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Why Every Hospitality Business Needs a Disaster Recovery Plan (and 5 Areas You Need to Cover in Yours)

Got a plan for the unexpected in your hospitality business? Make sure you’ve covered these five areas.

By Dave Eagle

So you’ve achieved your dream of opening the cafe or restaurant of your dreams.

You’ve got a fantastic venue, perfected your menu, have a team that runs the show like clockwork, developed a good kitchen workflow and established a good relationship with your suppliers. The customers are coming in and you’re getting encouraging reviews – things are pretty much looking up.

Then a month later, something beyond your control happens. Maybe constant rain has caused your premises to flood, or a storm has driven a tree into one of your windows, making it unsafe for work. Maybe a blackout in your state puts a stop on your being able to cook and serve food in your restaurant. What then?

If you understand how much hard work it takes to set up and run a hospitality business, and how little it can take for its doors to shut, then you know the importance of making sure you’ve got a backup plan in case anything happens. And we’re not just talking about getting insured either.

The impact of natural disasters on Australian businesses

Post Hurricane Irma in the US this year, it was estimated that about 40 per cent of small businesses would never reopen again. For restaurant owners coping with the aftermath of a storm on that scale, first comes the flood waters, the lack of power, then the spoiled food (and that’s just the start of it).

In Australia, the fact is flood, bushfires, earthquakes, armed confrontations and even things like pest infestations and blackouts – all of which can heavily disrupt your business – can strike without warning.

The latest research by the Australian Business Roundtable estimated that the total cost of natural disasters in the country exceeded $9 billion in 2015. This cost is said to double by 2030, reaching an average of $33 billion per year by 2050.

That’s why every hospitality business – regardless of size – needs a disaster recovery or business continuity plan.

Yours can be really simple or detailed, depending on the type of outfit you’re running. Every hospitality business is unique, so it’s ultimately up to you to define what you think is the best approach for your brand, but your plan should broadly cover these five areas.

1 . What disasters or catastrophes your business is at most risk to

In order to plan for the correct potential dangers, you’ll first need to assess the risks your business has to certain disasters. When you’re identifying risks, consider what will affect your key services, resources and staff, such as power failures, natural disasters and illness respectively.

Every plan starts with asking the right questions. In this case, ask yourself what if:

  • your venue or area loses its power supply or had no access to the internet?
  • essential business information, such as your financial figures and customer contact data were destroyed?
  • your premises was damaged and inaccessible?
  • you lose several key staff members at once?
  • you weren’t able to get your usual supply of produce?
  • the things you need, such as roads and communications, were inaccessible or unavailable?

From here, you’ll understand what you can’t operate without, and this will also inform the rest of your plan.  

2 . How to ensure the safety of your people

The most important aspect of disaster preparation in your hospitality business is to of course ensure the safety of your guests and employees, how quickly you can move people away from areas of heat and smoke in case of a fire for example.

Your plan should also consider:

  • people who may need assistance evacuating your premises.
  • identified evacuation routes within your venue(s).
  • how you can access medical treatment and assistance, and what needs to happen if emergency services take a while to respond (for example, if there’s a flood in your general area).
  • how you can account for employees that may not be onsite.

In ensuring the safety of your employees, you’ll have to prepare for the possibility that people might not be able to work entirely if the situation is bad enough.

Hurricane Harvey for example, had a devastating effect on some 330,000 leisure and hospitality business employees in Houston, Texas, many of whom could not work due to personal catastrophic losses and the inability to access public transport.

3 . How to establish communications in case of a disaster

Even for the smallest of businesses, knowing who to call right away can be a boon when things go topsy-turvy.

It’s not just having a list of emergency numbers stuck on the wall somewhere on your premises, your emergency contact list should also include everyone who may be affected by possible crises or disasters that pose a risk to your hospitality business.

This includes:

  • all staff members, whether they regularly work onsite or not.
  • your customers, if you’ve obtained their contact details.
  • your vendors and people down your supply chain.
  • your insurance provider(s).
  • any business partners and shareholders you’re accountable to.
  • people who can fix your venue’s equipment and other systems.

A study by Deloitte, The Restaurant of the Future: Creating the Next-Generation Customer Experience, found that 40 per cent of customers want to hear from a restaurant once a month or more, with 34 per cent of those respondents wanting to see a personalised message each time.

Communicating openly with your customers, stakeholder and business partners in the event of business disruption gives the impression that you’ve got things under control, and gives you the opportunity to reassure them that you’re doing what you can to resolve the situation.

READ NOW: The Best Way to Deal with an Angry Customer

4 . How to cope with the loss of power

If it’s unlikely that your business could be affected by a natural disaster such as an earthquake or a major storm, then think about blackouts. In a power outage that affected Adelaide earlier this year, several restaurants and food businesses were forced to close and not only suffered from the loss of business, many also had to throw out stock.

“Unfortunately the insurance doesn’t cover it. It has to be more than 48 hours for blackout in a business,” said Sammy Klxementou, whose yiros and takeaway outlet also suffered a previous blackout in late 2016 that left his business without power for 22 hours.

Unless you have a backup generator, there’s not much that you can do if the power suddenly goes, so preparation is your best bet. Here are some practical elements to include in your disaster recovery plan in case of a power outage.

  • The contact details for a refrigerated truck service, this will help you reduce the amount of perishables you have to throw away during an extended power failure.
  • An “emergency menu” of food you can served with minimal preparation.
  • A list of appliances that need to be switched off during a power outage. Gas or fuelled heating equipment can cause a buildup of toxic fumes if exhaust systems stop working.
  • The operating instructions of a backup generator if you’ve got one onsite.

READ NOW: 5 Practical (and Effective) Ways to Reduce Your Restaurant’s Energy Bill

You’ll also save yourself a few headaches in case of a blackout by using cloud-based software for key functions such as your point of sale, bookkeeping and customer data management.

Pro-tip: if you lose WiFi in your venue, Kounta will continue saving transactions and sync them back to the cloud when your connection comes back on.

While storing some things online can be extremely helpful, it’s also a good idea to have an emergency kit containing documents that are essential to your recovery, including things like rental leases, bank or audit records, legal contracts, licenses and permits.

Your emergency kit should be stored offsite just in case you’re unable to access your premises for whatever reason.

5 . How to handle contamination or pest infestations

Everyone knows that commercial kitchens are ripe environments for contamination. We don’t need to go into how badly your customers can react if your venue develops a pest infestation, and they are more common than you think.

A 2015 report by the Centre for Economics and Business Research found 83 per cent of Australian businesses had experienced a pest infestation in the last five years.

Even if the problem doesn’t start in your premises (it could originate from the rubbish area at the back of your venue, or from a neighbouring business), the ramifications can be just as bad, so it’s a good idea to have a plan to deal with issues associated with possible food contamination. You’ll need to determine things like:

  • what you need to do if the contamination or infestation grows large enough to become unmanageable. If you need to close your business to get a professional in to sort the problem out, include the contact details of your designated pest controller in your disaster recovery plan.
  • what you need to do if your staff are ill as a result of contamination.
  • who you need to notify if pesticides are being used to control the problem. For example in New South Wales, you’ll need to notify the state’s Environment Protection Authority at least five working days in advance if pesticides will be used outside your premises if you’re located next to a school or community nursing home.
  • How you can effectively deal with any negative publicity as a result of a contamination or pest problem.
5 important areas to cover in your disaster recovery plan_Kounta
Image Credit: Brian Yap / Flickr (CC BY-SA 2.0)

Disaster recovery plans save businesses: La Porchetta Family Restaurants

Sara Pantaleo, Chief Executive of prominent Australian pizza restaurant chain La Porchetta had just finalised the company’s continuity and disaster recovery plan when her brother, Rocky Pantaleo, co-founder and face of the brand, suddenly passed on four months later.

The plan – which included a detailed risk analysis across 71 franchise locations (at the time), a set of checklists for franchisers and their staff, as well as a list of experts they would need to contact in any crisis – helped the family deal with the media frenzy that occurred at the time, keep franchise operators informed and get things back in order.

“I believe a crisis plan will not help avoid a crisis. Why I wanted one for the business was so everyone understands their role and knows what to do”, she said in an interview with the Sydney Morning Herald.

Although nothing can fully prepare anyone in business for the onset of a major disaster, there’s no reason not to have a system in place that anticipates and helps you deal with  potential catastrophes.

Put it this way, if you already frequently think ahead with your business’s finances and growth, a disaster recovery plan can only help to protect what you’re already investing so much in.