One of the most common questions we hear from restaurant owners is: "Do I really need cyber insurance if I don't store credit card data?" It's a reasonable question - after all, many restaurants use third-party payment processors or POS systems that handle card tokenization, meaning you never actually store card numbers on your own servers.
But here's the reality: cyber risk for restaurants extends far beyond card data. Ransomware attacks don't care whether you store payment details. POS vendor outages can shut you down regardless of how your card processing is structured. And even if you don't handle sensitive customer information, your business still runs on digital systems that can fail, be hacked, or be held hostage.
At Anchor Insurance, we help restaurant operators understand the full scope of cyber risk - not just data breaches - and make informed decisions about coverage. This guide walks through the modern realities of restaurant cyber exposure, even when card data isn't in the picture.
The Myth: "No Card Data = No Cyber Risk"
Many restaurant owners operate under the assumption that cyber insurance is only for businesses that store sensitive customer information, like credit card numbers, Social Security numbers, or healthcare records.
This belief is based on two common misconceptions:
- 1.Data breaches are the only cyber risk: In reality, ransomware, vendor outages, and system failures are far more common (and often more costly) for restaurants than traditional data breaches.
- 2.Third-party processors eliminate your risk: While tokenized payment systems reduce your PCI compliance burden, they don't protect you from operational disruptions when those systems go down or get hacked.
The truth is: your restaurant's cyber risk is tied to how much you rely on digital systems to operate, not how much customer data you store.
The Modern Reality: Cyber Risks That Don't Require Storing Card Data
Even if you've outsourced payment processing and don't maintain a customer database, your restaurant is still exposed to several major cyber risks:
1. Ransomware Attacks
Ransomware is malicious software that encrypts your systems and demands payment (usually in cryptocurrency) to restore access. It doesn't care what data you store - it targets any business that can't afford downtime.
How ransomware can hit restaurants:
- An employee clicks a phishing email, downloading malware onto your network
- The malware spreads to your POS terminals, back-office systems, and reservation software
- Your systems lock up, preventing you from processing orders, accepting payments, or managing tables
Even if you don't pay the ransom, you'll incur costs for IT forensics, system restoration, and lost revenue during the outage. These can easily reach tens of thousands of dollars for a multi-day disruption.
What cyber insurance covers: Ransom negotiation and payment (if appropriate), forensic investigation, system restoration, lost income, and extra expenses during downtime.
2. POS and Vendor System Failures
Your restaurant likely relies on third-party vendors for critical operations:
- POS systems (Square, Toast, Clover, etc.)
- Online ordering platforms (ChowNow, Grubhub, DoorDash integrations)
- Reservation systems (OpenTable, Resy)
- Payroll and scheduling software (Gusto, ADP, 7shifts)
If any of these vendors experiences a cyberattack, software bug, or system outage, your operations can grind to a halt - even though you don't control their security or infrastructure.
Real-world example:
In 2023-2024, several major POS and hospitality software vendors were hit by ransomware, leaving thousands of restaurants unable to process payments or access sales data for days. These restaurants didn't store card data themselves, but they still suffered significant business interruption.
What cyber insurance covers: Dependent business interruption (DBI) coverage pays for lost income and extra expenses when a third-party vendor's cyber incident disrupts your business.
3. Email and Payment Fraud (Social Engineering)
Cyber fraud schemes targeting restaurants have become more sophisticated. Common tactics include:
- Fake invoice scams: A vendor's email is compromised, and you receive a legitimate-looking invoice with updated bank details. You pay it, and the money goes to a fraudster.
- CEO fraud: You get an urgent email from someone claiming to be your owner or manager, asking you to wire money or buy gift cards.
- Payroll diversion: An employee's email is hacked, and their direct deposit is changed to route to a scammer's account.
These attacks don't require breaching your systems or stealing card data - they exploit human trust and email vulnerabilities.
What cyber insurance may cover: Some policies include social engineering coverage (also called funds transfer fraud) as an optional endorsement. This can reimburse you for losses from fraudulent payment instructions.
4. Business Email Compromise (BEC)
If a hacker gains access to your email accounts, they can:
- Steal vendor communications and divert payments
- Impersonate you to trick employees or suppliers
- Access confidential business information (contracts, financials, employee data)
- Use your email as a launching pad to attack your vendors or customers
Even if no card data is involved, you could face legal claims, vendor disputes, and reputational damage.
What cyber insurance covers: Forensics to determine how the email was compromised, legal defense if vendors or employees sue you, and sometimes direct financial losses from diverted payments.
5. Website and Online Ordering Disruptions
If your restaurant has a website with online ordering, reservations, or even just contact forms, you're relying on digital infrastructure. Cyberattacks like DDoS (distributed denial of service) or website defacement can:
- Take your site offline, preventing customers from placing orders
- Damage your reputation if hackers post offensive content
- Disrupt integrations with delivery platforms or reservation systems
Again, no card data needs to be stored for this to cost you time, money, and customers.
What cyber insurance may cover: Extra expenses to restore your website, lost income if online orders are a significant revenue source, and PR support to manage reputation damage.
What to Focus On Instead of Card Data Storage
If you're trying to evaluate whether your restaurant needs cyber insurance, asking 'Do we store card data?' is the wrong starting point. Instead, ask:
1. How Reliant Are We on Digital Systems?
Make a list of every digital system or platform you use to operate:
- POS and payment processing
- Online ordering (direct or through third parties)
- Reservation and table management
- Payroll, scheduling, and HR
- Inventory and supply chain management
- Accounting and bookkeeping software
- Email and communication tools
If you can't operate normally without any of these systems for more than a few hours, you have cyber risk.
2. What Would a 24-48 Hour Outage Cost Us?
Calculate your average daily revenue and fixed costs (payroll, rent, utilities). Multiply that by 1-2 days. That's your baseline exposure for a short-term cyber incident.
For most restaurants, even a single day of lost revenue plus the cost of emergency IT support can easily exceed $10K-$20K.
3. Do We Have Backup Plans for Vendor Failures?
If your POS vendor goes down, do you have:
- A manual process to take orders and accept payments?
- Backup terminals or mobile card readers?
- A plan to communicate with customers about delays?
If the answer is no, cyber insurance with dependent business interruption coverage can be a critical safety net.
4. How Strong Are Our Cybersecurity Controls?
Even if you don't store card data, basic security hygiene matters:
- Do all employees use unique passwords and multi-factor authentication (MFA)?
- Are your systems regularly updated with security patches?
- Do you have offline backups of critical data?
- Have you trained staff to recognize phishing emails?
Good controls reduce your risk, but they don't eliminate it. Cyber insurance is the financial backstop when controls fail.
When Card Data Actually Does Matter
To be clear: if you DO store, process, or transmit payment card data in-house (versus using fully tokenized, third-party processing), your cyber exposure is higher. In those cases:
- You're subject to PCI DSS (Payment Card Industry Data Security Standard) compliance requirements
- A data breach could result in PCI fines from card brands (Visa, Mastercard, etc.)
- You could face lawsuits from customers or card-issuing banks
- Your 3rd-party liability limits need to be higher to cover notification costs, legal defense, and settlements
But even in that scenario, your biggest exposure is often still business interruption and ransomware, not the data breach itself.
How Anchor Insurance Helps Restaurants Evaluate Cyber Risk
At Anchor, we don't start by asking 'Do you store card data?' We start by understanding your operations and tech dependencies.
Our process:
- We inventory your critical systems: POS, online ordering, reservations, payroll, etc. This helps us identify where you're most vulnerable to operational disruption.
- We model realistic loss scenarios: What does a 1-day, 3-day, or 7-day outage cost you in lost revenue and extra expenses? This informs how much business interruption coverage you actually need.
- We compare 1st-party vs 3rd-party priorities: If you don't store much customer data, we might recommend higher limits for business interruption and lower limits for data breach liability, saving you premium where it doesn't add value.
- We shop multiple carriers: As an independent broker, we can access carriers that specialize in hospitality and compare how they handle vendor incidents, ransomware, and social engineering coverage.
- We explain what you're buying in plain terms: No jargon, no sales pressure - just clear explanations of what's covered, what's excluded, and what trade-offs you're making.
Frequently Asked Questions
If my POS vendor is PCI-compliant, am I protected?
PCI compliance reduces your risk of a data breach, but it doesn't protect you from ransomware, vendor outages, or system failures. Your vendor's compliance also doesn't transfer liability or financial responsibility to them if something goes wrong. You still need your own cyber insurance.
Can I just rely on my vendors' insurance?
No. Most vendor contracts include liability caps (often one month's service fee or a nominal amount like $500) that are far below what you'd lose in a multi-day outage. Their insurance protects them from lawsuits, not your lost revenue. Cyber insurance with dependent business interruption coverage fills this gap.
What if I only use cloud-based systems - do I still need cyber insurance?
Yes. Cloud-based systems are convenient and often more secure than on-premise setups, but they're not immune to outages, cyberattacks, or vendor failures. In fact, your reliance on cloud vendors makes dependent business interruption coverage even more important, since you have no control over their uptime or security.