The Case for Replenishing the Restaurant Revitalization Fund

 


Photo by Priscilla Du Preez | Unsplash

Photo by Priscilla Du Preez | Unsplash

It can be argued that from March 2020 until June 2021, no business sector had to deal with more issues than the restaurant industry. Not only did they have to deal with closures due to quarantines, but there were restrictions on distancing and tabling that severely cut back capacity. To stay afloat, many restaurants had to quickly pivot to business models that revolved around takeout and foot delivery apps. On top of that, until very recently, many members of the public were averse to venturing out for lunch or dinner.

 

Why should we care? Well, it turns out the Independent Restaurant Coalition estimates that 70% of your local eateries are individually owned. They aren’t part of a franchise or mega restaurant group. They are businesses owned by your neighbor, to provide food and entertainment to your neighborhood, employing more of your neighbors. Often, it is the first job a person has in life and it is a career builder, particularly in minority communities. It is estimated that a half-million entities in the United States fall into the category of stand-alone operations. We also lost over 90,000 of these businesses during the pandemic.

 

Now during the COVID-19 crisis, there were programs put in place to help out these restaurants. Funds from the Economic Injury Disaster Loan (EIDL) and Payroll Protection Programs (PPP) did help a bit. But in terms of replacing completely lost revenues, they fell far short. Throughout the pandemic, you may have read prominent restauranteurs – such as David Chang, for example – penning op-eds for newspapers insisting on more economic relief.

 

So, as a part of the Biden Administration’s pandemic relief package, $28.6 billion was set aside for the Restaurant Revitalization Fund (RRF) through the U.S. Small Business Administration. This program was designed with input from chefs and restauranteurs around the country. Before going any further, all of the revenues had to be verifiable through tax forms and/or point of sale reports, and the businesses could apply for the difference between their 2019 and 2020 revenues, subtracting out the funds already received via the Payroll Protection Program.

To give you some idea of how this works and why it is necessary, I am going to tell you the story of one of my clients – Nella Pizza e Pasta in Chicago, IL. Opened in 2017, and owned by a couple that immigrated from Naples, Italy, Nella was doing great prior to March 2020. They employed a couple of dozen folks that did everything from waiting on and busing tables to cooking the meals to washing the dishes.

 

Prior to the lockdown, delivery and pick up was a very small percentage of their business. All of that had to change quickly when the so-called “Covid Curtain” fell. Business year over year fell 47 percent. Now, loans had to be repaid, rent was due, electrical bills for lights and refrigeration had to be paid as well as the gas for the stoves and ovens. And, on top of that, the delivery services were taking 15% of gross sales. To say it was a challenge is a true understatement.

 

Nella was lucky. Like many small businesses during the pandemic, neighbors pitched in on a GoFundMe page to support the employees. The business they did receive was enough to barely sustain the operation. When the applications opened for the Restaurant Revitalization Fund in May they had their paperwork ready and were among the first entered. Also, a helping factor is that the business is 100% woman-owned. Grant money has been used to pay back rent, overdue loans, and taxes.

 

For those applying for the RRF, minority and women-owned businesses got to the head of the line. You also got to the head of the line if you grossed under $1.5 million in pre-COVID sales. Through the program the following smallest of the small benefited:

  • 12,898 applications from businesses with not more than $50,000 in pre-pandemic revenue requesting $290 million in funds

  • 73,671 applications from businesses with not more than $500,000 in annual pre-pandemic revenue requesting $6.1 billion in funds

  • 34,010 applications from businesses with $500,000 – $1,500,000 in annual pre-pandemic revenue requesting $8.4 billion in funds

By the time the smoke cleared, at the grant deadline, over 370,000 applications for over $76 billion in grants was requested.

 

This led to an over-subscription of nearly $60 billion dollars. Many of these are like a friend of mine’s restaurant in Fremont, CA. Massimo’s 45 years old, did a healthy amount of business pre-COVID, and still trying to make it while his costs keep rising. Between March and April, the price of beef rose 14.5%, pork 9.6%, fresh fruits and melons 9.3%, processed poultry 5.4%, and dairy products 3.2%. They are still waiting for an answer on their application.

 

A bipartisan group of Congressional Representatives and Senators – led by Representatives Earl Blumenauer (D-OR) and Brian Fitzpatrick (R-PA), along with Senators Roger Wicker (R-MS) and Kyrsten Sinema (D-AZ) – have introduced the Restaurant Revitalization Replenishment Act. It would make up for the gap in funding and help nearly a quarter of a million businesses across all parts of America keep their doors open.

 

Now, some have tried to use the RRF shortfall as a wedge issue. Former Trump advisor Stephen Miller has sued to stop the program in several states. He claims that by putting women and minorities first there was race and gender bias. Instead of finding a uniting solution that will keep thousands of doors open and employ millions of people, he has chosen the tribal route.

 

What we need here is a solution, not division. Local economies have been under attack by a number of forces. Online shopping has hurt many retail operations, local media has been severely downsized, to name a few. The COVID-19 pandemic has only exacerbated these issues. Helping independent restaurants helps revitalize our local economies rural town by rural town, city block by city block. Urging your Congressman or Senator to vote for the Restaurant Revitalization Replenishment Act is a way for you to take action. You can visit saverestaurants.com to see how to get involved.


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