Who benefits from the Restaurant Revitalization Fund? | Modern restaurant management


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The Restaurant Revitalization Fund (RRF) was created by the American Rescue Plan (ARP) Act of 2021, which was enacted by President Joe Biden on March 11, 2021, to help small and medium-sized businesses in the food sector. the service industry, which has been hit hard by the COVID-19 pandemic.

The Small Business Administration (SBA below) was tasked with administering the $ 28.6 billion tax-free grant. At the end of April, the SBA launched the RRF online registration portal. On May 3, when the website officially opened, applications started pouring in and quickly depleted the funding pool. By the end of June, the SBA had received more than 278,000 claims, for a total of $ 72.2 billion (SBA, nd -a). Only 101,600 lucky applicants received approval of their applications. On July 2, SBA administrator Isabel Guzman announced the closure of the RRF program in a press release.

According to program guidelines (SBA, nd -b), RRF grants can be used to pay for a variety of expenses, including utilities, salaries, supplies, and other qualified costs, and each qualified business can apply for a grant up to $ 5 million per physical location, but not to exceed $ 10 million in total for multiple locations.

A week after the program closed, the SBA released the RRF database to the public. The remainder of the article will analyze the data to provide insight into the distribution of the fund and the recipients of the grants.

In May 2021, the first month the fund became available, 88,750 requests with a total value of approximately $ 20 billion (72% of the fund’s budget) were approved (see Figure 1), indicating that the RRF ran out very quickly after opening the program. The average grant amount approved in May was $ 230,264. In June, a further 11,850 requests were approved before the rest of the fund ran out. The average grant amount approved during that month was $ 681,378 (see Figure 2).

Figure 1
Figure 2

Restaurant seekers are diverse in business forms. Forty-one percent of the fund went to C-Corps, 40 percent to LLCs, 12 percent to S-Corps, three percent to sole proprietors, two percent to partnerships, and the remaining two percent to all. others, including tribal businesses (see Figure 3). In terms of number of grants, LLC replaces C-Corps as the largest group with 38,955 approved applications. C-Corps remains closely behind with 37,050 nominations approved. Within each form of business, the average grant size is around $ 300,000, except for sole proprietorships, which have a smaller average size of $ 107,717 (see Figure 4). This is consistent with the fact that sole proprietorships tend to have smaller operations than their peers in forms such as partnership, corporation, and LLC.

figure 3
Figure 4

Over 90 percent of the RRF, amounting to approximately $ 25 billion, went to 90,448 non-franchised restaurants, the remaining nine percent to 10,152 franchised restaurants (see Figures 5 and 6). There is no noticeable difference in the average grant size between franchised and non-franchised businesses, which range from $ 260,000 to $ 285,000.

Figure 5

Figure 6

For franchise businesses in the database, all approved RRF grants are subtotaled by named franchise. The top five franchise recipients and their total grants are shown in Table 1.

Franchise

Total grants

1.

Metro

$ 362,265,927

2.

Golden Corral

$ 277,112,270

3.

I JUMP

$ 117,944,461

4.

Denny’s

$ 79,043,758

5.

Dunkin Donuts

$ 63,547,348

(Table 1)

The program’s original plan was to offer priority review of applications submitted by women-owned businesses, veterans, and socially and economically disadvantaged people during the first 21 days of the program (SBA, nd -c), or the priority group. The policy was challenged by lawsuits claiming it discriminated against businesses from white male owners. The judges ruled in favor of the plaintiffs in these lawsuits, which led to the cancellation of thousands of grants already approved to the priority group by the SBA (Romeo, 2021).

Ultimately, 63% of the fund went to 72,165 applicants in the priority group, the remainder to 28,435 applicants outside the group (see Figures 7 and 8). The average priority group grant size is around $ 250,000, well below $ 373,099 for other companies.

Figure 7

Figure 8

Across the country, larger states / districts are expected to tend to have more restaurants to apply for the RRF and potentially get a larger sum of statewide grants. The top five winners and their total grants are shown in Table 2.

State / District

Total grants

1.

California

$ 5,703,196,722

2.

new York

$ 3,663,496,349

3.

Texas

$ 1,666,190,554

4.

Illinois

$ 1,415,682,112

5.

Florida

$ 1,340,899,692

In terms of average grant amounts for each state or district, the top five winners and their average grant amounts are shown in Table 3. New York and California are again in the top five on this list, joined by DC. , Massachusetts and Hawaii. . This list could be partly linked to the high cost of living of the regions.

State / District

Average grant

1.

CC

$ 549,395

2.

Massachusetts

$ 388,841

3.

new York

$ 375,666

4.

Hawaii

$ 361,934

5.

California

$ 357,478

When restaurants are further divided into subgroups, the data tells a bit more about the makeup of applicants and the size of grants to each subgroup. Most of the candidates (80,374; 80%) still claimed to be “Restaurant”. However, since a company can make multiple selections when self-disclosing their applications, the grant count does not exactly match the total number of applicants based on the dataset. For most sub-groups, the average grant amount is relatively stable in the range of $ 150,000 to $ 300,000. The only exception was for businesses that declared themselves “inns,” with an average grant of over $ 700,000.

Figure 9

To sum up, the RRF ran out quickly after its debut and was nowhere near enough to help revive all restaurants affected by the pandemic. C-corps, S-corps, and LLC were among the top three recipients in terms of grant amount and amount. Over 90 percent of the fund has gone to support non-franchised restaurants. More than 60 percent of the fund has gone to the priority group, including restaurants owned by women, veterans, and the socially and economically disadvantaged. As you might expect, large states tend to get a large reduction in the fund, while the average size of individual grants might reflect the cost of living of a region.

An internal bill was introduced by Congressman Blumenauer in June to amend the ARP Act to increase RRF credits by $ 60 billion.

The references

Small business management. “SBA Administrator Announces Closure of Restaurant Revitalization Fund Program.” SBA.gov. Accessed July 28, 2021-a.

https://www.sba.gov/article/2021/jul/02/sba-administrator-announces-closure-restaurant-revitalisation-fund-program

Small business management. “Guide to the SBA Restaurant Revitalization Funding Program”. SBA.gov. Accessed July 28, 2021-b.

https://www.sba.gov/sites/default/files/2021-04/Restaurant%20Revitalization%20Fund%20Program%20Guide%20as%20of%204.28.21-508_0.pdf

Small business management. “SBA Restaurant Revitalization Funding”. SBA.gov. Accessed July 28, 2021-c.

https://www.sba.gov/funding-programs/loans/covid-19-relief-options/restaurant-revitalization-fund

Romeo, Pierre. “SBA stops Restaurant Revitalization Fund payments after courts rule they discriminate.” Restaurantbusinessonline.com. June 14, 2021.

https://www.restaurantbusinessonline.com/financing/sba-stops-restaurant-revitalisation-fund-payments-after-courts-rule-theyre

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