As many of you know, the Restaurant Revitalization Fund allocated $28.6 billion in grant money to restaurants devastated by the pandemic. Just nine days after the application process began, the SBA had received 266,000 applications that totaled over $65 billion, leaving a shortfall of $36 billion.
In total, over 362,000 applications were received in the three weeks that the application portal remained open, coming to a total of $75 billion in funding requests and leaving nearly $50 billion in outstanding need. The SBA reported that the average grant application was for just over $200,000.
To address the obvious need, the Restaurant Revitalization Fund (RRF) Replenishment Act was introduced to Congress on June 11. The bill provides $60 billion in additional funding.
The Restaurant Revitalization Fund Replenishment Act
Introduced by the same lawmakers who initiated the Restaurant Revitalization Fund, Senators Kyrsten Sinema (D-Ariz.) and Roger Wicker (R-Miss.), and Representatives Earl Blumenauer (D-Ore.) and Brian Fitzpatrick (R-Pa), they have called for more than double the initial fund to help fuel an economic recovery. If passed, the amount would cover the existing applications and allow the SBA to accept additional requests.
“While it appears that our work to prioritize restaurants most in need was successful in the first round, the extraordinary demand for the Restaurant Revitalization Fund shows that many more businesses still desperately need help,” Congressman Earl Blumenauer said in a press release. “We must work quickly to replenish this critical relief program and ensure all local restaurants get the support needed to keep their doors open, pay their staff, and support the industry’s trillion-dollar supply chain that impacts every sector of our economy.”
Senator Roger Wicker also shared similar sentiments. “Our restaurants are now beginning to recover from a year of lost revenue, but many establishments are still hurting and have not been able to access aid for which they are eligible. Replenishing this fund would help restaurants, their staff, and the broader food supply chain as they continue to get back on their feet.”
Because of the strong demand, the first and only round of funding went to the priority group—businesses owned and operated by women, veterans, or the socially or economically disadvantaged. Representative Jim Hagedorn (R-Minn.) criticized the prioritization system as discriminatory. Those who won’t make the funding cutoff “happen to be, let’s just be honest with it, white men that own bars and restaurants.”
Restaurant owners in Texas and Tennessee have initiated lawsuits, claiming that prioritizing applicants based on gender and race is unconstitutional. A federal court in Texas recently issued an injunction, temporarily halting the approved aid to more than 2,900 small businesses.
A similar $16 billion grant fund for music clubs, theaters, museums, performing arts organizations, and other live venue operators, the Shuttered Venue Operators Grant, has, thus far, enough funding for all qualified applicants. Unfortunately, getting these grants to those businesses in need has progressed much slower than the RRF. While the program went into effect approximately six months ago, most venues are still awaiting aid. As of June 9, the SBA had awarded just 90 grants.
The Current State of the Restaurant Industry
As states and cities lift restrictions and dine-in guests return, some lawmakers question the need for additional funds. Unfortunately, one month of increasing revenue does not make up for over a year of lost income. Many restaurants are still uncertain if they can make it through to the other side of the devastation and disruption brought on by COVID-19.
In April, consumer spending in restaurants was still $1.4 billion below pre-pandemic levels. With some restrictions still in place in over 20 states and 36% of customers still not feeling safe enough to return, many operators are not yet demonstrating sustained profitability for 2021.
The business closures do not only affect the families that have been in the foodservice industry for over a decade but also their suppliers, distributors, local farmers, and employees. While May saw the addition of 189,000 jobs in the sector, the industry still employs 1.5 million fewer people than before the pandemic struck.
National Restaurant Association Executive Vice President of Public Affairs Sean Kennedy shared the following in a statement after the introduction of the bill:
“The success of the RRF so far is, in large part, because the SBA focused on making the program simple and accessible. We appreciate how swiftly they were able to establish a program unlike anything they had administrated before and believe it has the structure to sustain additional funding.
For much of the country, life is starting to feel close to normal. While restaurants are optimistic about this trend, we’re still in the early days of rebuilding and are far from recovery. Industry revenue continues to be below expectations, and in many states, we’re still operating under limitations. To make sure we don’t lose our rebuilding momentum, we will continue to focus on creating access to the tools the industry needs to address outstanding obligations and to manage the new challenges that could slow our recovery.”
This bill will not make it to the floor for debate without broad bipartisan support. Weighing in with your representatives in Washington and letting them know that restaurants still face a tremendous uphill climb, despite the return to indoor dining, may help get the support the industry needs. You can send an email to your officials with just one click here.