Restaurants face new challenges to survive after key legislation halts

Restaurants that have struggled to survive the pandemic now fear closing their doors permanently after the Senate effectively killed legislation that would have provided more funding.

In May, the Senate failed to advance the Small Business COVID Relief Actwhich included $40 billion to reload the Restaurant Revitalization Fund (RRF) set up by a separate relief bill in March 2021.

The restaurants argued the new money was needed because nearly 177,000 restaurants that applied for funding were excluded from the $28 billion in grants sent to just 105,000 restaurants.

Now those restaurants have little hope of getting additional funding from Washington, where House and Senate Republicans are skeptical of additional relief money. They say much of what has already been authorized by Washington has yet to be spent, and they are not in favor of increasing taxpayers’ money at a time of rising inflation.

Sen. Mike Braun (R-Ind.) Said after the vote that the feds needed to “stop contributing to Biden’s inflation crisis by spending more money than we don’t have,” while the Sen. Ted Cruz (R-Texas) said after the vote. vote, he would support bills in the future if paid by “already authorized and appropriate COVID-19 relief funds.”

Diana Staley, owner of Reverie Kitchen in Connecticut, spent nine weeks before the vote meeting with senators. She said the bill could be reconsidered, but Republicans would likely only support it if more unspent COVID-19 funds were reallocated to pay for it.

Only $5 billion of the bill came from unused funds of the Paycheck Protection Program (PPP), a pandemic-era program that provided small businesses with loans to pay their payrolls and other costs such as mortgages and rent.

“They don’t look at it for what it is,” Staley said. “Restaurants contribute more than $900 billion to the economy, growing $36 billion each year. This legislation allows restaurants to recover from the pandemic and to grow and hire more people, and that growth will end up being a multiple of the amount of that bill.

Some Democrats were also skeptical of the most recent version of the bill, though they still voted to debate it. But it could lead to problems down the road if brought back.

Senator Chris Murphy (D-Conn.), for example, said after the vote it was “too expensive and doesn’t have enough safeguards on how the money will be spent.” He said if reconsidered he would help insert key changes. An aide told The Hill he was “concerned about how the funding will be disbursed”.

The list of restaurants that initially received subsidies revealed that 1 in 10 RRF restaurants belonged to a large franchise, despite certain rules and limitations, according to a analysis by food publication Counter.

It also showed that only a small fraction – 5% – of restaurants received nearly 40% of the previously allocated $28 billion.

The chance to revive the fund has sparked hope in Ruth Gresser, the owner of Pizzeria Paradiso in Washington, D.C.

Gresser was one of nearly 3,000 restaurant owners whose grant approvals were rescinded after a federal court issued an injunction ruling that the Small Business Administration‘s 21-day period to prioritize women, minorities and other socio-economically disadvantaged candidates was unconstitutional.

“Congress doesn’t seem to care, or not enough senators, and suddenly it’s more important that they chart that budget line,” Gresser said, adding that she cut her staff from 60 people, four of its five sites still generating less revenue. than they were in 2019.

Before their approval was rescinded, the owners of Goosecup in Leesburg, Va., planned to use the funds to pay staff members and their debt. They could not apply for PPP loans – eligible restaurants could apply for both with the risk of receiving a lower RRF subsidy – because their restaurant opened after the February 2020 deadline.

“We are at this point where we have a lot of debt, a little more than what we would have gotten from the RRF,” the owner said. “Almost every month we have to accumulate more and more debt, and at some point we have to step back and say, ‘Is it worth it?'”

Washington restaurant owner Jill Tyler lobbied the Independent Restaurant Coalition after her restaurant Tail Up Goat received an RRF grant, but her bar Reveler’s Hour did not. His bar has been unable to continue generating revenue at pre-pandemic levels – especially with new strains and surges of COVID-19 – and is only open half the hours it had. used to be.

“We’re going to see the main streets get sad,” Tyler said. “What we’ve seen up close won’t even be a fraction of what’s to come.”

Staley, the Connecticut restaurant owner, said she is still meeting with lawmakers despite the major setback, but even if there is a reconsideration of the bill, she isn’t sure it will be moved to a fast pace.

“A lot of members are distracted by so many issues going on and it’s not as glamorous as some, but it’s a stable industry,” Staley said.

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