strict “ABC” test to determine if a worker could be classified as an independent contractor. Since then, California has passed Assembly Bill 5, a new law that makes it more difficult to classify workers as independent contractors.

Companies that use independent contractors to make deliveries may face legal challenges, and they must keep up with changing regulations. Companies could also face charges of discrimination, harassment and other issues related to employment practice liability.

While all of these issues may seem daunting and overwhelming to a restaurateur, your business does not need to be scared into stagnation and unable to keep up with its competition. Though not all insurance policies are created equal, and just purchasing a standard "General Liability" insurance policy will not ensure you are properly protected, a properly designed insurance program can protect your restaurant from such claims. A properly designed insurance program that includes General Liability, Cyber, Property, Auto and Employer's Liability insurance can provide protection from all of these potential claim scenarios.

Food Poisoning

According to the USDA Food Safety and Inspection Service, cold food should be kept at 40° F or colder, while hot food should be kept at 140° F or warmer. When food is stored at temperatures between 40° F and 140° F, bacteria growth can double in only 20 minutes.

Restaurants must go to great lengths to ensure the safety and quality of their food. When food goes out for delivery, however, maintaining high standards becomes more complicated. Containers that maintain proper temperatures can help, but only if they are used properly and consistently. Unexpected traffic and other problems can lead to delays that put food at risk of dangerous bacteria growth.

Cyber Risks

Many young consumers love their phones, but they don’t actually want to talk on them. This means that they’re unlikely to call your business to place an order. Instead, they want an online ordering option.

Online ordering systems can be very convenient, especially when they keep track of key user information such as names, phone numbers, home addresses and payment methods. All this data, however, is also attractive to hackers. Credit card fraud and other types of cyberattacks are also a concern.

Cybercrime is a growing problem. The FBI’s Internet Crime Complaint Center received more than 1.5 million complaints between 2015 and 2019, with losses totaling more than $10.2 billion.

Need assistance with managing the risks associated with your restaurant or hospitality business? Contact your BXS Insurance representative by phone, email or call 855-377-1529.

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