With the Commonwealth Games just around the corner, Scottish restaurants have a great opportunity to enhance their profitability. Typically, July and August tend to be quiet months in the restaurant trade so any games-enhanced profit increase would be good news for the balance sheet.

It’s a great opportunity but could also present a significant risk. When most of your business is expected to take place within a short window of time, if you were forced to close for a reason beyond your control, how would you recoup the income lost?

If an incident were to occur, for example a fire, escape of water or power failure, the first step an insurer would be likely to take in the event of a claim is to look back at the last three years of accounts. Since these would typically reflect the quieter summer months, the amount reimbursed could fall significantly short of restaurant’s ‘Commonwealth Games’ projections.

So, how can restaurants get around this?

Restaurateurs may miss a trick if they don’t allow for this summer’s influx of tourists. Business interruption insurance covers the loss of income that a business suffers if it is affected by a disaster. Some insurance policies will include business interruption cover on a ‘declaration’ linked basis and this should be adequate to cover any profit spike over this period.

However, not all restaurants are insured on this basis, and as such, it might be worth taking a second look at your summer profit projections and, if necessary, increasing your gross profit sums insured. You may also consider increasing your stock levels sums insured, along with reviewing your banking procedures to ensure your on-site money is covered by existing limits. Although any increase to sums insured might come at an additional cost, the expense will be minimal compared to what may be at stake.

It is recommended to speak with a specialist adviser who understands the restaurant sector to ensure you have the right insurance in place to meet your needs.