FRR replenishment hopes dashed | modern restaurant management

The US Senate failed to advance Small Business COVID Relief Act of 2022 (S. 4008), ending the possibility of replenishing the Restaurant Revitalization Fund (RRF).

“Throughout the pandemic, restaurants have focused on serving their communities. When government-mandated shutdowns closed dining rooms, restaurants found a way to change operating models and keep employees on the payroll. When first responders needed a hot meal, restaurants stepped in to help in cities and towns across the country,” said Michelle Korsmo, president and CEO of the National Restaurant Association.” When Congress offered these restaurants the RRF lifeline, restaurant owners and operators made business decisions based on those pledges. Restaurants still trying to make up for what was lost in the pandemic today are grappling with labor shortages, record inflation and supply chain constraints. Today’s vote will further compound these challenges and lead to more economic hardship for families and communities across the country that depend on the restaurant and foodservice industry.

“Today, a Senate filibuster shattered the promise made to more than 177,000 small business owners in communities across the country,” said Sean Kennedy, executive vice president of public affairs for the National Restaurant Association. “These restaurateurs thought the creation of the Restaurant Revitalization Fund was a down payment and that the Senate would complete the mission with this vote. A bipartisan majority voted to begin debate on this critical legislation, but it was not the 60 votes While there are valid questions about government spending and inflation, restaurants should not be caught in the crossfire We salute the leadership of Senate Majority Leader Chuck Schumer (D-NY), as well as Senators Ben Cardin (D-MD), Roger Wicker (R-MS) and Kyrsten Sinema (D-AZ) for their creative work and lobbying to reconstitute the RRF.”

The $48 billion Small Business COVID Relief Act of 2022 (S. 4008), presented by Sens. Ben Cardin (D-MD) and Roger Wicker (R-MS), included $40 billion for RRF replenishment and $8 billion to support other industries deeply affected by the pandemic. The House passed the Relief for Restaurants and other Hard Hit Small Businesses Act of 2022 (HR 3807), this included $42 billion to replenish the RRF on April 7. Both political parties agreed that the RRF should be replenished but could not reach consensus on how to pay it. Democrats generally wanted to treat the replenishment as emergency spending, while Republicans generally wanted existing funds reallocated.

The U.S. bailout established the RRF with $28.6 billion that Senate Majority Leader Charles Schumer (D-NY) called a down payment to restaurants. More than 278,000 restaurants applied for funds from the RRF, but only 101,000 applications were funded before the Small Business Administration ran out of funding. By leaving 177,000 people unaided, the federal government has essentially picked winners and losers, among direct competitors, based on chance, not need.

The program’s first round of financing, which operators used primarily to pay down debt and payroll, was a resounding success. According to the Association’s research, more than 900,000 restaurant jobs have been saved and 96% of recipients say the funds have helped their establishments stay open. But those who did not receive funds are still languishing. In fact, 62% of operators say their restaurant has accumulated additional debt since the pandemic began; 57% said their restaurant had fallen behind on expenses. Industry-wide, food and beverage establishments lost $300 billion in sales in the first year of the pandemic.

“Local restaurants across the country were expecting help, but the Senate couldn’t finish the job,” said Erika Polmar, executive director of the Independent Restaurant Coalition. “Neighborhood restaurants nationwide have kept their hopes up for this program, selling their homes, cashing in retirement funds or taking out personal loans in an effort to keep their employees working and their doors open. We estimate that more than half of the 177,300 restaurants awaiting an RRF grant will close in the coming months due to Congressional inaction.

Polmar continued: “The IRC was born out of the darkest early days of the pandemic. Independent restaurants have come together to create a strong collective voice. For two years, this voice spoke powerfully and effectively, pleading for relief. Now, that same voice will fight for critical independent restaurant issues and stay engaged in Washington, DC and local communities. And make no mistake, we will continue to fight for a sustainable future for independent restaurateurs, their employees and the communities they support. We remain grateful to the elected officials and their staff who have worked tirelessly for independent restaurants, including Majority Chef Schumer, Sens. Wicker and Cardin, President Pelosi, and Representatives Blumenauer and Fitzpatrick. There would be no restaurant revitalization fund without their efforts and they will continue to be ardent champions of neighborhood restaurants in Congress.

At least 90,000 restaurants and bars have closed since the start of the pandemic. Nearly 300,000 restaurants applied for RFF grants in 2021, but almost 200,000 restaurants did not receive funding – 52% of which said they were on the verge of closing permanently if the RRF were not not replenished. Ninety senators voted to create what became the Restaurant Revitalization Fund last February.

Earlier this week, ChowNow, Toast and more than twenty other companies and trade associations penned an industry letter urging Congress to act quickly so that the tens of thousands of independent restaurants who have not received assistance can keep their doors open. The group of businesses and trade associations has warned Congress that up to four out of five restaurants and bars are at risk of closing permanently, threatening the livelihoods of farmers, bakers and thousands of workers.

A recent IRC survey of nearly 1,000 members of the independent restaurant and bar community in 48 states found that more than half of businesses that did not win RRF grants will close within six months. Survey responses also show how businesses in desperate need of help would use FRR grants to pay off debts, raise wages, make repairs and, moreover, keep their businesses open:

  • 86% of restaurants said a subsidy would allow them to hire more staff;

  • 77% of restaurants said a subsidy would allow them to pay their rent;

  • 48% of restaurants without reported federal subsidies are at risk of defaulting on a loan, compared to 22% of businesses that received an RRF.

  • 40% of restaurants without reported federal subsidies are at risk of filing for bankruptcy, compared to 25% of businesses that received the RRF.

  • 83% of restaurants said a subsidy would allow them to increase their salary;

  • 44% of restaurants said a grant would allow them to expand their menu;

  • 51% of restaurants said a subsidy would allow them to expand outdoor dining options; and

  • 91% of restaurants said a subsidy would allow them to cope with rising food prices without significantly increasing menu prices.

The full survey results are available here.

About Imogene T. Bishop

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