The National Restaurant Association is asking Congress for a $240 billion recovery fund.
The National Restaurant Association is asking Congress to support a new $240 billion recovery fund to “provide a lifeline” to restaurants struggling financially amid the pandemic.
The recovery fund is the primary bullet point on an overall strategy the Association referred to as the “Blueprint for Recovery.”
The fund, called the Restaurant and Foodservice Industry Recovery Fund, has three main purposes—to support expenses and debt obligations, to help restaurants rehire and retain workers, and to assist locations in readjusting to heightened health and safety standards. The Association said funds should be limited to restaurants in business prior to March 15 that have “suffered significant sales and job losses related to the COVID-19 pandemic.” More specifically, the fund would be for those that have seen a drop in revenue of 25 percent or more.
The Association suggested the $240 billion recovery fund—which is based on estimated losses through the end of 2020—be available on a quarterly basis via an IRS portal. Restaurants would apply for funds up to the prior year’s quarterly gross revenue, which would be used for such things as payroll, rent, and utilities. Restaurants would report how they spent the money, and any improper use would have to be repaid.
“This proposed RFIRF [Restaurant and Foodservice Industry Recovery Fund] will provide much-needed assistance to a critical industry that employs a very large segment of the nation’s workforce and that has suffered disproportionately from the COVID-19 pandemic,” the Association said in a statement. “The industry is uniquely vulnerable to economic disruption, and for a variety of reasons, the previous federal relief programs have not provided practical relief to save the industry from ruin. This RFIRF will be fair, easy to administer, and effective in saving as many small businesses—and ultimately American jobs and families—as possible. Congress should enact this program without delay.”
As part of the Blueprint for Recovery, the Association highlighted its fixes for the stimulus package’s Paycheck Protection Program, which include revising the eight-week forgiveness period to three weeks after restaurants can reopen, amending the restriction that mandates operators spend 75 percent on payroll and 25 percent on rent and utilities, and changing the repayment length to 10 years.
The program, which has received a host of criticism from the restaurant industry, ran out of funds on April 16. There’s also been concern about large chains receiving sizable loans while smaller companies have been left in the dark. Shake Shack said Monday that it would return its loan so “those restaurants who need it most can get it now.”
The Association also supports a 100 percent refundable tax credit that helps restaurants with reopening costs, such as loss of business due to capacity limits, modifications to spaces for health and safety reasons, enhanced sanitation and cleaning measures, personal protection equipment, use of disposable products, and employee education.
Other key matters in the Blueprint for Recovery include deferment on unemployment taxes, enactment of a bill that would allow more restaurants to accept food stamps, and increased funding for economic injury disaster loans.
Mark Allen, President and CEO of the International Foodservice Distributors Association, said the food distribution industry will lose around $24 billion in the next three months due to closures and that leaders in Congress must consider the big picture.
“The impact of this economic crisis is felt throughout the food supply chain and the Blueprint for Recovery is a strategic solution to help rebuild the hard-hit foodservice industry,” Allen said in a statement. “Congress should authorize and appropriate the proposed emergency $240 billion Restaurant and Foodservice Industry Recovery Fund [RFIRF] as an urgent priority to avoid further damage to this portion of our economy.”
According to a survey of more than 6,500 operators conducted by the Association, 97 percent of operators said their sales were lower year-over-year during April 1-10. Sales were down 78 percent on average. The organization said the industry lost $30 billion in March and estimates another $50 billion will be gone in April if trends continue.
The Association also calculated that more than eight million employees have been laid off or furloughed since the beginning of the pandemic. That accounts for two-thirds of the 12 million that worked at food and drinking establishments in February.
Around 88 percent of operators said they’ve laid off or furloughed employees since the outbreak. On average, those respondents cut 83 percent of their total staff. More than 40 percent of owners laid off or furloughed their entire staff. Sixty-one percent said existing federal relief won’t prevent more layoffs.
“The restaurant industry has been the hardest hit by the coronavirus mandates—suffering more sales and job losses than any other industry in the country,” said Sean Kennedy, the Association’s executive vice president of public affairs, in a letter to Congress.
“On March 18, we wrote you warning of a bleak outlook for the restaurant industry … as the pandemic was unfolding,” he continued. “One month later, we have a clearer picture of the severe challenges that lie ahead, and ask for a focused solution on behalf of an industry that is a vital part of every community.”