Restaurants Finally Get Some Morsels of Relief
(Bloomberg Opinion) -- When we last visited the restaurant industry, it was late December and Congress had just passed a $900 billion pandemic relief bill. Months earlier, independent restaurateurs like New York’s Tom Colicchio (Crafted Hospitality) and Chicago’s Kevin Boehm (Boka Restaurant Group) had banded together to push for $120 billion in aid for struggling restaurants. Their plan had been included in the relief package that passed the House, and it had more than 50 co-sponsors in the Senate.
But President Donald Trump and Senate Majority Leader Mitch McConnell were more interested in giving business people a tax break for lunches — the derisively named three-martini lunch break — so they stripped out the financial relief and replaced it with their tax break. That was pointless at the time, of course, because the pandemic had largely canceled the business lunch.
“It’s disgraceful,” an angry Andrew Rigie told me at the time. Rigie, the head of the New York City Hospitality Alliance, had been deeply involved in the effort to get legislative help for restaurants. “Big corporations that don’t need the money get billions,” he added, in reference to airlines, which received $16 billion in that year-end package, “while struggling small businesses that are the lifeblood of cities get nothing.”
Fast-forward a few months. In the latest relief package, President Joe Biden’s $1.9 trillion stimulus bill, which will likely be signed into law by the end of the week, the airlines will receive an additional $15 billion, bringing their total to $81 billion. But guess what? This time, the restaurant industry got some help as well: $28.6 billion. It comes a year into the pandemic, after more than 110,000 restaurants have closed permanently, and it isn’t nearly as much as the industry hoped for. But it’s much better than nothing.
What is so surprising about lack of aid for restaurants is that they are the most visible manifestation of the economic toll the pandemic has taken. Most big corporations will come out of it more or less unscathed. It’s the small businesses, and especially the restaurants, that have suffered. Millions of restaurant workers have lost their jobs. Restaurants have had to endure, in many cases, several lockdowns. Once they were allowed to open, they were restricted to 25% capacity in many places, making profits a near-impossibility. In New York, many restaurants built extravagant sidewalk extensions to allow for “outdoor dining” in winter. Others turned to take-out. Restaurateurs spent much of the past year waiting for another shoe to drop. It usually did.
“We need a restaurant stabilization bill,” Colicchio said last May in an interview with Bill Maher. “We’re looking for some runway to keep open. … We’re not going to buy back our stocks with this, and we’re not going to give our executives bonuses.”
So now the question is: Will the $28.6 billion earmarked for restaurants offer that runway? Will it prevent further restaurant closings? One helpful factor is that the money will be given as a grant rather than a loan and will be based on the difference between a restaurant’s 2019 revenue compared with its 2020 revenue. It can be used for routine operating expenses as well as payroll. About $5 billion will be set aside for small restaurants that take in less than $500,000 a year in sales.
“It will make a huge difference if there’s enough money in the till,” said Ken Aretsky, who owns Patroon in New York City. “We can pay old debt from vendors — amazing!” But, he added, every bar and restaurant in the country will apply, so no one knows how far the money will stretch.
“Local restaurants and bars come in all shapes and sizes and are struggling in different ways,” Boehm said. “It’s not too late for so many restaurants who aren’t sure how they are going to pay down debt, make payroll or pay their rent in the months ahead.”
Rigie told me that he thinks Congress understands how important the restaurant industry is to cities and that he found “a strong commitment to reup the relief funds if the industry is still in need.” Well, we’ll see.
It is a tragedy that so many restaurants have closed during the past year — restaurants with Michelin stars as well as local diners; hamburger joints as well as cozy neighborhood haunts. It’s a tragedy that so many restaurant workers lost their jobs and that cities lost part of their identity. Let’s hope that with this new stimulus package, the industry can finally start to recover.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."
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