To the restaurateur, guest satisfaction is everything. Creating a memorable experience to keep that guest coming back is crucial to the success of any restaurant. According to an August 2019 blog from lightspeed a great restaurant experience is created by focusing on 4 simple items:
Certainly, creating an enticing menu of food and beverage items will attract people into the restaurant. Serving the guests the food and libations they request in a friendly and responsible way is key to keeping the patrons coming back and ensuring your legal liability is kept in check.
Enjoying a nice cocktail or a cold beer with your food adds to the overall dining experience for patrons. For the restaurant owner, alcoholic beverages come with a generally higher profit margin, making alcohol sales doubly appealing. On the flip side, serving alcohol inside your restaurant could create potentially catastrophic liability exposures that might not surface for weeks, or even months.
In an internal study of our restaurant book* in the most recent 2 year reporting period, we found that just under ½ of 1% of all liability claims filed involve liquor liability. Despite the much lower frequency, the average claim cost is nearly 13 times higher than other GL BI claims. ($38,608 compared to $3,032).
*Excludes limited service restaurants
Let's Talk About Laws
Understanding the nature of your state’s dram shop laws is critical to managing this exposure. The majority of the states allow recovery from alcohol-selling vendors for serving alcohol to a patron when they knew, or should have known, the customer was intoxicated. The exact degree of liability will always depend on the unique situation, but recovery can extend to others harmed by the intoxicated guest, and sometimes even liability to the guest themselves, in the case of their own injury. Although laws vary by state, a formalized training protocol is critical. Demonstrating the protocol’s scope and the associated training regimen will be crucial to mounting a defense and limiting your liability.
Liquor liability claims are like others in that the best way to successfully defend one is by preventing it in the first place. Training all employees in compliance with state and local laws is a must for any establishment engaged in selling alcohol. This training should embody not only detecting potentially intoxicated or underage consumers; it should also focus on methods to de-escalate situations. Whether you conduct the training yourself, send your employees to a state sponsored class, or assign and reinforce online training, your protocols should be reviewed by a professional to ensure thoroughness and compliance with all laws.
- Establish a carding policy for the establishment
- Follow all state laws regarding service
- Require staff training for all employees
- Empower your employees to scrutinize identification
- Reinforce serving limits
- Recognize behaviors that signal intoxication
- Respond to intoxicated patrons in ways that minimizes confrontation
- Prioritize customer safety through responsible service
Fight for Your Right
By their very nature, liquor liability (LL) claims have a longer than normal reporting lag. Within GB’s restaurant book of business, the average LL reporting lag is 22 days, compared to 5 days for normal General Liability injury claims.
This reporting delay could hamper the investigation, and the chances of successfully defending a claim along with it. When investigating a LL claim, there are unique attributes that need to be explored and brought to light. Among the key items needed to achieve a thorough investigation are:
- Training – document that all servers of alcohol were properly trained (when, how and by whom).
- Training Materials – gather all training materials
- Employees – document and get statements from all employees who interacted with the guest.
- Receipts – review restaurant tab / bar bill to document how many drinks were consumed and when.
- Video – scan video to see if the guest is captured and how he was acting
- Timing / Route – investigate the timing between when you last served the patron and when the accident occurred.
- Other Defendants – investigate other establishments where the guest may have been served
- Licenses – ensure they are all current
Despite the best intentions and the diligent preventative training, claims will still be presented. Larger restaurant firms usually have a designated response team who is proficient in conducting a thorough investigation and preserving all critical evidence, along with skilled and tested dram shop defense counsel to ensure the best outcome.
By understanding the risk associated with serving up the good times for your guests, you can continue to give your guests the experience they enjoy, while letting the good times roll, responsibly. Cheers!
Tim Kelly has 30 years of industry experience and leads the Restaurant & Foodservice Practice at GB.
Kristy Sands has 28 years industry experience in Claims and Account Management, and is Vice President of Communications at GB.