Delivery Platforms, Caterers and Event Vendors: Allocating Risk and Ensuring Compliance

Restaurants and hospitality operators in the USA increasingly rely on third parties — delivery platforms, caterers, rental companies, and event vendors — to extend service and drive revenue. But each third-party relationship introduces liability, operational risk and compliance obligations that must be allocated clearly in contracts and managed through insurance and onboarding processes. This article outlines practical, location-specific steps (New York City, Los Angeles, Chicago, Miami) and commercial contract language to protect your business.

Why allocation of risk matters now

Third-party delivery platforms and event vendors can materially change your exposure:

• Delivery apps typically charge restaurants 15–30% of order value in commission, shifting cost structures and dispute risk to operators (see external analysis: New York Times).
• Caterers and event vendors may bring independent liability — property damage, liquor liability, food-borne illness — that can result in multi‑thousand-dollar claims or business interruption.
• State-specific rules (e.g., California’s gig-work laws) affect who is responsible for labor, workers’ comp and employment-based claims.

Without contractual clarity and verified insurance, restaurants can be named in suits even when a vendor is primarily at fault. Allocating risk up front protects both balance sheet and reputation.

Core contractual levers to allocate risk (actionable checklist)

• Define scope and control. Specify the exact services the vendor performs (delivery, catering, rental, set-up) and who controls safety and food handling on-site.
• Express indemnity. Require vendors to indemnify and defend the restaurant for vendor-caused claims (property damage, bodily injury, food contamination).
• Insurance minimums. Set insurance limits and certificate requirements (see recommended minimums below).
• Insurance additional insured clause. Require vendors and delivery providers to name your restaurant as an additional insured on commercial general liability (CGL) and auto policies when performing on-site or delivery activities.
• Hold-harmless and limitation of liability. Use narrowly tailored limitations to avoid giving vendors unlimited recourse while ensuring customers remain protected.
• Service levels and penalties. For regular relationships (e.g., a preferred caterer or delivery partner), include SLAs and financial penalties for missed performance or safety breaches.
• Audit and verification. Reserve the right to audit vendor insurance certificates and policies periodically.

For guidance on drafting these elements, review: Contracts, Vendors and Third-Party Liability: How to Draft Agreements That Protect Hospitality Operators.

Recommended minimum insurance requirements (USA, by location)

While state rules differ, the following commercially reasonable minimums are widely used for caterers and event vendors servicing urban hospitality venues (New York City, Los Angeles, Chicago, Miami):

• Commercial General Liability (CGL): $1,000,000 per occurrence / $2,000,000 aggregate
• Commercial Auto Liability: $1,000,000 (for any vendor vehicles delivering food/equipment)
• Employer’s Liability / Workers’ Comp: as required by state law (California, New York and Illinois require active workers’ comp coverage)
• Liquor Liability: $1,000,000 (if the vendor serves or handles alcohol)
• Umbrella/Excess: $2,000,000–$5,000,000 recommended for large events or high-profile venues
• Product Liability/Contamination coverage: Consider specific food contamination coverage for caterers

Require vendors to provide an ACORD certificate and name the venue as an additional insured. For processes on how to enforce these requirements: see Auditing Vendor Insurance Certificates and Enforcing Minimum Coverage Requirements.

Practical cost context: single-event liability insurance for a one-day event commonly ranges $75–$250 for basic $1M/$2M coverage in many U.S. markets, while annual policies for vendors vary by revenue and exposure (see Event Insurance pricing benchmarks at Insureon: https://www.insureon.com/small-business-insurance/event-insurance).

Third-party delivery platforms — what to negotiate and require

Major delivery platforms in the U.S. include DoorDash, Uber Eats, Grubhub (and integrated POS-delivery services like Square/Toast). Typical commercial facts:

• Commission ranges commonly fall between 15–30% of order value depending on services and promotions (see reporting on app commission trends: https://www.nytimes.com/2020/05/26/dining/restaurant-delivery-fees-coronavirus.html).
• Platforms provide various marketing/promotional programs that add fees or require discounts.

Contract and risk controls to insist on:

• Clear liability carve-outs: If a platform’s driver causes bodily injury or property damage while on-premises or during delivery, the platform should assume primary responsibility.
• Data and CGA access: Ensure you retain transactional data and the right to audit delivery-related incidents.
• Insurance and additional insureds: Require the platform to name your business as additional insured for claims related to their couriers on your premises.
• Right to refuse drivers: Maintain the right to exclude couriers from the premises for safety or compliance reasons.

Platform pricing and programs change frequently; negotiate or consider in-house delivery for high-margin items if commissions erode profitability.

Vendor onboarding and verification process

Implement a repeatable vendor onboarding flow to avoid surprises:

1. Contract signed with standard indemnity and insurance clauses.
2. Receipt and verification of ACORD certificate naming you as additional insured.
3. Confirmation of state-compliant workers’ comp.
4. Safety and food-handling proof (ServSafe certificates for caterers, routine temperature logs).
5. On-site orientation for events (traffic flows, load-in/out protocols, emergency contacts).

Use a vendor onboarding checklist to prevent liability: Vendor Onboarding Checklist: Due Diligence to Prevent Liability from Suppliers and Contractors.

Table: Quick comparison — delivery platforms vs. caterers vs. in-house/event vendors

Drafting practical indemnity and defense language

• Use specific, mutual indemnities tied to control: vendor indemnifies for vendor actions; host indemnifies for venue-caused issues.
• Require duty to defend only where vendor is the primary at-fault party, but be cautious about accepting unlimited defense obligations.
• Limit reservation of rights: include prompt notice of claims and an obligation for the indemnitor to assume defense within a defined time (e.g., 30 days).

For sample structures and defense allocation: see How to Structure Indemnity and Defense Obligations in Hospitality Contracts.

Enforcement, audits and remedies

• Perform annual insurance audits and random on‑site checks before major events.
• Use penalty clauses for missed SLAs or safety breaches (deductibles, withholding payment).
• Document incidents thoroughly; use mediation clauses for cost-effective dispute resolution before litigation.

For disciplinary contract language and penalty structures, review: Service Level Agreements and Penalty Clauses to Manage Third-Party Performance and Risk.

Conclusion — Practical next steps (30–60 day plan)

1. Update vendor and platform agreements to require CGL $1M/$2M, auto $1M, liquor limits where applicable.
2. Insert additional insured and indemnity clauses with specific, narrow triggers.
3. Start auditing certificates and set a remediation process for gaps.
4. Negotiate delivery commissions or test hybrid in‑house delivery if margins are under pressure in markets like NYC or Los Angeles.
5. Train staff on vendor oversight, including refusal authority for unsafe delivery drivers and immediate incident reporting.

Protecting revenue and reputation in hospitality means treating third-party risk as an operational priority — not an afterthought. Robust contracts, verified insurance and a disciplined onboarding/audit program will keep your restaurant out of the crossfire when partners fail.

External references

• “How Delivery Apps Hurt Restaurants,” New York Times — https://www.nytimes.com/2020/05/26/dining/restaurant-delivery-fees-coronavirus.html
• Insureon — Event insurance overview and cost guidance — https://www.insureon.com/small-business-insurance/event-insurance
• DoorDash for Business (platform overview) — https://www.doordash.com/business/