Industry Insights: Food for Thought: Can You Have Your Dream Kitchen?

Is your home kitchen your dream kitchen? Or do you dream of a bigger, more modern or more efficient kitchen? As you know, what you like and what works for your cooking style may not be the same for others. The same applies for commercial kitchens. Whether in the food service contractor (FSC) space or traditional retail restaurants, a lot of thought goes into a kitchen’s design—with efficiency and safety being the highest priorities. 

Food service contractors operate in a variety of different industries or sectors, essentially serving their client’s clientele. Once they are awarded a contract, they serve a set demographic on their customer’s premises. Alternatively, restaurant operators choose a location and bring their cuisine and restaurant concept to the general public. But are there more similarities and differences than meet the eye? Let’s dive into the workers’ compensation claims data and see.

We aggregated the loss data in Gallagher Bassett’s restaurant and food service contractor books to determine if one commercial kitchen generates the same or similar loss consequences, and we examined the loss data from the last four years for these two different classes of clients.  

The Hard Numbers

In comparing these two industries, one thing stuck out: The food service contractor space is, on average, more costly than the restaurant space. This could be driven by a number of factors, including a larger part-time workforce in the restaurant sector and a lower average weekly wage (AWW) due to tipped employees being in the restaurant mix. In fact, we show the AWW of food service contractor associates being more than 50% higher than their restaurant cohorts. This, in turn, drives up the average cost of a claim.   

The average total incurred for food service contractor workers’ compensation claims is 12% higher than in the restaurant sector.

Using Gallagher Bassett’s SMART proprietary complexity scoring system, we find that the average complexity of claims in the FSC space is 19% higher than in the restaurant space. Interestingly enough, despite the increase in complexity, the average duration is exactly the same between these two business groups. With such a significant difference in complexity, one would ordinarily expect longer durations, but that is not the case. Plus, the average age of the injured worker shows a 29% older claimant population than the restaurant worker. We hypothesize that the food service contractors tend to be much larger entities and, therefore, have the ability to implement more stringent and enforceable return-to-work policies. 

What Causes the Losses in These Comparative Kitchens?

When looking at the causes of loss, we found a lot less disparity than in the analysis of frequency and severity indicated above. As reflected in the chart below, the same causes of loss made each sector’s top five — albeit in slightly different orders.

Loss Cause:  

We hypothesize that these differences are caused by operational constraints, inexperienced workers, or other variances between the two service models. Regardless, the path forward can only be seen after a focused analysis of the specific location’s loss data by experienced safety and risk management professionals. As the economy picks up from the pandemic, now is the time for risk managers to complete an assessment of the key loss drivers in their “kitchen” and prepare to benchmark against their own businesses and their competitors’ businesses.

Food for Thought

FSCs and restaurant operators should practice preventative measures for their spaces and businesses. Claims may be inevitable, but their frequency and severity could be limited based on the kitchen’s design or, perhaps even, its renovation. Once the physical premises is optimized for safety, consider incorporating procedures and practices in the following areas: 

• Team Member Tenure: Confirm new hires are adequately trained on safety protocols.
• Physical Limitations: Ensure assigned duties are capable of being performed (consider pre-hire Functional Capacity Evaluations (FCEs)).
• First Aid Kits: Verify kits are fully stocked to address minor injuries quickly.
• PPE: Check all PPE is in good working shape and is being properly used.
• Floor Care: Ensure floors are cleaned regularly with correct cleaning fluids and routines are followed to avoid the most frequent slip-and-fall injuries.

As with any safety measure, a routine review of procedures is encouraged more frequently than just once a year. Adopting the tried and tested 5 Step Risk Management Process is essential to make these practices effective:

1. Identify the risk
2. Analyze the risk
3. Prioritize the risk
4. Treat the risk
5. Monitor and review the risk

Beyond these suggested measures, a regular review of loss cause data by location is helpful to see emerging trends and changes in causes of loss. Doing so will lead to a safer working environment and reductions in claim costs and loss experience ratings.

By Tim Kelly and Regina Woodberry-Stith

Courtesy of Gallagher-Bassett

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