Help for battered restaurants could be on the way as House considers new bills
Washington, DC, May 20, 2020 | Washington Post
Almost from the day the $670 billion Paycheck Protection Program was announced, restaurant owners have been complaining that it doesn’t work for their industry. Congress has clearly heard them.
Last week, Reps. Dean Phillips (D-Minn.) and Chip Roy (R-Tex.) introduced the Paycheck Protection Flexibility Act, which would extend the period in which small businesses can use the money and ease restrictions on the amount they can spend on non-payroll expenses such as rent. House Speaker Nancy Pelosi (D-Calif.) signaled that she would be willing to hold a vote next week on the act, a shift from her recent strategy to focus only on major coronavirus relief bills, according to a Politico report. The effort appears to have bipartisan support in the House and Senate as a quick fix to the Small Business Association program that has drawn widespread criticism from restaurateurs whose PPP money would convert to a two-year loan if they don’t follow the terms of the program.
What’s more, Rep. Earl Blumenauer (D-Ore.), a senior member of the House Ways and Means Committee, introduced a bill Wednesday that aims to help restaurants ride out the pandemic as they face a future of limited dining capacity, public fear and rising costs to cover masks, gloves and cleaning products. The Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive Act of 2020, or simply, the Restaurants Act, would create a $120 billion grant program to help an estimated 500,000 independent restaurants survive a potentially long period when they may earn only a fraction of their former revenue.
Under the act, money would be administered by the Treasury Department and available only to independent establishments with fewer than 20 locations under the same name, a caveat designed to avoid a repeat of PPP embarrassments in which chains such as Potbelly, Shake Shack and Ruth’s Chris received funds meant for small businesses. (Some of the companies, such as Shake Shack, gave back the money.) The National Restaurant Association has made a similar plea to Congress, but the Restaurants Act would target only small independents, which represent 70 percent of all restaurants. The grants would cover the difference between revenue from 2019 and that projected for 2020, with a cap of $10 million per grant.
Restaurants are “uniquely vulnerable as we face the covid-19 pandemic,” Blumenauer said in a statement. “Few industries have been as uniformly ravaged as the food service industry, which is why I am working with a coalition of culinary experts and advocates and pushing my colleagues in Congress to provide support. Local, independent restaurants are the beating heart of our communities. They need relief now.”
The legislative efforts come after weeks of lobbying from the National Restaurant Association and the recently formed Independent Restaurant Coalition (IRC), as well as a Monday meeting at the White House, where 10 restaurant executives expressed their concerns to President Trump. Last month, the IRC sent a letter to both chambers of Congress, asking for the restaurant stabilization fund.
The program, Guidara said, “will put all of those people that are currently unemployed back to work, such that, by the third quarter of this year, we’re going to be looking at unemployment reports that are astonishingly good, not to mention the supply chain that we represent. … Our plan helps bring unemployment back to where it needs to be, and it supports a lot of our other industries that rely on independent restaurants for their survival.”
Naomi Pomeroy, the James Beard Award-winning chef behind Beast in Portland, Ore., said that although the PPP was passed with good intentions, it doesn’t do much for independent restaurants, 40 percent of which are closed and the rest limping along as carryout and delivery operations. As originally written, the PPP required operators to spend their money over an eight-week period, use 75 percent of the funds on payroll and hire back their employees by June 30 or risk converting the money into a two-year, low-interest loan. The Paycheck Protection Flexibility Act would extend deadlines and eliminate restrictions.
“I am sitting on it and crossing my fingers that the change is coming fast enough for me,” Pomeroy said about her PPP money, which remains untouched in the bank. “I feel relatively optimistic about that right now, to be honest.” If the changes aren’t made, she added, she will give the money back because she cannot afford the debt.
To Pomeroy, the stabilization program is key. It would provide relief funds to get through the pandemic, not just an eight-week window. This is particularly important for a place like Beast, a small, fine-dining destination in a city that has yet to reopen restaurants. But even when it does reopen, Beast may be able to seat only 10 guests because of social distancing requirements, making it next to impossible to stay afloat without breaks in rent, government assistance or both, while the novel coronavirus continues to spread unchecked and owners spend more money on sanitation and protective gear.
“I mean, right now, we’ve got a bridge halfway over the water, right? Thank you,” Pomeroy told The Washington Post. “Yes, a halfway-built bridge is better than no bridge. But we have to figure out how to get us to the other side of that, and that’s really going to happen through the stabilization fund.”
Just as important, the funds would help chefs and owners like Pomeroy figure out how to reinvent themselves in a landscape that is expected to change dramatically in the months leading up to a vaccine, and maybe even after.
“The deal is this: I have to change the model of my restaurant, and so do almost everybody else that I know. I have to reconfigure my tables, possibly even change to being almost like a meal-delivery service. … So we need to restructure,” she said. The fund “will get me to the other side, where I can start to really figure out a game plan that’s going to make sense and push us forward. Our industry is important, and we need to save it, and we just need that bridge to be built all the way.