Bars, Taverns, and Nightclubs

Risk Management Information

Bars, Taverns, and Nightclubs

Business Links

Bars, Taverns, and Nightclubs

Report Number: / BL-10-17
Release Date: / July 22, 2005
Section Title: / Mercantile

NAICS722410

SIC 5813

ISO 16920; ISO 16921; ISO 16930; ISO 16931; ISO 16941; ISO 16942

NCCI 9084

Exposure Abstract

Lines of Insurance / Areas of Concern / Risk* / Section
Commercial Automobile / Incidental vehicle use; valet parking; vehicle theft and vandalism / L / CA Assmt / CA Controls
Liability / Falls; fire; violence; drunk driving; foodborne injuries and illness; harassment / H / LB Assmt / LB Controls
Property - Crime / Employee theft; burglary; robbery / H / CP Assmt / CP Controls
Property - Fire / Suspicious or incendiary fires; improper installation, care, or use of cooking equipment; improper use of pyrotechnic devices; careless smoking / H / FP Assmt / FP Controls
Property - Inland Marine / Business Interruption / Business interruption; damage to or loss of accounts receivables, valuable papers and records; equipment, computers, signs and awnings, and fine arts; bailment / M / IM Assmt / IM Controls
Workers’ Compensation / Lifting; falling; noise; hazardous substances; workplace violence; and cooking operations / L / WC Assmt / WC Controls
*Risk: L-Low, M-Moderate, H-High

Description of Operations

Bars, taverns, and nightclubs, collectively referred to as “drinking establishments,” are businesses primarily engaged in preparing and serving alcoholic beverages to customers for immediate consumption. These businesses are closely regulated by State and local alcoholic beverage control authorities.

Services – Drinking establishments provide a location where alcoholic beverages are served and people can socialize. Some States may allow establishments to sell packaged alcoholic beverages for consumption off the premises. Drinking establishments may also serve food and provide entertainment for their customers.

Drinking establishments can range from small neighborhood bars, where only limited services are provided, to large nightclubs featuring live entertainment on a regular basis. In addition, businesses may design their facilities to attract specific types of patrons, such as enthusiasts of a particular sport, type of alcoholic beverage (e.g., wine bar), type of entertainment (e.g., trivia or karaoke), or certain types of music.

The hours of operation of a drinking establishment will be limited by State and local ordinances governing the sale and serving of alcoholic beverages. Beyond this restriction, operators are free to chose their opening and closing times. Most establishments operate seven days a week, although some jurisdictions may prohibit operation on Sunday.

Facility – Drinking establishments may be located in a wide range of structures. These may include old store fronts, retail outlets, or abandoned industrial properties. They may be freestanding buildings or a part of multi-occupancy structures, such as shopping centers. The size of the facility will also vary considerably. A typical bar with limited food service will be between 1,000 to 2,500 ft2 (93 to 232 m2). A small neighborhood tavern may be less than 1,000 ft2 (93 m2), while a nightclub may be more than 8,000 ft2 (743 m2). Large facilities may occupy more than one story of a structure or have mezzanines.

The interior of a typical drinking place may be divided into 5 major areas. These are the bar area, non-bar seating area, entertainment area, kitchen/production area, and office/storage area. The physical size of each of these areas will depend upon the scope of services provided by the place. This is especially true for the entertainment area.

The bar area is the primary area where alcoholic beverages are dispensed. There may be seating at the bar, along with high-counters or tables where standing patrons may rest their drinks. The seating area will typically consist of tables or other furniture where patrons may sit and be served by a waiter or waitress. Tables are commonly two-person tables, which may be joined together or separated as need requires. Entertainment areas may range from small areas where a jukebox, video game, or pool table is located to large areas with one or more raised stages and dance floors. Kitchens may range from simple food preparation areas, where hot dogs or sandwiches may be prepared, to full-scale restaurant kitchens. Office/storage areas include areas where administrative work is performed and extra stock is kept. It may include locker areas or changing areas for staff.

Drinking establishments may have outdoor areas, such as decks, for patron use. Freestanding facilities may have dedicated parking areas.

People – Typical personnel at drinking establishments may include bartenders, waiters or waitresses, and bartender’s helpers. Other personnel include managers, hosts or hostesses, food preparation personnel, dishwashers, and entertainment workers, such as disc jockeys. The type and number of each worker will depend upon the size of the business, the extent of the food service, the volume of customers, and the hours of operation.

Bartenders fill drink orders taken directly from patrons at the bar or through waiters and waitresses who place drink orders for seated patrons. Waiters and waitresses take customer orders, serve food and beverages, prepare itemized checks, and may accept payment. Bartender’s helpers assist waiters, waitresses, and bartenders by cleaning tables, removing dirty dishes, and keeping bars and service areas stocked with supplies.

In general, there are no specific educational requirements for most jobs at drinking establishments. Bartenders typically acquire their skills by attending a bartending or vocational or technical school. Food preparation workers may receive training through restaurant associations or vocational schools.

State liquor control authorities may set minimum age limits for people serving alcohol or working in places where it is served. Usually, bartenders must be at least 21 years of age.

The industry employs a high number of part-time workers. Historically, the industry has a high turnover rate.

Fixtures and Equipment – Fixtures and equipment for drinking establishments can be divided into three main categories: bar equipment, food service equipment, and entertainment equipment. Bars will also have office equipment, storage shelves and cases, and security equipment.

Bar fixtures and equipment will include the bar itself, bar stools, tables, chairs, non-alcoholic beverage dispensing equipment, liquor inventory control systems, beer dispensing equipment, sinks, ice machines, mixers, blenders, refrigerators, bartenders tools, and cash registers. The bar itself may be a simple, off-the-shelf item, or a custom designed and manufactured unit that may cost thousands of dollars.

Food preparation equipment may include commercial stoves with griddle tops, microwaves, deep fryers, broilers, toasters, mixers, slicers, coffee machines, sandwich tables, preparation tables, warming tables, freezers, refrigerators, and food storage equipment. The type of equipment found will depend upon the type and extent of food service provided.

Entertainment equipment may include televisions, juke boxes, pool tables, air hockey tables, foosball tables, dart boards, pinball and video game consoles, raised stages, microphone systems, lighting and sound systems, and DJ equipment. Equipment may be owned by a vending equipment company and supplied to the drinking place for a fee.

Supplies – Supplies at drinking establishments are primarily cutlery, place settings, glassware, table linens, and stocks of food, liquor, and beverages. Some places may have stocks of expensive, premium wines and liquors. Drinking establishments may be provided with promotional items by beverage suppliers or others for use or distribution to their customers.

Additional Information – In addition to the materials provided in this report, the following Web-sites may provide useful information.

American Bartenders Association,

American Beverage Licensees,

National Conference of State Liquor Administrators,

National Restaurant Association,

U.S. Department of the Treasury, Alcohol and Tobacco, Tax and Trade Bureau,

[Exposure Abstract]

Risk Management Information

Bars, Taverns, and Nightclubs

Commercial Automobile Exposure Assessment

[Commercial Automobile Exposure Controls]

Drinking establishments will have a minimal commercial automobile exposure, although the exposure increases if valet parking services are provided. However, even incidental vehicle operation exposes the business to loss. When employees are using their own vehicles to perform tasks, such as picking up supplies or going to the post office, management should be concerned about their driving skills, as this creates a non-owned vehicle exposure. The following areas should be reviewed to provide a comprehensive exposure assessment.

Management

Is a ‘safety policy’ in place addressing the safe operation of vehicles by drivers?

Is a policy in place requiring that all drivers be secured in a seat belt when a vehicle is in motion?

Are drivers instructed to not use communications devices (e.g., cellular phones) when they are driving?

Is there a written policy addressing the consumption of alcohol and illegal substances by drivers?

If employees are allowed to use company-owned/leased vehicles for personal use, are limitations in place as to who may drive the vehicle and the radius of operation?

Where valet parking service is provided, do drivers meet the same criteria as drivers of company vehicles?

Where valet parking service is provided, are policies in place to address care and security of customer vehicles?

Operations

Are multiple locations being managed that may require employees to drive between locations for business purposes?

Do employees use their personal vehicles for business purposes?

If valet parking service is provided, is there a key control program in place?

Are drivers instructed to lock company vehicles, and activate the alarm system, if provided, when vehicles are unattended?

During non-business hours, are company vehicles kept in a secure location with adequate key control?

Driver Qualification, Training, and Supervision

Are drivers properly licensed?

Is the operation of vehicles restricted to qualified drivers?

Is a driver’s State Motor Vehicle Record obtained when first hired, and periodically updated and reviewed?

Where driving will be part of the applicant's responsibilities, do reference checks include information on driving?

Is a driver’s condition (e.g., fatigue level, use of medications, etc.) taken into consideration before assigning a driving task?

Are drivers trained on the location of controls on company vehicles and procedures to follow in the event of a breakdown or accident?

Are drivers trained on how to properly inspect company vehicles they will be operating?

Are records of driver qualification and training documented in the employee’s personnel file?

Vehicle Maintenance and Inspection

Are company vehicles properly maintained and are maintenance records kept?

Are drivers required to inspect company vehicles before operation?

Accident Reporting, Recording and Analysis

Are drivers trained on what to do at the scene of an accident?

Does management record and analyze each accident to help prevent future occurrences?

[Exposure Abstract]

Risk Management Information

Bars, Taverns, and Nightclubs

Liability Exposure Assessment

[Liability Exposure Controls]

The following questions highlight factors to be considered when evaluating a drinking establishment for liability exposures.

Loss Control Management

Is there an organized system for managing liability exposures?

Do employees receive orientation on their responsibilities under the system?

Life Safety

Are there a sufficient number of means of egress?

Are means of egress free and unobstructed?

Is the maximum capacity for the establishment posted, as required by law?

Is there a policy in place to control crowds?

Are fire extinguishers properly inspected and maintained?

Has an emergency action plan been implemented?

Are all reported customer injuries and illnesses documented?

Accident Prevention

Is there an organized program for cleaning and maintaining floor surfaces?

Are high risk areas (e.g., high traffic or frequently wet areas) inspected frequently?

Are changes in levels, platform edges, or floor openings clearly marked?

Do stairs, ramps, balconies, platform edges, elevated walkways, or similar structures have hand or guard rails?

Is there adequate lighting?

Is glassware inspected for chips and breaks prior to use?

Are tables, chairs, and other furnishing free of obvious hazards?

Is all electrical equipment properly grounded?

Are arcade games, vending machines, and other heavy freestanding items firmly mounted to prevent toppling?

Are all decorations firmly fastened and fire safe?

Is candle use controlled?

Are restrooms clean and sanitary?

Are there procedures for handling inclement weather?

Are there controls for liability exposures associated with independent contractors?

Customer Security

Have the crime hazards for the property and surrounding area been analyzed?

Are exterior areas adequately illuminated?

is there a prominently posted customer code of conduct that describes acceptable and unacceptable conduct?

Are steps taken to reduce the amount of cash on hand?

Are employees trained in handling customer violence?

If security guards are used, are they well trained and properly supervised?

Are emergency numbers posted by all telephones?

Alcohol Service

Is management familiar with the State requirements governing the sale of alcoholic beverages?

Are all alcohol servers trained in responsible service practices?

Does the establishment verify that customers are of legal drinking age?

Are a sufficient number of servers present on each shift?

Are there posted signs that promote responsible drinking?

Are drink recipes standardized so that servers can more easily monitor customer alcohol consumption?

Are “happy hours” or other drink-oriented events avoided?

Is food available for customers?

Does the establishment have a policy for stopping alcohol service to suspected intoxicated persons?

Does the establishment maintain a list of reliable transportation providers near each telephone?

Is a log used to document times when persons were refused service due to intoxication, when identification was refused, when alternate transportation was arranged, and when other alcohol-related incidents occur?

Food Safety

Are food products purchased from government-approved sources?

Are deliveries inspected prior to acceptance and unsatisfactory items refused?

Do supplier contracts contain indemnification agreements?

Is food stored and handled in a safe and sanitary manner?

Do workers who handle food follow good hygienic practices?

Is food stored and cooked at the proper temperature?

Is cooking equipment maintained in proper working order?

Other Concerns

Are safety and security procedures established for valet parking operations?

Are there procedures for controlling liability exposures associated with special events?

[Exposure Abstract]

Risk Management Information

Bars, Taverns, and Nightclubs

Property - Crime Exposure Assessment

[Property - Crime Exposure Controls]

The following information can be used to assess the property crime exposures of drinking establishments.

Employee Theft

Are all job applicants thoroughly screened prior to employment?

Are there controls on petty cash disbursements, bank deposits and withdrawals, issuance of checks, payrolls, reconciliation of bank statements, and the paying of invoices?

Are there controls on the delivery of goods, and are invoices checked against deliveries?

Can cashiers tamper with customers’ checks or register receipts?

Are there control systems in use for the dispensing of alcohol?

Can employees enter or leave the facility without being seen?

Can employees who are caught stealing be successfully prosecuted?

Robbery

Is cash on-hand or in cash drawers kept at a minimum?

Is cash transferred to the bank regularly, but not on a set, predictable schedule?

What are the hours of operation of the business?

Is the business located in an area considered to be “high-crime”?

Is the business isolated from its neighbors?

Are employees advised to observe and report suspicious persons?

Are employees trained in procedures to follow during and after a robbery?

Burglary

Would it be easy for a burglar to gain entry?

Is there equipment or structures in outdoor areas that could be used by a burglar to gain entry?

Is there a structure, building alcove, or overgrown foliage that could provide the burglar with cover to work without fear of being seen?

Are interior and exterior lighting levels adequate?

Are exterior lighting fixtures protected against breakage, and are damaged lighting fixtures or burned-out bulbs replaced as soon as possible?

Are windows, doors, and other openings, such as roof hatches, securely locked?

Are bottles of liquors and wines stored in a locked room or closet?

Is cash removed from cash registers and stored in a safe?

Fraud

Is there a policy regarding the acceptance of payment by checks and credit cards?

Is the policy posted near all cash registers?

Are clerks trained in the company’s policy regarding acceptance of payment by checks and credit cards?

Are clerks trained in identifying counterfeit currency?

Vandalism

Are there signs of vandalism on the premises, such as graffiti on building walls?

Are there signs of transients or vagrants living on or about the property?

Are there security patrols during nighttime hours and other periods when the business is closed?

[Exposure Abstract]

Risk Management Information

Bars, Taverns, and Nightclubs

Property - Fire Exposure Assessment

[Property - Fire Exposure Controls]

The fire exposures for drinking establishments will vary based on the type of building construction, the size of the facility, and the operations involved. Fires may be related to improper installation, care, and use of cooking equipment; caused by careless smoking; improper use of pyrotechnic displays; or related to incendiarism. The loss of life, as well as the structure, furnishings, and stock, are the primary fire-loss concerns. The following information can assist in assessing the fire exposures of drinking establishment.

Facility Design and Construction