Dirt Candy

Evan Sung

Amanda Cohen's Dirt Candy in New York City never struggled for business before COVID-19.

Restaurant Revitalization Fund Leaves Behind More Questions than Answers

Controversy over the distribution of grants continues to linger as operators seek more funding.

The Restaurant Revitalization Fund was hailed as a banner win for operators—the culmination of months of lobbying and pleas from decimated restaurants across America. The first industry-dedicated program since COVID-19 slapped an unprecedented vise on dine-in service. Simply, for many, it was the first time they received any form of government assistance in 16 months, Erika Polmar, executive director of the Independent Restaurant Coalition, said.

But now the RRF is dry, and the end result is hardly rosy. The SBA last week released data on the program. One concern that’s surfaced is the potential number of ineligible businesses, such as recreation facilities, management companies, and hotel chains, that received grants.

“Congress clearly spelled out that only eating and drinking places should qualify for relief,” Polmar said. “When refilling the fund, we urge Congress to make the necessary changes that will ensure only restaurants and bars receive additional funding in the future. We hope the SBA answers our questions about how many individuals awarded grants in the priority period had their awards revoked. Those businesses must be made whole, as should every restaurant and bar impacted by this pandemic."

The IRC on Friday hosted a press conference asking the SBA to deliver additional information about the RRF, which closed in late June (access to the portal will officially stop July 14). The $28.6 billion program received north of 370,000 applications, or about 55 percent of the total number of eating and drinking establishments open in February 2020.

This group sought more than $75 billion as funding evaporated in three weeks. On average, restaurants requested grants of roughly $207,000—a sign the industry is facing “tremendous financial need,” the National Restaurant Association said.

In turn, the IRC and Association, among others, including a bipartisan group in Congress, continue to lobby for $60 billion in further aid. A dozen senators and 150 House members sponsored legislation earlier this month to replenish the RRF.

While the IRC brought up the $60 billion hope Friday, it also shared a Freedom of Information Act (FOIA) request demanding that the SBA release select information about the RRF. This came days after the SBA announced the exhaustion of funds, which left over 177,000 restaurants and bars in need of relief and on the brink of permanent closure, the IRC said.

Among the points:

Overall, 101,004 applicants received relief totaling $28,574,979,471.70

There were 72,568 “priority” applicants, roughly 72 percent, that received relief totaling $17,965,827,472.09. In all, less than a third of the largest grants went to prioritization groups and less than 10 percent went to non-priority businesses.

The SBA said 10,155 franchise locations received $2,649,675,046.00; six Hilton Hotel subsidiary locations collected $21,178,445.07; five Wyndham Hotel subsidiary locations took home $2,937,875.87; 85,406 businesses from urban areas received relief; and 15,598 businesses from rural areas received relief.

Nearly 70 entities received the RRF’s top draw—$10 million, including 15 wedding venues and caterers, eight airport and sports venue concessions companies, franchises from the quick-service industry’s largest brands, including Panera Bread and McDonald’s. Multiple events spaces and airport concession companies, as well as franchisees of Dunkin’, Buffalo Wild Wings, Chuck E. Cheese, Five Guys, and Jimmy John’s, collected grants within the $5 million to $10 million range.

Issues with the RRF began in earnest when nearly 3,000 restaurants and bars owned by women, socially or economically disadvantaged individuals, and veterans, had grant awards rescinded following lawsuits in Texas and Tennessee that ordered the SBA to cease honoring the 21-day priority period for marginalized groups. 

A federal court ruling accused the SBA’s 21-day prioritization program of discriminatory practices. Two restaurants in Tennessee and Texas filed lawsuits, and two of three judges accused the SBA of "racial gerrymandering" and called its decision-making effort to award grants "unconstitutional.”

“It is now well documented that women and people of color had difficulty accessing PPP loans, which was a problem in the restaurants industry where more than half of businesses are owned by women and more than a third by people of color,” Polmar said. “Any government relief program must be designed to bring relief where it is needed most and that’s why we’re taking action. We are fighting to ensure all restaurants who need help can get it.”

Last Tuesday, as part of the ongoing legal disputes surrounding the priority period, the SBA filed a cross motion to dismiss a complaint filed in the Northern District of Georgia alleging that the priority period on the basis that it unconstitutionally discriminates on the basis of race and sex. As part of this motion, the SBA argued “applications from both priority and non-priority applicants exceeded Congress’s allocation of funds to the RRF.”

More than 122,000 applications came from this “priority” pool. As the IRC points out, about half of all restaurants in the country are owned or co-owned by women. And yet women-owned businesses received 12–18 percent fewer loans than the estimated makeup of women-owned businesses nationwide. Meanwhile, while more than 60 percent of all chefs are people of color, an AP analysis of PPP loans by zip code found that “thousands of minority-owned small businesses” were among the last to receive loans during the first two rounds of funding.”

Amanda Cohen, IRC co-founder and owner of Dirt Candy in New York City, is one of the restaurant owners who did not receive an RRF grant. She said she’s been open 13 years and never this near to closing. “A year and a half into this pandemic, and I am broken. Before the pandemic, we were an incredibly busy destination restaurant. During the pandemic, we were lucky if we saw any guests at all,” Cohen said in a statement, urging Congress to refill the fund.

Diana Staley, owner of Reverie Kitchen in Branford, Connecticut, says the issue of how many restaurants missed the RRF is, “inclusive, not divisive, that benefits so many people, neighborhoods and cities across our great country.”

She shared a letter with FSR on Monday:

“Close your eyes and think about one of your favorite dishes from a nearby restaurant. So many memories in our lives involve marvelous food where simple ingredients become comfort! Imagine a light switching off and suddenly your business is forced to close with perishable inventory, suppliers, employees, and family members in the dark, and then remain closed for 16 months or forced to only open as a scaled down to-go operation with no inside dining. This tragedy took many restaurants to the devastating brink of despair, through no fault of their own!

Restaurants have been hit harder than any other industry during the pandemic and have had little to no relief in the last two stimulus packages passed by Congress. The restaurant industry contributes about 15.6 million jobs, the second largest private sector employer, representing 10 percent of all payroll jobs in the economy. Ten percent! More than 110,000 restaurants closed for business: 2.5 million jobs were lost and more than $240 billion in lost revenue.

The Restaurant Revitalization Fund was passed March 11 and implemented by the Small Business Administration (SBA), with a priority to veterans, women and some minorities; following that priority period, funds would be distributed first come, first serve. The SBA began processing applications on May 4. Lawsuits ensued, and on May 27th, The Sixth Circuit Appeals Court ruled that the race and gender-based priority was Unconstitutional; however, by that time, the fund was already largely exhausted, leaving many restaurants, 177,300 out of the 278,304 who applied with nothing. A fair and reasonable remedy is to replenish the RRF fund, and on June 11th, Congress introduced the Restaurant Revitalization Fund Replenishment Act of 2021.

Please push to replenish the RRF so that so many of us who have received no assistance at all, no PPP, no EIDL, nothing, have a share in some relief to recover. Remember that recovery for restaurants affects jobs in every community, suppliers, employers, salespeople, truckers, the airlines, etc. The restaurant industry touches us all, and everyone has that one favorite dish, that one special restaurant that they want to visit again and again. For, Food is a treasure in our lives that knows no boundaries, that unifies us all and nourishes the soul!  Let us be inclusive in our efforts to rebuild our cherished restaurant industry. Please contact your representative and senators to pass and support H.R. 3807, the Restaurant Revitalization Fund Replenishment Act of 2021.”