The restaurant industry is finally getting its own ransom – but if there is enough for everyone, it remains an open question.
President Biden last week signed a $ 1.9 trillion coronavirus stimulus and relief package that included $ 28.6 billion earmarked specifically for the struggling restaurant industry. It is the largest financial relief program ever undertaken for the restaurant industry in the United States.
To qualify, restaurants with fewer than 20 locations must subtract their 2020 revenue from their 2019 revenue and submit their applications for the difference – minus any Paycheck Protection Program funding received last year. The Small Business Administration is expected to start receiving applications in the coming weeks.
The problem is that the process is expected to be slow – and even with 110,000 restaurants closed last year, there is not enough money set aside to offset the estimated $ 255 billion in overall losses suffered by the food service industry last year as result of the pandemic, experts said.
“It’s a great start, but it will take about five seconds,” said restaurant consultant Rick Camac.
Erika Polmar, executive director of the Independent Restaurant Coalition, says she will require the pool to be renovated until everyone gets paid. Meanwhile, restaurant owners are concerned that they may be left out, even when they dream of what they will do with the money.
Ayala Donchin, executive chef and CEO of Evelyn’s Kitchen in Harlem, was among those who missed the first round of PPP financing because the banks that partnered with the SBA distributed funds to large established companies like Los Angeles Lakers and Ruth’s Chris Churrascaria.
Donchin, who called the first round “extremely demoralizing,” managed to secure subsequent rounds of PPP financing, but that money was reserved – by law – for payroll.
If she takes a portion of the restaurant’s ransom, which can be used for almost any commercial expense – rent, supplies, food and upgrades – she plans to use it to repair her crumbling infrastructure and expand her online sales.
“The ovens. The ilumination. A sign on the front. Cabinet doors that are broken – and packaging added to expand our ability to ship items nationally, ”said Donchin.
Still, she is concerned. “We don’t have any money yet. And it can take eight to 12 weeks. We are still in survival mode and there is no way to plan without having the money. ”
Biden promised that the application process will open “within weeks, not months”. But even after it is opened, the process is expected to be slowed down by efforts to eliminate some of the problems that affected the first round of PPP loans.
In the first three weeks, the SBA will prioritize donations to restaurants owned by women, veterans and anyone considered to be socially and economically disadvantaged.
So, in the first two months, only restaurants that generated less than $ 500,000 in annual revenue in 2019 need to sign up. Thereafter, individual restaurants can apply for up to $ 5 million and restaurant groups can apply for up to $ 10 million.
Money that is not spent by the end of the year must be returned.
Restaurateur James Mallios, owner of the Greek restaurant Amali in Midtown and Bar Marseille in Rockaways, said he would use the money to hire more staff and build more outdoor tables – as well as rebuild wine lists “after freezing purchases for almost one year”.
He called the act a “lifeline”, despite knowing that the money could run out before he won. “I hope we receive our grant, but even if we don’t receive it and no other money is made available, it gives us an emotional wind in our sails.”
New York restaurants and bars are feeling more optimistic after a bitter winter in general. Indoor dining capacity, which resumed 25 percent in February, is now 35 percent and rising to 50 percent on March 19.
But they are still suffering. There were 25,000 food and drink outlets in the city before the pandemic. About 5,000 of these bars and restaurants closed during the pandemic, according to the Partnership of New York.