By Justin Reese

True story: I recently was sitting in a popular little restaurant in Florida that used a local service for to-go deliveries and heard a story about a delivery order that sat in the driver’s car for 45 minutes while he waited for another order to be ready. Neither the customer nor the restaurant was happy. The restaurant probably wasn’t paying the delivery service a lot, but it goes to show….you get what you pay for.

And these days, there are a lot of options to choose from: The guy you hire at minimum wage (plus tips) to cart your pizzas around town; the ride-share-cum-food-delivery services like Uber and Lyft; and the web portal-based full-service food delivery operations like GrubHub and PostMates. 

It’s a booming business and no wonder: Some 20 percent of U.S. consumers get food delivered at least once a week, spending $10 billion in 2016 on pizza deliveries alone. But restaurants (and hotels that house them) may face risks from these services, too. It’s not just customers who are unhappy over food that is delivered cold, soggy or worse. Drivers can have accidents. They may have a grudge and do something nefarious to the food they’re carting. Then there are criminal acts, by and against drivers – robbery, rape or worse. 

It all comes together as added business risk for the restauranteur. While there are many grey areas when it comes to liability, any organization with comparatively deep pockets may be targeted when it comes to legally assessing blame for food deliveries gone wrong. 

The grey areas here, though, eventually may lead to court actions over exclusions, coverage and limitations of liability. For example, the liability coverage applies while the delivery is in process – being picked up and delivered. But what about when the app is open, drivers are ready to go but aren’t actually picking up and/or delivering food? And what if one service is delivering for multiple area restaurants at the same time and the driver gets into an accident? Could all of them be drawn into the claim?

There are three approaches to restaurant delivery these days. One is the driver who’s put on payroll. The driver should get additional auto coverage and the general commercial liability policy will protect the restaurant owner if the driver’s  in an on-the-job accident. A second are the contract services like GrubHub and UberEATS, whose agreements stipulate that each party has liability coverage in specified amounts. 

And, there’s another category of delivery service that is could be more troublesome to restaurants. These “on-demand” services – Postmates is one, DoorDash another – don’t necessarily get your permission to deliver your food. Their position is that they are courier services whose customers are individual customers, not the restaurant. Your branded menu gets onto their platform when an individual searches for it or tags it within their system. That’s not transparent to the customer, though, and you can get blamed when quality control is compromised.

This sort of forced food delivery service is problematic, and the trademark infringement suit filed by Burger Antics in suburban Chicago against DoorDash illustrates one common response. (Door Dash removed the restaurant’s information from its portal in response to the suit.) Others add into their complaints issues over food safety and quality and compliance with sanitary codes. Your best protection for now is standard liability insurance combined with clear disclaimers of delivery arrangements. 

It all may be changing as the third-party delivery market continues to grow and food safety issues remain. Regulations are being floated across the country to clean up the food delivery market mess with a particular focus on food safety, liability for bad delivery and intellectual property violations. But until they’re put in place, restaurant management should stay on top of the exposures these services pose and make sure their insurance is sufficient for the risk. 

HUB International’s consultants are available to work with you in understanding how trends and developments like restaurant delivery services affect your risk posture today and in the future.