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Risk assessment for a restaurant is all about finding the areas of potential risk and discovering ways to mitigate or avoid them. The hospitality industry is known for inherently risky business models, especially when inflation is involved. The effects of inflation in restaurants are far-reaching, including both food inflation and labor shortage issues.
In this BinWise blog post, we’ll look at the top six facets of restaurant risk assessment. We’ll also offer specific examples to prepare you for conducting your own restaurant risk assessment.
By the end of this post, you’ll be prepared to assess the risk of your restaurant business and plan to work with that risk. With such plans, you'll find restaurant success on the other side.
Restaurant Risk Assessment
Restaurant risk assessment covers everything that could go wrong in a restaurant business, including:
- Food spoilage or contamination
- On-the-job injuries
- Broken restaurant equipment
- Employee theft–learn about the difference between internal theft vs. external theft
- Inventory concerns–from liquor inventory to wine inventory to surplus inventory
- Liquor liabilities
- Customer concerns–including allergies or an incorrect dish
- Food supply chain issues
- Inflation-related problems
- Theft–dine and dash for example
There are so many areas of a restaurant business, and each area comes with its own risk assessment needs. There are common facets of risk assessment that cover all restaurant areas, however.
The following three facets of restaurant risk assessment show up across your entire restaurant. They’re rather broad because they can fit different situations with varying contextual relevance.
"Key Takeaway: Risk assessment for a restaurant is all about finding the areas of potential risk and discovering ways to mitigate or avoid them."
3. Kitchen Mishaps
Kitchen mishaps in terms of risk assessment and management cover everything from a spoiled dish to a major spill of ingredients to broken equipment. You also have to look out for fires, cross-contamination, and order mix-ups.
A risk assessment in your kitchen includes a close look at the areas where something could go wrong and its probability of occurring. The best way to avoid kitchen risks is to have a streamlined order of operations in line with your restaurant operations, and have regular training for kitchen staff beyond training in kitchen slang.
You should also include a quantifiable measurement of your kitchen’s risks and draft a plan that lowers those risks. For example, consider the 23% that at least one full-time worker will get sick within 30 days. That can severely decrease your kitchen's operational efficiency. You can minimize that risk by making sure proper cleaning measures are taken to avoid germs.
2. Customer Service
Customer service risk issues can show up in a few ways. Some of those risks include lawsuits based on poor service or food poisoning and general customer satisfaction. Poor online reviews are also a risk, even if they aren’t as big as a lawsuit.
To manage customer service risks, training your wait staff for both immediate and long-term needs is the place to start. Beyond that, make sure every customer-facing action and area of your restaurant is managed with customer satisfaction in mind.
That even includes making sure the towels are stocked in the bathroom. However, it starts with having tables ready and keeping the bar operating efficiently.
1. Shrinkage
Shrinkage occurs in the form of food waste, customer theft, employee theft, or–in extreme cases–natural disasters. You can prepare for each of these scenarios in different ways.
For natural disasters, pretty much all you can do is have an emergency plan in place. That can include emergency exits, or even a power shut-down to avoid further destruction. For food waste, the best plan is to map out dishes and ingredients to avoid preparing food that will be thrown out. That means both being careful with ingredients and making use of older ingredients. An example of that is, using the surplus tortilla chips from a dish to be used for nachos.
When it comes to customer theft, you can discourage it by perfecting your customer service. You can also make sure customers are aware that you have staff throughout the restaurant. Additionally, you should set up a host stand by the front door.
For employee theft, it starts with hiring the right people. Asking the right restaurant interview questions and screening candidates will help you avoid hiring people who will steal from you.
Restaurant Risk Assessment Example
After reading those facets of risk assessment for a restaurant and learning what to expect, you’re on your way to preparedness. There is, however, another exercise you can do to get ready. That is delving into examples of restaurant risk assessment. With restaurant risk assessment example practice, you’ll be ready for on-the-job situations.
The next three examples are some of the most common areas of risk and risk assessment in a restaurant. As you open your restaurant and create your restaurant business plan, you’ll want to test examples of risk assessment specifically for your restaurant.
These three mean you’re off to a good start:
3. Menu Item Example
A risk assessment example for a menu item can help you identify potential pain points with specific ingredients. To craft this example, make a list of everything that you need, from restaurant equipment to ingredients, for a specific menu item. Then go down that list and identify potential risks with those factors, and find solutions for those potential risks.
2. Dine and Dash Scenario
For a dine and dash scenario, the best example is to plan how you would react if a customer were to dine and dash. A tip to use for your plan is creating a restaurant floor plan that's hard to get through quickly for someone unfamiliar with it. You should also keep your wait staff moving frequently among tables and seating areas to discourage theft.
1. Food Supply Chain Management
Food supply chain risk is often out of your hands. You can prepare for it though and work on supplier relationship management. With this example, take a look at the sourcing of a specific ingredient. Keep an eye for anywhere the supply chain could break down, and have alternatives in place in case of those issues.
Frequently Asked Questions About Restaurant Risk Assessment
Risk assessment for a restaurant can feel… well, risky. When you’re prepared for it, it doesn’t have to be. There are risks you can’t avoid.
The more you know, the more you can feel ready for risks that come your way. Our answers to these frequently asked questions will help you with that preparation:
What Are the Risk Factors In a Restaurant?
The risk factors in a restaurant cover everything from food spoilage to structural and building damage. A restaurant has so many areas to consider, from the bar to the menu types to customer satisfaction. Risk factors can show up in all of those areas.
How Do You Write a Risk Assessment?
Writing a risk assessment includes:
- The potential hazards
- The people affected by those hazards, and the potential harm to them
- Evaluation of those risks, and plans to deal with them
- Written records of risks you’ve found–actual risks and damages, not just the potential ones
- Regular reviews of your risk assessment and mitigation strategies
Those are the basics of a risk assessment. Anything beyond that will depend on your restaurant business structure.
What Is the First Step of a Risk Assessment?
The first step of a risk assessment for a restaurant is to identify the potential hazards. This can seem daunting, but the best way to go about it is to start with one area of the restaurant. For example, you can start in the kitchen, as kitchen safety and standards are a pivotal part of a successful restaurant. From there, you can assess risk for the other restaurant areas.
What Is a Risk Assessment Checklist?
A risk assessment checklist is a list of the different areas of your business, with an inspection of the potential risks in those areas. Your risk assessment checklist helps you make sure you’ve evaluated the risk potential of every facet of your restaurant business.
What Are the Four Ways to Manage Risk?
The four ways to manage risk are to avoid, reduce or mitigate, transfer, or accept the risk. You can choose which of these types of risk management is right for the situation depending on the level of risk. You should also consider the potential damage that will occur depending on your choice of risk management.
Restaurant Risk: Risky Restaurant Checks (and Balances)
When you enter into a restaurant business knowing the risks to look out for, you’re ahead of the curve on mitigating those risks. There are issues you won’t be able to avoid, but the more you know, the more you can prepare for.
Come back to the BinWise blog for more information on risk management, and restaurant management solutions. When you’re ready to open a restaurant, check out BinWise Pro, alongside BinScan, our mobile app. Our restaurant inventory management software support for food and beverage can help you, as a restaurant manager or owner, avoid some inventory risks.