There is no doubt that restaurants attract a lot ofcompetitors–particularly in a soft market. It's a large andappealing niche to an agent looking for a target market–andrestaurants are everywhere, in small towns and large cities.According to the National Restaurant Assn., nearly 1 millionrestaurant locations exist in the U.S. and they generate about $580billion in sales annually, approximately 4 percent of the U.S.gross domestic product. Further, the restaurant industry isbeginning to recover from the recession faster than some otherindustries, such as construction. The National Restaurant Assn.predicts flat sales through the end of 2010, following 2 years ofnegative growth–a good sign. Additionally, according to the Bureauof Labor Statistics, in the first 3 months of 2010, the restaurantand food service industry added 42,500 jobs, adjusted for typicalseasonal hiring patterns. As sales and payrolls go up, so dopremiums.

Related: Read “Restaurants and the recession.”

It is not hard to see why this is an attractive niche for somany agents. But how can an agent achieve success in this crowdedfield of restaurant insurance sales? How do you avoid spinning yourwheels? Here are some strategies to consider:

Stay on top of changing coverage options that mayenhance your proposal (and your chances for an order!) Therestaurant industry is a dynamic one. It is constantly evolving andwith that comes new exposures and coverage needs. The agent whoidentifies those changing needs and presents solutions will gain amarketing advantage.

For example, an emerging exposure and coverage need forrestaurants is cyber risk insurance. Like other businesses,restaurant owners rely more and more on the Internet for variousaspects of their operation. Using the Internet as a tool fore-commerce and general business operations also means new exposuressuch as data/security breach, copyright or trademark infringement,data destruction and/or corruption as a result of a virus, cyberextortion, hackers, worms and other cyber meddlers, and firewalland network security attacks.

Internet use exposes restaurants to risks that may not be coveredunder many commercial insurance policies. Most restaurants donot have the tools or procedures in place to detect identity fraud,including an incident response plan, vendor management proceduresor data encryption for personally identifiable information. Manystates have enacted data breach notification laws, and thecompliance costs to notify customers as well as the risk ofincurring fines/penalties can be significant. Some carriers thatare ahead of the curve are offering cyber risk insurance. Forexample, one of the carriers my company represents offers a cyberrisk endorsement that is affordable and offers important basicprotection for the restaurant owner. Insurance professionals whoresearch this coverage and proactively present a quote to theirclients and prospects demonstrate that they are staying ahead ofthe curve and looking out for their clients' interests.

Similarly, restaurants use more sophisticated equipment tooperate their businesses than in the past. Whether it iscomputer-based cash registers integrated with point-of-salemanagement systems, multiple refrigeration systems,commercial-grade sound systems or inventory scanners, restaurantsare using technology to be more efficient and help manage labor,inventory and energy costs. Many use their point of sale systems asa time clock for employees so they can match staffing with businessvolume. When you add personal computers, telephone systems and faxmachines as well as the electrical distribution system itself tothe mix, there is plenty of equipment at risk of power surges,electrical arcing and short circuits.

Unbudgeted losses from a breakdown can be extremely costly, yetsome agents and policyholders still regard equipment breakdowninsurance as optional. Although the coverage itself is not new,some of the exposures that it addresses are new as the use oftechnology continues to advance in the restaurant industry. This isan opportunity for an agent who understands the importance of thecoverage for today's state-of-the-art restaurant operation toshine.

Cyber risk and equipment breakdown insurance are just two of themany coverage options you can present to your clients and prospectsthat will demonstrate your understanding of how specializedcoverages relate specifically to their business.

Keep abreast of restaurant industry trends and how theymay impact your clients' insurance needs. What's new inthe restaurant industry? If you can't answer that question, thenyou already are behind the 8 ball in the sales game. A firm graspon the restaurant industry, what's new and what is developing, isone way you can differentiate yourself from other agents. There aremany websites that will help you stay informed on industrytrends.

One recent trend is that many restaurants are using drinkpromotions to bring in business. Happy hours, half-price winenights, ladies' nights, sporting event specials are all on theupswing and along with these promotions, liquor sales in relationto food sales are up at many establishments. Drink promotions maybe a successful strategy for many establishments, but restaurantowners need to be educated about the potential pitfalls of thisstrategy regarding their insurance coverage and premiums.

Depending on how high the liquor ratio climbs, some carriers maynot wish to write the risk, while others may raise rates andpossibly limit coverages if they perceive that the establishment ismore a bar than a restaurant. You will look like the knowledgeableprofessional that you are if you point out the possible downsideearly, before the non-renewal notice or the rate increase. If youwait until after, you know what they say about the messenger whobears bad news; not a good scenario for you. You may also use thisas an “in” with new clients if you can knowledgeably discuss howoperational changes may affect their premiums orcoverage–particularly if their current agent has not bothered to doso.

Other recent restaurant industry trends that may affect yourclients' insurance include adding delivery service, entertainment,takeout, a dance floor, more TVs, or expanding late-night hours.All of these ideas may seem to the policyholder like a terrific wayto increase revenues, and that may be true. But you can avoidunpleasant surprises at renewal time by talking to your clients inadvance about how potential changes could affect their insurance.Ask if they are considering any of these changes and contact thecarrier about how it may impact the policyholder's eligibility andrates so the policyholder can make an informed decision knowing thecosts as well as the benefits. By doing this, you become not just asalesperson, but a business advisor.

Fact-check your submission using the Internet.Sounds pretty basic, doesn't it? Yet many agents do not take thetime to verify the information provided by clients via the sametool that the underwriter is sure to use: the Internet. In thehighly competitive environment of restaurant insurance, agentscan't afford to lose their credibility with a market. Yet time andagain, our office receives submissions from agents who clearly didnot do their homework.

Related: Read “Tough times mean more boozing.”

The Internet has brought a whole new dimension to theunderwriting process. Most restaurants have their own websites thatprovide important information like hours of operation,entertainment calendars and drink specials. In addition, there aremany other potential sources of information on the Internetincluding Facebook, MySpace, CitySearch and Metromix, just to namea few. Before you submit that application that says the restaurantcloses at 11:00 p.m., has no entertainment and does not have drinkspecials, use your search engine to check for conflictinginformation, because you can be sure that 95 percent of therestaurant underwriters will be doing the same.

If you verify the underwriting information before submitting therisk and then follow up with the client or prospect regarding anyinconsistencies, it is far better than having an underwriter findthe errors or oversights in your submission. Once your credibilityis undermined with an underwriter, it is hard to regain. It isoften said that insurance is a relationship business. That is trueboth on the agent- to-policyholder side and on theagent-to-underwriter side. Underwriters value relationships withprofessional salespeople who provide accurate, complete submissionsand they will reward those agents with their very best efforts andultimately that will give you a competitive edge.

Understand the niches within the niche. We'vealready talked about why restaurants are an attractive niche formany agents. The successful salesperson will learn how toeffectively target the niches within the niche. Not all restaurantrisks are created equal. The coverage needs of a fine diningrestaurant are not the same as a fast food restaurant. Carriers'appetites vary as well. Work smart and work efficiently. Know theappetites of your markets and which product fits which type ofrestaurant best.

Your markets will quickly grow weary of a shotgun approach tomarketing restaurant risks. Underwriters want to see that youunderstand their target risk. The beauty of this scenario is thatthe best interests of the carrier, the agent and the policyholderare nearly perfectly aligned. Each partner can be a winner in theprocess if you have taken the time to identify the best insuranceproducts for your varied restaurant clients. A fine diningrestaurant with a fine arts collection should not be written on aBOP with a $5,000 fine arts sublimit or with a carrier that willnot provide garage keepers' legal liability coverage for theirvalet service. Similarly, a corner deli is not best served by apackage policy with a high minimum premium loaded with extras thatmay sound good, but are really not pertinent to the operation.

The sales professional who has taken the time to understand howdifferent restaurant types fit with different insurance marketswill improve the underwriting process for allparticipants–including the client. There is no reason to have yourclients or prospects complete supplemental applications for marketsthat are not a good fit with their operation. Similarly, youragency staff need not waste their time following up with carrierswho are going to just end up declining a risk because it does notfit their appetite. You can develop a win-win-win scenario for yourclient, your agency and your markets if you take the time todevelop this basic understanding of your clients' needs and yourmarkets' appetites.

Knowledge is king. Each of these key strategiesis contingent on the same basic principle: You, the agent, have toeducate yourself. You can cold call restaurants until you're bluein the face, but if you do not understand the restaurant industry,the specifics of a given client or prospect's restaurant operationand the finer points of the products and coverages available in therestaurant insurance marketplace, it is unlikely you will succeedin the long run. So take advantage of the plentiful resourcesavailable to you and go to school first. Then go write somerestaurant insurance.

Related: Read “Restaurants and the recession.”

Related: Read “Tough times mean more boozing.”

Heidi Strommen is president ofProHost USA in Minneapolis. ProHost is a program administratorformed in 1989 that writes insurance for restaurants, bars adntaverns. Strommen joined the firm in 1990 and oversees allunderwriting, business development and administrative functions.She can be reached at [email protected].