The industry is making another push to replenish the Restaurant Revitalization Fund. But it won't be easy.

This past week, The National Restaurant Association shared survey data with Congressional leaders on the state of the consumer, some 18 months removed from the onset of COVID-19. It painted a convoluted landscape, to put it blandly. Thanks to a recent spike in cases due to the Delta variant, six in 10 said they’ve changed their restaurant usage, while 37 percent said they ordered takeout or delivery instead of sitting down in a restaurant, and 19 percent chose to dine outside.

Perhaps the most troubling turn—19 percent said they’ve stopped going out to restaurants and 9 percent cancelled existing plans to dine out in recent weeks.

Sean Kennedy, EVP of Public Affairs at the Association, called recent trends “dangerous,” and said shifts in dining-out behavior are “beginning to put acute pressure back on the restaurant industry.”

It’s the coupled concern of operating amid present inflationary pressures—namely labor and commodities—yet without the pent-up demand that’s fueled traffic of late. “The small gains that our industry has made toward financial security are in danger of being wiped out, dashing the hopes of communities, entrepreneurs, and consumers nationwide,” Kennedy said.

The restaurant industry, per the Association’s data, lost $300 billion in revenue during the pandemic. It remains a million jobs short and some 90,000 restaurants are closed permanently or long-term.


Where Did the Restaurant Revitalization Fund Go Wrong?

Restaurant Revitalization Fund Leaves Behind More Questions than Answers

As it has since the program ran dry, the Association continues to push for replenishment of the Restaurant Revitalization Fund in response. Today, there are roughly 177,000 RRF applications asking for $43.6 billion in grants still pending.

The RRF provided support to less than a third of the businesses that applied (north of 370,000 did so). In early August, Majority Leader Chuck Schumer and Senator Dick Durbin spoke on the Senate floor in support of a $48 billion infusion. Senator Ben Cardin (D-MD) introduced and moved to pass a bill (S. 2675) by unanimous consent, but the attempt was blocked by an objection.

Blaine Luetkemeyer, a ranking member of the House Committee on Small Business, introduced the $60 billion ENTRÉE Act in July, which would be funded by rescinded money from unspent Economic Industry Disaster Loans, as well as state and local funds within President Joe Biden’s American Rescue Plan.

“The rise of coronavirus variants like delta threatens to push these restaurants closer to permanent closure,” Kennedy wrote in a letter regarding the 177,000 applications on the outside looking in. “The RRF was funded as emergency spending to preserve an industry uniquely vulnerable to the government response to the pandemic. It has proven its effectiveness in every state, saving restaurants, workers, and the suppliers who depend on their business.”

There appears to be bipartisan support for additional federal funding for restaurants, yet the future remains clouded.

Robin Gagnon, co-founder of We Sell Restaurants, works with hundreds of restaurant groups each year and recently analyzed numbers in the RRF Freedom of Information Act. Gagnon discovered some telling statistics:

For one, restaurant franchises received less than 10 percent of the money distributed. Of the total awards, 90,492 ($25.6 billion) went to independent operators, while only 10,158 ($2.65 billion) went to franchise restaurant locations (9.28 percent).

“Based on this data, it appears that franchise brands were almost entirely left out of the Restaurant Revitalization Fund grants, which makes it very tough for those owners,” Gagnon said in an email. “Although these individuals are connected by a larger brand, they operate independently and face the same challenges as all other restaurant owners. The lack of funding for restaurant franchises makes their recovery much more difficult.”

Despite well-publicized issues over the 21-day priority period and the rescinded grants that followed, the RRF made ground on this topic.

Congress initially ordered the SBA to prioritize funding for restaurants owned by women, those who self-identified as socially or economically disadvantaged, and military veterans. This strategy came under fire when at least three federal courts ruled against it, claiming the process discriminatory. 

Even so, payouts to priority groups accounted for 72.7 percent of the funds. Women-owned businesses received $10.1 billion, while socio-economically disadvantaged groups collected $8.9 billion, and veteran businesses were awarded $1.6 billion.

Some other points of note:

Wineries, alcohol producers, brewpubs, breweries, bars, and saloons received a total of $4.5 billion, or nearly 16 percent of the total funds. Caterers received $3.2 billion, or 11.5 percent of the total funds. Combined, 27 percent of the funds went to these categories which would not classify as traditional restaurants. 

Less than a third of the applicants were approved for grants, as noted. A total of 100,650 restaurants received funding. Awards ranged from a low of $1,000 to a high of $10 million. More than 250,000 restaurants applied for relief and did not receive it.

Overall, 43 percent of the money was awarded in increments smaller than $500,000, while 57 percent of the grants were larger than half a million dollars.

A group of 329 restaurant owners received $5 million or more or collectively, total of $2.1 billion, or 7.3 percent of the entire $28.6 billion grant.

Diana Staley, owner of Reverie Kitchen in Branford, Connecticut, has continued to fight for relief. A former professional tennis player once ranked in the top 400 in the world, she says quitting is “not in my makeup.”

Staley penned the below letter and has sent it to ranking officials. Congressman Charlie Crist’s office wrote back Monday to say Crist planned to cosponsor H.R. 3807, or the $60 billion RRF Replenishment Act of 2021 (separate from the previous two mentioned efforts).

Here is Staley’s letter in full:

“So here we are, hoping to have the cosponsors this week (HR 3807 has 213 cosponsors and the Republican HR 4468 has 67 cosponsors) to bring the RRF legislation to a vote, and, likely, they will not bring it forward. Why? Not because there is no support, but because they are so focused on hard and soft infrastructure, blaming each other for all that is wrong in this world. The majority of Republicans only want to take down the sitting president and do not want to support legislation that makes the Administration look good or help the American people, who are suffering. 

This is what we have become in this country, one of division and infighting. Another reason this Bill will not be put up for a vote is directly related to the failure of constituents to contact their representatives and demand representation on this issue and for those representatives to do just that, follow through on the impetus from their constituents. Large restaurant associations focus more on those who drive their funding: large conglomerates and chains. There are more than 600,000 independent restaurants and where the hell are they? 177,300 restaurants didn’t get funded and where the hell are they? 101,004 were funded and where the hell are they? And how many of all of these people have ever been actively involved in governing, in touch with their representatives, showed up for elections? Not many. Many do not even know who their representatives are, nor do they know how to contact them, and worst of all, those elected representatives do not respond back to their constituents; instead, weak communication and pathetic form letters. Furthermore, very few people even show up to vote.

Thus, we must be the people that drive the legislative agendas. We must be the people that ensure that our representatives support legislation that improves, not divides our country, that addresses dire circumstances as they unfold. We must be the people who push our representatives to focus on governing, instead of on the business of blocking legislation to diminish the majority party in power. The laissez-faire and entitlement attitudes pervade this country. A majority of people just think they deserve everything, and don’t have to actually do anything to bring about change. Many, even, in forums and other media groups were so focused on their own situation, that they could not even admit or recognize the fact that this RRF legislation was found to be Unconstitutional: You cannot use race and sex as a parameter to determine access or eligibility. And instead, what did we see, time and time again on Reddit, Facebook, Twitter, etc., and all over the media, “white guys stole my money stories,” when that is the exact opposite of what happened. Priority groups comprised of women, minorities and veterans received 94,246 of all the 101,004 applications that were funded. Only 6,758 Non-priority applications in the entire country were funded. The real tragedy here is that this legislation was simply underfunded.

Lastly, of all the restaurants in the country, I promise you, few were involved in the process of creating this legislation. Our local restaurant associations, the NRA and the IRC, all need to improve the manner in which they communicate and engage with the restaurant industry as a whole, regarding issues and legislation, and most of all, restaurants must be a more active participant in the life of our beloved restaurant industry. Bottom line, be an active participant in your town, city, state, and country, lucky for us we have that opportunity. Don’t waste it!”

Consumer Trends, Feature, Finance