What’s Next for Independents as the Restaurant Revitalization Fund Closes?

Further aid could mean the difference between recovery and a 'mass extinction' event for many of the country's restaurants.

July 16, 2021 Suzanne Blake

Before COVID-19, Robert St. John was a symbol of independent restaurant success. As the owner of New South Restaurant Group in Hattiesburg, Mississippi, he had amassed six restaurants and two bars by 2020. But everything changed that fateful year, when coronavirus spread across the U.S., shutting down restaurants nationally and deconstructing the customer comfort level with in-person dining.

More than a year later, after the pandemic hit independents especially hard, St. John has lost two restaurants and a bar, including his flagship Purple Parrot fine-dining concept, the first restaurant he opened 32 years ago.

St. John’s focus from day one centered on taking care of his 300 employees, he says. He filed a mass unemployment claim for the whole company. Depending on the concept, New South’s restaurants, including Creole eatery Crescent City Grill, casual Italian restaurant Tabella, Ed’s Burger Joint, breakfast and lunch outlet The Midtowner and Tex Mex El Rayo, either closed or remained open for carryout.

Staying afloat as an independent, locally owned restaurant was an entirely different beast than surviving as a fast-food chain, he says. Counter-service competitors had the benefit of drive-thrus and lessened independent competition.

On March 19, 2020, St. John received a text asking if he would like to be involved in founding the Independent Restaurant Coalition, a group working to support local restaurants and bars. St. John hopped on board immediately, eventually lobbying to get the Restaurant Revitalization Fund passed.

“It boils down to one word, and that's survival,” St. John says. “In mid-March of 2020, we were seriously facing a mass extinction event. And I don't think that's an exaggeration.”

The fund received bipartisan support, which St. John believes indicated the extent of its importance. Although they initially asked for $120 billion, $28 billion was a good start, he says.

But a start nonetheless; not the final act. Since the depletion of the Restaurant Revitalization Fund, more than 177,000 restaurant owners now find themselves without the funds necessary to keep their businesses afloat, the IRC says. This comes at an especially challenging time for restaurant owners as the costs of running a restaurant continue to rise, according to the Producer Price Index Report.

The price of beef and veal, grains, and cooking oils all climbed in recent reports, by 10.5 percent, 25.7 percent, and 9.3 percent, respectively, between April and May of 2021. The price inflation occurs on top of restaurants having already lost more than $280 billion during the pandemic, according to the National Restaurant Association.

St. John is one of the recipients of the original Restaurant Revitalization Fund as Tabella, Crescent City Grill, the Mahogany Bar, and El Rayo received grants. Part of the grant covered an outside patio project to increase options for outdoor seating.

“The restaurant business is a brutal business under normal circumstances,” St. John says. “When you're dealing with the scared public and major labor shortage and all those challenges, it's just rough, and so we were kind of hanging on by a thread.”

Yet his two other concepts, The Midtowner and Ed’s Burger Joint, are still without aid, and their future remains uncertain.

“We'll be having the same conversation that we had at the beginning of the pandemic,” Erika Polmar says. “If restaurants don't have help in this way, you are facing an extinction event, where independent restaurants in particular will not be able to survive the recovery period of the pandemic.”

St. John says he is hanging on as long as he can, hoping they can wait until the fund is replenished. The difference between receiving a grant and not receiving one for his businesses is enormous. St. John predicts it will take a couple years before there’s any sense of normalcy in the sector.

“I am living proof that when restaurant relief is passed on to a business that it makes a major impact in our survival,” St. John says.

Erika Polmar, executive director of the IRC, echoes St. John’s sentiments in calling for the replenishment of the fund. This is on behalf of all restaurants, because of their significance in local economies.

“Restaurants are an integral part of our communities,” Polmar says. “They are the people that brighten up dark main streets, that are often the first person in to revitalize a neighborhood, but also the first person you go to when you need help, whether it's raising money for a little league or to end child hunger.”

Polmar, who founded a farm dinner series called Plate and Pitchfork in Oregon to support local food systems roughly two decades ago, says the fund is critical to the future of restaurants. Many of the 177,000 operators left out of the RRF are saddled with debt from months of closure, she says.

Even though some guests are flocking back to dining rooms in search of the socialization lost during the pandemic, 36 percent of diners will not resume their regular dining behavior until at least after September 2021, OpenTable data indicates.

There is hope for Polmar, St. John, and countless others, though. The Restaurant Revitalization Fund Replenishment Act was introduced to Congress in June for $60 billion in additional funding and has gained bipartisan support. Without it, the restaurant industry will likely keep struggling, Polmar says.

“What we really need right now is the Restaurant Revitalization Fund to be replenished with the $60 billion that our Congressional champions have put forth in both the Senate and the House in the Revitalization Fund Replenishment Act,” she says. “That would bring the industry back. And it's not just because we enjoy going out to eat. Restaurants are some of the largest employers in the country.”

At the end of 2020, 12.5 million were employed by restaurants, although this figure decreased since the prior year due to the pandemic’s hit on the industry.

“We'll be having the same conversation that we had at the beginning of the pandemic,” Polmar says. “If restaurants don't have help in this way, you are facing an extinction event, where independent restaurants in particular will not be able to survive the recovery period of the pandemic.”

With the initial Restaurant Revitalization Fund came a host of controversy as the resources initially gave a 21-day priority to marginalized groups, like women and racial minority business owners. This was ruled unconstitutional by two of three judges in lawsuits filed. Nearly 3,000 restaurants and bars owned by women, socially or economically disadvantaged individuals and veterans had their grants rescinded.

New concerns emerged that several ineligible businesses, including recreation facilities, management companies, and hotel chains received grants after a data release from the Small Business Administration (SBA) program earlier this month.

Polmar hopes moving forward, the SBA doubles down to ensure it continues to award funds only to eligible businesses. The key change she would have liked to see in the allocation of resources is if the fund received the $120 billion she says it needed in the first place, far beyond the $28 billion originally available. Without this, she says the only solution is to replenish.

“I think the more that restaurant owners and operators and employees and bar owners and everyone that is served by this fund, which also includes caterers, food trucks, and food stands, each one of those businesses, each one of those individuals, needs to use their voice right now to let their representatives in Congress know how important this financial aid is, that their jobs depend on it,” Polmar says. “I think that will move the needle.”

Although the stakes are high for restaurants, St. John says he has full faith Congress will do its part and provide relief to restaurant owners across the country.

“Based on what was done over the last year, I think that Congress saw the need and took action,” St. John says. “I believe they see the need again. We just got to figure out the vehicle and how to make that work. So I'm very optimistic, and I refuse to be any other way.”