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You own a restaurant and you are an innovative marketer, willing and able to use cutting edge technology to promote your restaurant, delicatessen, diner, bar, cafe, coffee house, wine bar, catering, or food delivery business. Perhaps you have a top-of-the-line web site allowing potential customers to link to suppliers, critics, chefs, producers, vintners or other specialty growers. Perhaps you sponsor an eating club or a frequent user program that requires customers so share personal information with you. If you pay attention at all to social media, your restaurant will have Twitter and Facebook accounts. One or more of your locations may have an internet connected computer network. Maybe you sell merchandise related to your restaurant business on-line.

These are all creative responses to the highly competitive market that the food service industry inhabits. But have you considered the potential risks and liabilities that such practices may involve? Believe me, I am not for a moment suggesting that you rein in your creativity or your entrepreneurial spirit. Far from it! But thinking outside the box also means thinking clearly about risk -- and preparing for it.

Many, perhaps most, insurance coverage programs in the market that are designed for restaurants and related businesses will not fully protect you from cyber liability. You need to ask yourself whether you are adequately covered for data ad security breaches, copyright or trademark infringement that might occur on your website (even if the offending item is posted by others), loss or corruption of data (including customer information) caused by a virus or hacker, or cyber extortion.

Yes, cyber extortion. I know it sounds odd. But consider this item posted by Reuters news agency just a few days ago:

"Hackers have stolen data on more than 600,000 Domino's Pizza Inc. customers in Belgium and France, the pizza delivery company said, and an anonymous Twitter user threatened to publish the data unless the company pays a cash ransom." June 16, 2014.


And Target (you have probably read about the huge data breach suffered by Target and that company's resulting loss of customers and business) is not the only recent victim of a massive data breach. Also from Reuters:


"P.F. Chang's China Bistro is investigating claims of a data breach involving debit and credit cards stolen from restaurant locations in the United States, the Asian-themed casual dining restaurant chain said on Tuesday." June 11, 2014.


While it is true that Domino's and P.F. Chang are large restaurant chains and so might be expected to be targets of hackers and extortionists, an inadvertent loss of data (perhaps caused by something as "low tech" as loss of a laptop on which company and/or customer data is stored) or a malicious attack by a hacker or extortionist can be even more devastating to a smaller business, with fewer resources to fall back on.

Computer and web-based payment systems, data collection and maintenance, advertising, marketing, and sales have become central to business operations in recent years. Restaurants are no exception. Yet standard insurance policies often do not cover the risks that go along with this kind of activity. If your business is employing these new tools to boost marketing, efficiency or record-keeping -- and you probably should be -- spare a moment to consider whether you are adequately insured. A loss resulting from cyber activity will be no less of a problem for your business than a loss resulting from a simple slip and fall or a fire.

And we can also help you with the more standard coverages that restaurants and similar businesses need -- general liability, property damage, workers compensation, and business interruption insurance.

If you have any questions about insurance coverage for your food service business, or if you want to talk specifically about cyber liability issues, please give me a call or send me an email. And keep on innovating!

Contact Alex Pfeifer, Pfeifer Insurance Brokers, at 650-762-8070 or alex@pfeiferins.com.

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