Editorial: Restaurant Revitalization Fund needs a second helping

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.