Operations

Restaurants to Congress: No More Waiting. We Need Help Now!

Yelp’s new Local Economic Impact Report shows the coronavirus pandemic is doubling the risk of permanent closure for independent restaurants across the country, with over 140,000 having closed since June 15.

The report found that 53 percent of independent restaurants that closed between March 1 and June 15 will never open their doors again. Most metros and states had their business closure rates increase by at least 200% while consumer interest in local businesses fell by 50% or more.

Market analysts at the Independent Restaurant Coalition, a nonprofit restaurant advocacy group, estimates that up to 85 percent of restaurants could close if lawmakers in Washington D.C. can’t agree on another bailout for the industry soon.

Without a bailout, IRC estimates that up to 11 million people could lose their jobs, which would severely impact the economic health of many local communities.

“The unpredictable closures of bars and restaurants over the past week will continue, and is exactly why momentum is growing for the RESTAURANTS Act,” IRC said in a press release. “America’s 500,000 independent restaurants and the five million farmers, distillers, fisherman and meat purveyors that supply them are uniquely impacted by COVID-19…Independent restaurants require more from Congress, and Rep. Earl Blumenauer (D-Ore.) and Senator Roger Wicker’s (D-Miss.) bipartisan RESTAURANTS Act would give these businesses the confidence and resources to help get through this.”

If passed, the RESTAURANTS Act would provide over $120 billion in available funding for restaurants that are not publically traded and have $1.5 million or less in revenue. The grants can be used to cover payroll responsibilities, utilities, rent, and other expenses necessary to keep a restaurant open.

The White House reportedly supports the legislation, along with prominent Senators Sens. Lindsey Graham (R-S.C.), Kyrsten Sinema (D-Ariz.), Christopher Coons (D-Del.), and Doug Jones (D-Ala.).

A recent survey from Marketplace.org found that over half of employers have asked employees to take pay cuts to avoid layoffs during the pandemic. Even so, restaurant operators have been forced to lay off 91 percent of their hourly workers and 70 percent of their salaried employees.

When congress first passed the CARES Act, and the Paycheck Protection Program along with it, many big-name restaurant chains like Shake Shack and Ruth’s Chris Steakhouse took the loans that were meant to go to independent restaurants and small businesses. Some of these chains ended up returning the loans.

On July 1, Congress extended the Paycheck Protection Program, legislation that allowed businesses to take out forgivable federal loans to ensure that they could keep their employees. As of this writing, over $517 billion in loans have been distributed among the program’s 5 million applicants.

“We found early in this crisis that the PPP program designed for small businesses didn’t work for the businesses most impacted. Not just impacted, but devastated – restaurants,” Blumenauer told reports with The Hill.

Before COVID-19, the restaurant industry was projected to become America’s next trillion-dollar industry. Independent restaurants were slated to bring in over 65 percent of revenue, enough to account for four percent of national GDP.

Research from IRC found that on average 90 percent of revenue from restaurants goes directly to local communities through employees, suppliers, and rent.

“Over the past two months, Congress has mustered the political will to pass more than $3 trillion of relief to most sectors of the economy – the House of Representatives just passed an additional $3 trillion of relief. There were broad-based programs for direct individual assistance, small business loans, and tax relief for businesses large and small. Likewise, there was targeted relief for industries that were hard-hit by the effects of COVID-19. Yet in every piece of legislation, restaurants have been ignored at the peril of the very communities they serve. We can’t afford not to act. Nothing less than millions of livelihoods, hundreds of thousands of businesses, and the fabric of our communities is at stake,” Rep. Blumenauer said in a press release.

Yelp’s data did show how some restaurants have survived during the pandemic. There’s been a 10-fold increase in the volume of takeout orders since March 15. However, with the number of diners down 57 percent from pre-pandemic levels, increased to-go and takeout orders are not a sustainable lifeline for restaurants.

The report also found that fast-casual concepts have fared well since the pandemic began. Some analysts anticipate double-digit growth over the next several years due to the concept’s reliance on takeout orders and their ability to grow revenues during recessions. During the 2007 recession, fast-casual restaurants grew by 13 percent while the restaurant industry only grew by 5 percent overall.

But without assistance from the federal government, restaurant owners fear their supply chain will be devastated. So far, according to IRC, forced closures of restaurants around the country have resulted in:

  • $1 billion in perishable goods were left sitting in the stagnant supply chain within one week of dining rooms closing
  • Premium seafood product sales decreased by 80%.
  • Wine sales decreased by 67%.
  • Sales of spirits dropped by 75%.

“For the sake of our communities and the millions of Americans that the 500,000 small, independent restaurants employ, Congress must pass The RESTAURANTS Act of 2020 in the coming weeks,” IRC said.

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