In a new study among independent restaurants, more than 82 percent fear they'll permanently close if Congress does not replenish the Restaurant Revitalization Fund.
The winding path of the Restaurant Revitalization Fund has not been an easy one to navigate for restaurants. What was initially a $28 billion fund to support restaurants as they got through the pandemic, which shuttered dining rooms, transformed consumer habits, and left many independent restaurants clinging for life, has disappointed many operators that sought federal aid. Simply, $28 billion was nowhere near enough.
According to the Independent Restaurant Coalition, Congress underfunded the original RRF by at least $42 billion, which means only a third of businesses that applied for grants from the SBA received relief, leaving behind more than 177,000 applicants. In total, restaurants and bars lost north of $280 billion in potential revenue during the pandemic.
Thursday was a make-or-break moment as members of the House Small Business Committee marked up their share of the budget reconciliation package, which currently holds no additional capital for the RRF.
With rising commodity prices and consumer hesitancy surrounding the Delta variant, the IRC said, the situation is becoming even more pressing of late, and restaurants’ bottom lines are being hit after 18 months of debt. The price of beef, grains, and cooking oil skyrocketed this past year by 40.3, 87, and 39.5 percent, respectively.
And there remain dining restrictions in roughly a third of the U.S., according to OpenTable. Based on data from the National Restaurant Association, 60 percent of adults changed their dining habits due to COVID, a troubling sign of would come be to come if independent restaurants don’t receive help.
“We’ve got a recipe for disaster,” says Erika Polmar, the IRC executive director. “If these restaurants and bars don’t receive relief soon, the consequences will be absolutely devastating.”
Over 90,000 restaurants and bars closing reflect this struggle. Even more indicative of current times, however, one in five operators said their credit scores were below 570, a number that makes many ineligible for loans, according to recent survey data from the IRC.
And the labor shortage is not helping these independent restaurants. According to the Bureau of Labor Statistics' August jobs report, restaurant and bar employment fell 41,500 during the past month, and restaurant and bar employment is still 966,300 below pre-pandemic levels.
Polmar says the only thing that will rescue restaurants at this juncture, and recoup the jobs they provide, is refilling the RRF. More than 82 percent of independent restaurant operators said in the survey they fear they will permanently close without federal help.
At an IRC press conference Thursday morning before Congress began looking at the budget package, many restaurant owners shared their stories of personal struggle.
It took Rawlston Williams about three years to open The Food Sermon in Brooklyn, New York’s Navy Yard. It was only open seven weeks. In the eighth, as COVID hit, revenues plummeted.
The Food Sermon restarted in June, but has lost money ever since. To make matters worse, at the height of the Delta surge, and with so many still working from home, leaving the office building The Food Sermon operates vacant, the restaurant closed again Friday. The RRF would allow The Food Sermon to invest in diversifying its offerings and not just rely on foot traffic, Williams says.
Other operators told a similar story.
Lindsay Tusk, co-owner of Cotogna, Quince, and Verjus in San Francisco, a city that faced some of the strictest regulations, including forcing businesses to close outdoor dining for two months, watched her restaurants go from award-winning, thriving businesses to hanging on by a thread.
“Since the pandemic, we’ve been in a never-ending tailspin,” Tusk says. Her restaurants are extremely impacted by a nearly deserted neighborhood. “There’s not one light on in the Financial District.” This leaves a once bustling restaurant without customers.
Tusk says none of the endless pivots and willpower that kept one of her businesses open are sustainable. Bills are adding up and debt is stacked high.
There was no clear reason for some restaurants getting denied over others in the original RRF.
“I hate to say we were just unlucky,” Tusk says. She put all her applications in at the same time, eight minutes after the portal opened. “It’s a little bit of a head scratcher. There just wasn’t enough money in the first place.”
Even in Texas, one of the more relaxed states in terms of mandates, some restaurants need help. Chris Shepherd, the chef/owner of Underbelly Hospitality in Houston, expressed concern for his concepts and especially the mom-and-pops that create vibrant communities.
“Will I be able to make it? Maybe. We’ll see,” Shepherd says. “Will they? Probably not.”
“Without the RRF, I’m not sure how we will figure it out,” he adds. “It is imperative that Congress refill the RRF so that thousands of restaurants in Houston and across the country have the chance to survive and continue breathing life into our communities.”
Another operator, Tyler Akin, chef and owner of Stock in Philadelphia, closed his restaurants in March. He laid off all of his employees and hoped things would improve in a month or so. That day came and it was clear they hadn’t. In office districts with heavy rent, restaurants like his are facing steep climbs.
“Quite frankly, if we do not receive grants we will not survive,” Akin says. “The situation is more urgent now than it has been at any point during the pandemic.”
Still, the IRC has reason for hope. Senator Ben Cardin (D-MD) moved by unanimous consent to add $48 billion to the RRF. Altogether, 214 members of the House of Representatives and 15 members of the Senate have given bipartisan support for the Restaurant Revitalization Fund Replenishment Act after Reps. Earl Blumenauer (D-OR-3), Brian Fitzpatrick (R-PA-1), Sens. Roger Wicker (R-MS) and Kyrsten Sinema (D-AZ) introduced the legislation to provide $60 billion in additional funding.
If this does not pass, and pass soon, an extinction event could still be in order for corners of the independent sector, Polmar says. The main obstacle for getting it secured in Congress, which already has many supporters for additional funding, is a matter of public officials understanding the urgency of the problem, the IRC said.
“They thought it was done. ‘We did this thing,’” Akin says. “‘How could $28 billion not do the trick?’ But we all know $28 billion did not do the trick.”