Survey: Half of independent restaurants to close without aid

The food and service industry was among the hardest-hit at the beginning of the COVID-19 pandemic, when the national emergency forced many to shut their doors to customers. 

Help came in the form of a number of federal aid programs, the most recent of which – the Restaurant Revitalization Fund – was passed under President Joe Biden’s American Rescue Plan. 

But new data from the Independent Restaurant Coalition found over half of the independently-owned restaurants and bars nationwide that did not receive an RRF grant expect to permanently close their doors to the public within the next six months for good. 

What You Need To Know

  • New data from the Independent Restaurant Coalition found over half of the independently-owned restaurants and bars nationwide that did not receive a federal grant expect to permanently close their doors to the public within the next six months 
  • Last year's Restaurant Revitalization Fund grants went to over 100,000 small bars and restaurants, but another 177,000 potentially eligible applicants did not receive a grant due to lack of funds
  • The vast majority of business owners surveyed by IRC – 86% – said they would use an RRF or other federal grant to hire more staff; other priorities include making repairs, paying rent, paying utility bills or making supplier payments
  • The U.S. House of Representatives recently passed the Relief for Restaurants and Other Hard Hit Small Business Act of 2022, which would infuse the RRF grant program with another $42 billion

The IRC surveyed nearly 1,000 people across 48 states, which represents 1,824 restaurants and 40,062 employees nationwide. Nearly 96% of the businesses surveyed applied for an RRF grant, but only 14% received the relief. 

Of the businesses that did not receive a federal grant, 52% expect to close within six months. Over 40% of businesses that did receive an RRF grant said they are not in danger of closing their business at all. 

The vast majority of business owners – 86% – said they would use an RRF or other federal grant to hire more staff; other priorities include making repairs, paying rent, paying utility bills or making supplier payments. 

“After two years of missed rent, supplier, and utility payments, navigating astronomical food costs, and multiple COVID-19 surges that brought businesses to a halt, independent restaurants and bars are out of time, options and money,” Erika Polmar, executive director of the Independent Restaurant Coalition, wrote in a statement. “There is only one solution to this crisis: provide these businesses the financial support they need before it’s too late.”

The final round of applications for an RRF grant closed in July of last year, by which time the Small Business Administration had received applications totaling around $76 billion, significantly more than the $28.6 billion authorized for the program. The SBA awarded grants to over 100,000 small bars and restaurants, but another 177,000 potentially eligible applicants did not receive a grant due to lack of funds.

Businesses who did receive RRF grants have until March 11, 2023 to use the money. 

The IRC report came soon after the U.S. House of Representatives passed the Relief for Restaurants and Other Hard Hit Small Business Act of 2022, which would infuse the RRF grant program with another $42 billion. The bill would also allocate $13 billion for the establishment of the Hard Hit Industries Award Program, which would “assist small businesses with 200 or fewer employees that have experienced 40 percent or more in lost revenue,” per Rep. Nydia M. Velázquez, D-N.Y., chair of the House Small Business Committee. 

“This bill will deliver long-awaited aid to hundreds of thousands of restaurants and other small businesses that have been hit hard by the pandemic,” Velázquez added. “The sooner this bill is signed into law, the sooner these businesses can begin to move forward and advance our recovery.”

But the bill only received six Republican votes in the House, leaving doubts whether it would survive the evenly-divided Senate. 

Two senators have instead encouraged fellow lawmakers to approve their own bill, first put forward last August, to replenish the RRF program. Sen. Ben Cardin, D-Md. and Sen. Roger Wicker, R-Miss., proposed a $40 million cash infusion for the grant program, with additional funds for small business assistance proposals from certain gyms, minor league team sports, transportation services and more. 

“More than two years into the pandemic, hundreds of thousands of restaurants and other small businesses are still fighting to survive, while thousands have already closed their doors for good,” Cardin said in part. “Congress cannot mistake the hopeful signs of recovery in our economy for signs that restaurants, bars, and other hard-hit small businesses no longer need help.” 

Should the Senate pass the Cardin-Wicker measure, both pieces of legislation would be sent to a conference committee for lawmakers to hash out the differences. A final agreed-upon conference report would then be sent to both legislative chambers, and it must be approved by both the House and the Senate before sending it to President Joe Biden for signature. 

Chris Shepherd, head chef and owner of Underbelly Hospitality in Houston, on Thursday called on Texas’ two Republican senators, Ted Cruz and John Cornyn, to support the legislation when they return from Easter recess. 

“This grant relief would secure my restaurants’ financial future while giving me the financial flexibility to become a better employer. I would use the money to raise wages, bring on more staff, and pay down any pandemic related expenses that continue to hang over my balance sheet,” Shepherd said in a statement to IRC. “The stakes are too high to kick this down the road any longer.”

Spectrum News has reached out to Cruz and Cornyn for comment.