It seems this new century has been marked by one disaster after another. Beginning with the World Trade Towers in September 2001, Hurricane Katrina in 2005, the BP Gulf Oil Spill in April 2010, through the Tsunami in Northern Japan in early 2011 and the floods in Thailand in October of that same year. But it doesn’t just take a regional or global disaster to present great challenges to your restaurant or food provision business. It could be very local, such as fire or explosion in your restaurant, warehouse or principal facility.
If a catastrophe or major disruption hits my business, what do I do? How do I protect my business against a major catastrophe? What are the legal ramifications if I cannot perform and can’t hold that wedding event at my restaurant, if I can’t cater to that corporate meeting, or if I cannot provide food to my restaurant customers?
Recovery from disasters, catastrophes or major disruptions to or in your restaurant or provisioning business starts before they occur. It starts with developing a Disaster Recovery Plan. If you are a small business, the Plan can be very simple. If you are a significant restaurant group or food supplier, it could be complex and even drafted by an outside consultant. Here are some simple guidelines.
- Plan to keep your employees safe from harm. You can do this by asking your insurance broker to have your general liability carrier send a safety specialist to review your place of business. He can tell you if it is up to Code and suggest ways to improve safety, especially in the kitchen area where the majority of fires and explosions happen. (Be sure your general liability insurance gives you the right coverages --- business interruption, etc. --- and in sufficient amounts.)
- Make a list of your important company and business information: the names and contact information for your managers and employees; insurance policy and insurance broker numbers, etc. Give a copy to your key employees.
- Back-up your company computer off-line. There are several inexpensive back-up services (Carbonite, Mozy, etc.) that will back-up your computers automatically during the night.
- Keep copies of your key documents with an on-line storage service such as Drop Box, Google Drive, etc.
- In case of a catastrophe or major disruptive event, try to keep your customers and employees up-to-date via social media such as your web site, Facebook and Twitter.
Key Legal Issues:
The general legal rule in the U.S. is that you are excused from performing under a contract if an unforeseen event occurs that makes it “commercially impractical” for you to perform in part or at all. The event has to be major. It can be caused by an act of nature or be man-made. It has to have been reasonably unforeseen. A restaurant that has a significant fire that largely destroys its kitchen can probably use the “commercially impractical” defense to not host this Saturday’s wedding reception, or to not cater that corporate event next week. If you are a food supplier or other provider and your sole or a major manufacturing or processing plant is hit by a tornado, you are probably excused from fulfilling your contracts to supply provisions.. If only a part of your kitchen or processing plant is hit and is off-line, you are legally obligated to take reasonable steps to fulfill your contracts as best you can. The restaurant owner above who had a fire in his kitchen must make reasonable good faith efforts to fulfill the Wedding reception contract. Perhaps that means getting another restaurant or caterer to do the Wedding reception..
You also must give your customers/clients timely notice of the catastrophe or disruptive event and, in the case of the food provisioner, inform them that delivery has been delayed or will not happen so that they may try to make alternative plans. If only part of your food provisioning business has been impacted, you may also put your customers on allocation as long as the allocation methodology is fair and reasonable.
It is important to understand that you cannot just throw up your hands and give up. If you are under contract, you must take commercially reasonable steps to “mitigate” or lessen the negative impact on your customers and clients under contract with you, and get back in business as soon as reasonably possible. This may include operating temporarily in another location.
Remember, you can avoid some catastrophes by making sure your workplace is safe and up to code. You can minimize the impact to your business by imagining different types of disasters or disruptions that could happen to your business, and determining what action, information, documents, etc. you would need to get back in business. Go Plan
If you have any questions about the topics covered in this article, please do not hesitate to contact Michael Sullivan at (770) 434-1567 or email him at firstname.lastname@example.org.