Thousands of Independent Restaurant Owners and Prominent Chefs Demand Congress Create a $120 Billion Restaurant Stabilization Fund to Ensure Small Businesses Have a Chance to Survive
Prominent Chefs José Andrés, Nina Compton, Rosa Garcia, Naomi Pomeroy, Andrew Zimmern, and other Independent Restaurant Coalition members say independent restaurants “stand on the very brink of survival,” putting a $1 trillion industry and 11 million jobs at risk.
The National Bureau of Economic Research states that restaurants have only a 30% chance of survival if the crisis lasts four months — lower than any other industry.
Chefs Demand A Restaurant Stabilization Fund
WASHINGTON, D.C. — Today, thousands of independent restaurant owners and prominent chefs including José Andrés, Nina Compton, Rosa Garcia, Naomi Pomeroy, and Andrew Zimmern joined the Independent Restaurant Coalition (IRC) to call on Congress to create a $120 billion stabilization fund to provide structured relief to the 500,000 independent restaurants across the country struggling to survive the the COVID-19 crisis.
“The restaurants we love are hurting and are on the brink of extinction,” said José Andrés, part of the Independent Restaurant Coalition leadership team. “Our industry has faced the steepest job losses of any industry during the COVID-19 Crisis, but have received no direct aid from Congress. Restaurateurs are some of the most creative, inspiring, entrepreneurial people I know and right now they need a little hope that they can continue creating the experiences we cherish for years to come. We are fighting to give our communities a fighting chance at surviving this crisis.”
In a letter to Congress and in a Zoom townhall with thousands of participants from across the country, independent restaurant owners detail plans for a stabilization fund designed to “ensure small restaurants are able to access the resources [they] need to survive.” Independent restaurants directly employ 11 million people, and indirectly contribute to the employment of tens of millions more through the supply chain of farmers, produce distributors, linen services, beer and wine distributors and more. Restaurants contribute $1 trillion to the economy — or 4% of GDP — each year.
Unemployment In The Restaurant Industry
Restaurants are low-margin businesses, with on average about 15 days worth of cash on hand. Due to the COVID-19 crisis, restaurants are the number one contributor to America’s record unemployment. The Paycheck Protection Program (PPP) has not provided the life-line it was designed to give due to stringent requirements around when employees need to be rehired. Due to the length of the state and municipal closures, restaurants can’t reopen and generate revenue. Those rehired with the loan would only be laid off eight weeks later, making restaurants ineligible for loan forgiveness and saddling them with debt at a time they can least afford it. Independent restaurants make up less than 9% of the approved loans despite being the top contributor to the country’s record unemployment.
The industry faces months if not years of uncertainty and significantly lower sales, projected to drop 50% for at least the next 12-18 months as a result of safety measures like putting six feet between tables, limitations on large groups like weddings and birthday parties, reductions in tourism and business travel and a slow return to normal socialization rates. The IRC recently conducted a survey with the James Beard Foundation, which found that even after the first round of PPP was distributed to businesses across the country, 80% of independent restaurant owners were not certain they would be able to reopen after the crisis.
In its letter, the IRC proposes the following principles for a dedicated $120 billion restaurant recovery fund:
- No publicly-traded restaurant should be allowed to access the fund – Restaurants do not enjoy the same access to capital as publicly-traded restaurants and their subsidiaries or affiliates. They are privately-owned by individuals in communities across the country.
- No large restaurant chain or franchise should be allowed to access the fund – The IRC wants to ensure franchises and large chains of restaurants are blocked from outflanking small, independent restaurants. They believe that any group of restaurants with more than 20 restaurants under the same name, should be blocked from accessing these funds.
- Prioritize marginalized communities – Marginalized communities need to prioritized because they are at the greatest risk. A survey from the James Beard Foundation found 65% of women owners and 67% of owners of color operated businesses with $1.5 million or less in revenue.
- The fund should last through 2020 – Grant amounts should be based on the impact to each business, and allow operators to use funds broadly to offset operating expenses and payroll. Government regulations will require restaurants to modify dining rooms to reduce seating, slashing revenue. There will also be new costs for protective equipment and cleaning measures.
- Bars and wine bars should be allowed to participate – These types of establishments are similarly affected by current and ongoing restrictions on operations.
A Restructuring Plan
“Restaurants don’t need a bailout, we need a restructuring plan to give millions of people a fighting chance,” said Andrew Zimmern, a founding member of the Independent Restaurant Coalition, host of James Beard award-winning What’s Eating America and Bizarre Foods; and partner in Lucky Cricket and several other restaurants in Minneapolis. “Right now the over 11 million baristas, servers, bartenders, and line cooks you used to see every week are out of a job. These are the same people you see where you meet your constituents and the same people that have been working– often without pay– to feed students and frontline workers throughout this crisis. They’ve been here for us at our best and worst times and we need to be there for them.”
Restaurants are uniquely affected by this crisis: according to the National Bureau of Economic Research (NBER), restaurants only have a 30% chance of staying open if the COVID-19 crisis lasts four months – that’s lower than any other industry. This is made worse by the reality that even when businesses are permitted to reopen, social distancing guidelines and public hesitation is projected to cut revenue by 50%, making insolvency a reality for hundreds of thousands of independent restaurants.
“Even with the Paycheck Protection Program, I have serious doubts I’ll be able to reopen my business,” said Naomi Pomeroy, owner of Beast in Portland, OR and founding member of the Independent Restaurant Coalition. “In order to pay my suppliers–if they’re still in business– and pay for the necessary safety changes to reopen, and rebuild a business model that works at half capacity, I’ll need a jump start. There’s no guarantee I’ll make it through this time, but a stabilization fund will go a long way in giving us the tools to open our doors, generate revenue, and start getting the economy back on the right track.”
“Without our independent bars and restaurants, New Orleans loses its identity,” said Nina Compton, member of the Independent Restaurant Coalition and owner of Compère Lapin and Bywater Bistro in Louisiana. “People travel to New Orleans for our food, generating revenue for hotels, transportation and other businesses up and down the supply chain. Small, predominantly black-owned restaurants like mine have become an indispensable part of our economy and our communities. We need a jumpstart to give my business, and our way of life, a fighting chance.”
“Restaurants aren’t just the lifeblood of our economy, they’re the lifeblood of our communities,” said Rosa Garcia, member of the Independent Restaurant Coalition and owner of Mott Haven Bar and Grill, who is collaborating with World Central Kitchen and The Bronx Community Relief Effort to provide meals to those in need. “When this crisis hit, small restaurants around the country like Mott Haven stepped up to feed those hit the hardest by this pandemic. We are the heart of our communities, and we need Congress to step up and take action to provide direct assistance to our restaurants so we can rebuild what we once were and let millions of Americans get back to doing what they do best — serving our communities.”
The Independent Restaurant Coalition was formed by chefs and independent restaurant owners across the country who have built a grassroots movement to secure vital protections for the nation’s more than 500,000 independent restaurants and the more than 11 million restaurant workers impacted by the coronavirus pandemic. The Coalition’s leadership team includes José Andrés, Kevin Boehm, Sean Brock, Andrew Carmellini, Ashley Christensen, Tom Colicchio, Suzanne Goin, Will Guidara, Camilla Marcus, Mike Lata, Sam Kass, Nick Kokonas, Kwame Onwuachi, Patrick Phelan, Erika Polmar, Naomi Pomeroy, Marcus Samuelsson, Adam Saper, Steven Satterfield, Michael Shemtov, Nancy Silverton, Frank Stitt, Bobby Stuckey, Caroline Styne, and Andrew Zimmern.
Dear Speaker Pelosi, Leader McConnell, Leader Schumer and Leader McCarthy,
Today, the majority of our restaurants stand on the very brink of survival. Many deserving businesses are successfully utilizing the programs that you created in the congressional response to the COVID-19 pandemic. But the restaurant sector has been and will continue to be devastated and it is now the #1 contributor to America’s record unemployment. In addition, the duration of state and municipal closures has prevented the Paycheck Protection Program (PPP) from providing the vital lifeline we so desperately need.
Throughout this crisis, the independent restaurant community, representing over 500,000 restaurants and 11 million employees, has been hit especially hard. At present, four in 10 restaurants are closed and the remaining 60% are operating at severely depressed revenue levels (sales have plummeted $80 billion during the months of March and April alone). According to the National Bureau of Economic Research, restaurants can only expect a 30% chance of staying open, if the COVID-19 crisis lasts four months, which is lower than any other industry. Once we are allowed to reopen, we will continue to face significant hurdles. Revenue generation will be severely compromised due to social distancing policies (requiring fewer individuals in our restaurants) and limitations to large revenue generating events, including weddings, birthdays and corporate events.
Independent restaurants anchor neighborhoods and communities and drive travel and tourism in every Congressional district and state. Independent restaurants indirectly contribute millions of jobs for every business large and small that relies on a healthy travel industry from airlines and hotels to parking garages and retail. Further, independent restaurants directly support hundreds of thousands of jobs and small businesses, including farmers, fishermen, distributors and the service sector.
In order for us to serve your communities again and to assist in reigniting the economy, independent restaurants need critical support from the federal government. This support will provide us not only a bridge to open, but to continue operating and to be fully staffed. Therefore, we respectfully request Congress establish the Independent Restaurant Stabilization Fund to ensure restaurants will receive the necessary capital to reopen and stay open. While we support the proposal brought forth by the National Restaurant Association for a stabilization fund and incentives, we believe that an allocation of at least $120 billion in funds for grants is required, specifically for small operators, to ensure that we are able to access the resources we need to survive.
As such, we believe any funds approved by Congress should include the following principles:
- No publicly traded restaurant should be allowed to access the fund. Our restaurants do not enjoy the same access to capital as publicly traded restaurant companies and their subsidiaries or affiliates. We are privately owned, mostly by individuals that are living in each of your communities.
- No large restaurant chain or franchise should be allowed to access the fund. It is important to ensure that franchises and large chains of restaurants be blocked from outflanking small, independent restaurants. Therefore, we believe any group of restaurants with more than 20 restaurant entities under the same name should be blocked from accessing these funds.
- Prioritize underrepresented communities (with a focus on women and minority owners and operators). We believe independent restaurants that are owned by women and minorities need to be prioritized within the fund.
The fund should last through 2020. Grant amounts should be based on the impact to each business and allow operators to use funds broadly to offset operating expenses and payroll.
With future requirements to modify dining rooms and reduce seating (effectively limiting revenue by upwards of 50%) and additional mandates for protective items and cleaning measures raising costs, restaurants will not be “back to normal” anytime soon. Congress must provide stabilization for this industry through 2020 or we will be pushing millions back into unemployment.
Bars and wine bars should also be allowed to participate in the fund. These establishments are similarly affected by current and ongoing operational restrictions.
We need Congress to act or we will not be able to survive. According to a recent survey conducted by the James Beard Foundation, only one in five restaurants have confidence they can reopen their businesses when they are allowed to open again. The National Bureau of Economic Research states that restaurants only have a 15% chance of staying open if the COVID-19 crisis lasts six months. Small restaurants are scrappy and entrepreneurial; we run on thin margins and optimism. We are the places you meet your constituents, we are the places that donate to schools, we are the places feeding our frontline workers today. If these requirements are not met, our country will not only permanently lose 11 million jobs, but also these vital cornerstones of our communities.
The Independent Restaurant Coalition
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