Independent Restaurant Owners Call On Congress For Dedicated COVID-19 Aid

4.29.20 9:45 PM EDT: Updated to include IRC statement about direct aid for workers.

In the week following the scandal that saw publicly traded global restaurant corporations receiving – and returning – Small Business Association funds for COVID-19 relief, humanitarian chef José Andrés is partnering with celebrity chef Andrew Zimmern and others to call on Congress to provide immediate and long-term aid to independently owned restaurants.

The chefs have launched the Independent Restaurant Coalition (IRC) with a mission to “to save the local restaurants affected by COVID-19,” and are asking the public to help them lobby the federal government for dedicated loans, grants and tax breaks.

“It’s a powerful thing that is galvanizing and organizing restaurants,” Andrés  said at a virtual “Town Hall” Wednesday to announce the campaign. “I don’t think we (the public) realize how restaurants have become the backbone of communities all across America.”

While IRC founders still need to work out details of their request, in broad strokes, they’re asking Congress to make the following changes to the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27:

·      Fix the Paycheck Protection Program (PPP) by: assessing whether a business has met the terms for loan forgiveness to three months after restaurants can legally and fully reopen instead of the current eight weeks after disbursement; reinstating the $500 million gross revenue cap to determine eligible borrowers; increasing the length of time restaurant owners have to repay their loans to 10 years from two.

·      Launch a Restaurant Stabilization Fund that provides up to $120 billion in grants to independent restaurants that will “give them the upfront capital they need to reopen.”

·      Create new tax rebates that “incentivize employment so restaurants can continue to employ full staff and pay rent when business is slow.”

·      Make insurance companies include COVID-19 in business interruption insurance. “Right now,  restaurants aren’t receiving the benefits they deserve from insurance companies,” reads IRC’s website.

“We believe this will fix some of the problems with the PPP,” said Town Hall moderator Naomi Pomeroy, owner of Beast in Portland, OR.

The PPP, which was theoretically designed to help get small businesses through social distancing dining room closures, ran out of money two weeks after the program went live and has garnered criticism for running funds through large banks that favored large borrowers who by any sensible definition are not small businesses. A second round of the PPP lending program releases additional funding to applicants but analysts expect this money to run out any day.

Many independent owners say in addition to the inadequate funding, the PPP’s provisions themselves don’t go far enough.  

“Relief efforts haven’t really been adequate,” said Zimmern. “PPP is Swiss cheese legislation. An eight-week band aid doesn’t match the 12 months or more it will take to rebuild and re-employ 11 million people.”

The nation’s 500,000 independent restaurants directly employ 11 million workers, according to the IRC, and eight million of them are currently out of work. That’s not including all of the vendors who keep restaurants running.

According to Zimmern, restaurants are the number one employer of single mothers, first-time workers, immigrants and people coming out of prison.

Andrés  says, “Nobody works harder than the millions than those who are part of this big family.”  

PPP loan recipients are supposed to use most of the money to cover payroll while they’re struggling through the pandemic and the program does provide loan forgiveness and tax incentives for employee hiring and retention.

But aside from asking for a new “jobs provider rebate” that would give tax relief to restaurants based on the number of people they employ, IRC’s requests don’t include any relief for workers themselves.

Michael Shemtov, owner of Butcher & Bee in Nashville, emailed after the webinar, “Supporting restaurant workers has motivated our work from the beginning. Many independent restaurant owners have used personal savings or taken on new debt to support their employees. We welcome ideas for worker relief because we win when they win. Restaurant workers accounted for the largest share of unemployment claims in March but less than 8.9% of approved PPP loans went to restaurants and hotels combined.” 

Either way, there is no doubt that restaurants need help. The IRC says restaurants contribute $1 trillion to the U.S. economy each year, and only 30% of them will survive the crisis if it lingers four months or longer.

Those who do emerge may face even more difficult tribulations after reopening their doors. The first thing survivors will need to do when they reopen is pay old invoices. Then they’ll have to hire and train a skeleton staff to help unveil a newly configured, socially distanced dining room that’s expected to be legally required to cut previous capacity by 50%.

Many restaurateurs will decide it’s just not worth taking on more debt and will permanently close shop. Some will have to reimagine their concept to accommodate a new dining room layout, no large groups and reduced tourism, plus either less service or higher menu prices. The rest will go back to business fully expecting to ring an average of 50% less revenue over the first 12-18 months than when the virus forced them to suddenly close.

“It’s already hard enough to run a restaurant. We’re not going to make it with 50% occupancy,” says Nina Compton, owner of Compère Lapin and Bywater Bistro in Louisiana.

“It’s vital we support independent restaurant community so we can employ Americans,” says Zimmern. “No one got into the restaurant business to get rich. I saw the magic that happens when people sit down at a table together and share food.”