For restaurants ravaged by the pandemic, help is on the way.
The $1.9 trillion American Rescue Plan set aside $28.6 billion for restaurants – the single largest earmark in the stimulus bill. Starting this month, restaurateurs will be able to apply for up to $10 million in grants to offset some of the losses caused by Covid, its effects on the economy and government shutdowns.
Restaurateurs agree, any money is a good thing. But some wonder: Is it too little too late? Many bars and restaurants waiting for aid went out of business before they received it.
Across the Buffalo Niagara region, about 1 of every 4 jobs that existed at bars, restaurants and other eating and drinking places before the pandemic still haven't come back. About half of the jobs that disappeared last April when the lockdowns took effect have come back, according to the state Labor Department.
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The federal Paycheck Protection Program gave some restaurants some help last summer. But the $349 billion first round ran out in 13 days – before many business owners were allowed to apply. It was followed by a $320 billion second round of funding, which closed without exhausting all of its funding.
Small businesses can use the Restaurant Revitalization Fund in tandem with PPP money, the Employee Retention Tax Credit and Economic Injury Disaster Loans. The first program is a refundable credit that allows restaurants to claim a portion of their payroll costs. The second provides low-interest loans for companies that sustained losses during a declared disaster like Covid.
The $28.6 billion Restaurant Revitalization Fund is being administered by the Small Business Administration.
Will it be enough? Restaurants and industry groups have celebrated the funding but, while the money will be a lifeline for many, it is not a cure-all.
The fund will cover just 10% of the pandemic's losses, according to Sean Kennedy, spokesperson for the National Restaurant Association. The restaurant industry lost $240 billion in sales, according to the trade group's annual report.
There is hope, however, that the Restaurant Revitalization Fund will do a better job of getting help to small, independent restaurants than the Paycheck Protection Program. PPP loans were granted to billion-dollar businesses and Fortune 500 companies, such as the L.A. Lakers and the $2 billion Shake Shack chain.
"If you have more than 20 restaurants, you're out," Sen. Chuck Schumer, D-NY, told members of the New York Restaurant Association during a recent Zoom meeting. "We didn't want the Olive Gardens and Red Lobsters to push you out so they can get in, like last time when they pushed you out."
What's next? As much as the grants may help, it's going to take more than a cash infusion to get things back on track.
"Herd immunity is what's going to open our bar," said Maura Crawford, owner of Coco Bar & Bistro on Main Street. "It's not about money, it's about people doing right by each other and getting vaccinated."
Crawford, like many restaurant owners, believes that things are beginning to turn a corner.
More than 440,000 Western New Yorkers have received at least one dose of the vaccine, according to the state Health Department. Restaurants have been allowed to increase their seating to 75% of their maximum occupancy. Patrons have received an influx of cash with the latest round of stimulus checks. And nicer weather is coming, allowing patios to open.
Crawford feels said she is finally confident enough to reopen Coco Bar & Bistro this month. It has been closed since November, when the state imposed tighter "orange zone" restrictions.
"If I wasn't optimistic, I wouldn't be opening," Crawford said.
How do restaurants feel about it? It's not perfect, but it's appreciated.
"I think it’s a great effort. We’ll see how it works," said Ellie Grenauer, director of the New York State Restaurant Association and co-owner of the Glen Park Tavern in Williamsville.
There is some concern about how well the SBA will administer the grants. The SBA was widely criticized for its handling of previous aid, including PPP and Economic Injury Disaster Loans, and its delayed rollout of the Saving Our Stages grants for entertainment venues.
"It’s hard to criticize because we’re grateful for the assistance and none of us has been down this road before, Grenauer said. "We’re recreating the wheel."
Restaurateurs, including Grenauer, are just hopeful there will be enough money to go around and that they will get a piece of it.
"It's not the windfall of cash everyone think it will be but it will be extremely useful," Grenauer said.
Who is eligible? Food service and drinking establishments that have fewer than 20 locations. That includes caterers, brewpubs, taprooms and tasting rooms.
Publicly traded companies are excluded, as are those with pending Save Our Stages applications (which go mostly toward independent entertainment venues). Private equity funds are eligible, with limitations.
For the first 60 days of the program, there is $5 billion earmarked for restaurants that grossed less than $500,000 in 2019. During the first 21 days, the funds will prioritize restaurants owned by veterans and women, as well as the socially economically disadvantaged.
That does not mean, however, that restaurant owners who don't meet that criteria should wait to apply.
Funds can be used along with the first and second rounds of PPP money, COVID-19 Economic Injury Disaster Loans and the Employee Retention Tax Credit.
How much can they get? Individual restaurants can receive up to $10 million, while restaurant groups max out at $5 million.
How is the grant amount calculated? To find the grant amount, established businesses should take 2019 revenue minus 2020 revenue, and subtract the amount it received in PPP loans.
Restaurants that opened in 2019 should take their average 2019 monthly revenues, multiply the total by 12, then subtract 2020 revenues. Restaurants that opened in 2020 are eligible for grants, but specifics on how calculating their grant amounts have not yet been released.
What can it be used for? Payroll and benefits (for those earning $100,000 per year or less), mortgage (including interest) and rent, utilities, supplies (including PPE and cleaning products), food, operational expenses, sick leave and maintenance, including construction to allow for outdoor seating.
Covered purchases will have to be made by Dec. 31 unless the program is extended. Any unused grant funds will have to be returned to the government. Grant money spent on ineligible expenses will also have to be repaid.
