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Editorial News Retailing And Restaurants

Editorial: Restaurant Revitalization Fund needs a second helping

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Jacob Owens
Editor, Delaware Business Times

It’s no secret that America’s restaurants have suffered among the worst economic damage during the COVID-19 pandemic over the past 18 months or so.

The industry has lost an estimated $300 billion in sales versus anticipated revenues since the pandemic began, including more than $1 billion in Delaware, according to the national and state restaurant associations. It is also still down between 1.3 million and 1.5 million jobs from pre-pandemic periods, including about 6,900 jobs in Delaware.

According to a recent National Restaurant Association survey, about 39% of restaurateurs were unsure of whether they would be able to pay their rent in June, potentially putting them at risk of closing.

As the effects of the pandemic eased this spring and early summer, restaurateurs were challenged in new ways. A hiring crisis has unfolded as many former restaurant workers have chosen not to return to the industry and efforts to attract new workers have been stymied by enhanced unemployment benefits set to continue running through the end of this summer.

Big Fish Grill posted this photo amid the Delaware Restaurant Association’s social media campaign to draw attention to the financial hit taken by restaurants. | PHOTO COURTESY OF BIG FISH GRILL

Even in the back of the house, these entrepreneurs are getting squeezed. Surging demand from consumers exiting their COVID-induced hibernation has led to spiking inflation, increasing prices on virtually everything.

According to the U.S. Bureau of Labor Statistics survey in June, the average price of sirloin steak was up 3% from a year ago, while bacon was up 15%. Ham was up 7%, eggs 6% and milk 11%. Unfortunately for fruit lovers, grapes are up 30% and strawberries 15%. Even beer and wine prices are up from a year ago.

Only Italian restaurants seem to be getting a respite from food price inflation, as spaghetti, chicken and ground beef are among the few staple items costing less than a year ago.

I bring these issues up only to say that aside from the hassle of ensuring compliance with constantly changing government mandates, trying to find enough help to keep your doors open, and finding inventory cheap enough to turn a profit, the last thing a restaurateur should have to worry about is whether the government aid created specifically for them will arrive as promised.

Yet here we are.

The Biden administration’s American Rescue Plan established the Restaurant Revitalization Fund (RRF) under the U.S. Small Business Administration to provide funding to help restaurants and other eligible businesses keep their doors open. The program sought to provide restaurants with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. Much like the SBA’s previous Paycheck Protection Program (PPP), the RRF grants do not need to be repaid but must be spent by March 2023.

Also like the PPP, the RRF was riddled with issues from the get-go. A three-week priority period for underrepresented entrepreneurs was ultimately scuttled following a challenge in court, leading a few thousand approved recipients to be reconsidered. And the $28.6 billion in the fund was exhausted in just a few days, leaving more than 60% of applicants without aid, including hundreds in Delaware.

The reality of the situation is simply unacceptable, especially when considering the trillions of dollars in aid that has been appropriated over the past year and the billions in programs like PPP and Economic Injury Disaster Loans (EIDL) that went unallocated.

Yet, many of our federal legislators don’t seem to grasp the severity of the situation at hand. Many say that restaurants seem to be on better footing this summer as reservations seem hard to get and restaurants appear full during rush hours.

“Unfortunately, the optics don’t fit the narrative right now,” National Restaurant Association Executive Vice President of Public Affairs Sean Kennedy said in a recent webinar regarding the RRF. “The narrative was absolutely supported last year when we had shuttered restaurants on a Saturday night in every town in America. Indoor dining just wasn’t happening. As restaurants reopen, people are quick to assume that means we’re back to normal.

“They don’t understand that we have entire stations that aren’t open because we don’t have the staff, they don’t understand that we have almost $200 billion in lost revenue, which is a lot of debt that we’re still processing 15 months after being shut down by government decree; or they don’t understand that our food costs continue to rise and that we can only raise menu prices so much.”

Luckily, there is a pending solution. Two different bills, one by a bipartisan coalition and one by the ranking Republican member of the House Committee on Small Business, seek to replenish the RRF with $60 billion. The bills are similar in goal but differ in strategy – the bipartisan bill would print more money, while the Republican-led ENTRÉE Act would attempt to utilize unspent previously allocated dollars.

Neither bill has yet secured enough support to ensure passage, although the bipartisan Restaurant Revitalization Fund Replenishment Act of 2021 has secured considerable support in the House of Representatives, including Rep. Lisa Blunt Rochester. In the Senate, just 14 legislators have signed onto the bill though, and notably missing are Sens. Tom Carper and Chris Coons.

I add my voice to those calling on our senators to support additional aid to our favorite restaurants. Without it, the First State may have fewer places to raise a toast when we can finally one day put this pandemic behind us.

Update: Sens. Coons’ and Carper’s offices have confirmed to Delaware Business Times that they support the Restaurant Revitalization Fund Replenishment Act of 2021 and are awaiting Republican co-sponsors to join them in supporting the bill before they can formally be added by sponsor Sen. Krysten Sinema.

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4 Comments

  1. avatar
    Jack August 6, 2021

    One of the biggest failures here is the resulting discrimination against those that the funding was meant to help. Many of these businesses that were struggling before our now REALLY struggling. In addition to that, what we’ve done is created an uneven playing field that no one is talking about. You’ve got well-funded restaurants that have the ability to shut down for a couple days a week, each week, give staff breaks, offer higher wages, etc… while the struggling restaurants that never received the funds don’t have the depth of financing to do any of the aforementioned. I’m also seeing those funded restaurants improving their restaurants, which is must needed after almost a year of being shut down. The situation was bad before, now with this uneven playing field, the funded companies are now the gorillas in the room ready to take anyone out that didn’t receive the funding.

    Reply
  2. avatar
    Maria August 16, 2021

    Dear Jack
    I have a restaurant that fits this situation. Im thankful that you have nailed it here in this article and comment. Im not sure it will help but it sure is nice to know that someone at least gets it. Next week we lose our whole front of house to colleges. We simply cannot offer the money that our gorilla competitors can. Before the pandemic we were turning them away. One blow after the next. The price of everything along with price of labor will most definitely take us down. I worry about the future of real food.

    Reply
  3. avatar
    Ron Carmona August 20, 2021

    People don’t seem to understand that restaurants have to compete with big corporations like Lowes and McDonalds with staring hourly rates of $18 hour for unskilled workers.
    one of the reasons why is so hard to get a reservation is the lack of employees, my wife and i are working 60-70 hours just to compensate for the lack of employees.
    my labor cost has increased exponentially just to keep my current workers, not counting cost of ingredients.
    at best I’m breaking even right now, once winter starts if we don’t get the RRF grant, we will have to close our doors

    Reply
  4. avatar
    Capt. Robert Murray August 21, 2021

    Please stop giving all my tax money to Corp. America???? The PPP program has healed them forever. I am a small business that recently didn’t get pushed to the back of the bus, I got kicked off the bus, after being promised funding since the beginning of the fund. The lawsuit filed was the most ridiculous thing anyone ever listen to????

    Reply

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