Thursday, April 14, 2022 — 7:00 am ET
New Data: More Than Half of Independent Restaurants and Bars Without Federal Grants Anticipate They Will Close Within Six Months
Restaurants That Did Not Receive a Restaurant Revitalization Fund Grant Reported They Were More 26% More Likely to Default on a Loan Compared to Business That Received Relief
Businesses Without Relief Report Being 15% More Likely to File for Bankruptcy
WASHINGTON D.C. – Today, the Independent Restaurant Coalition (IRC) unveiled new data collected from nearly 1,000 members of the independent restaurant and bar community in 48 states demonstrating the dire situation the pandemic has created for businesses — in particular, more than half of independent restaurants and bars without Restaurant Revitalization Fund (RRF) grants anticipate they will close within six months. The survey responses also demonstrate how businesses in desperate need of relief would use RRF grants to pay down debts, raise wages, make repairs, and moreover keep their businesses open.
The RRF is a $28.6 billion grant program for struggling restaurants and bars that President Biden signed into law in 2021 as part of the American Rescue Plan. Nearly 300,000 restaurants and bars applied for RRF grants in 2021, but only about one in three applicants received relief.
“The data tells us what we’ve been hearing from restaurants for more than two years: thousands of businesses will close if the Senate does not replenish the Restaurant Revitalization Fund,” said Erika Polmar, Executive Director of the Independent Restaurant Coalition. “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. That’s why more than half the industry reported they will shut down within six months if they do not receive relief. There is only one solution to this crisis: provide these businesses the financial support they need before it’s too late.”
“Receiving a Restaurant Revitalization Fund grant would change the entire complexion of my business’ future,” said Chris Shepherd, Chef/Owner of Underbelly Hospitality in Houston, Texas. “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. Senators Cornyn and Cruz need to make restaurant relief a priority when they come back for Easter Recess. The stakes are too high to kick this down the road any longer.”
The data indicates that businesses would use RRF grants to pay down debts and make repairs, allowing restaurants to continue serving their communities:
86% of restaurants reported that a grant would allow them to be able to hire more staff;
77% of restaurants reported that a grant would allow them to to pay their rent;
72% of restaurants reported that a grant would allow them to pay their utilities;
76% of restaurants reported that a grant would allow them to make supplier payments; and
77% of restaurants reported that a grant would allow them to make repairs.
The survey indicates that a significant number of businesses anticipate they will close within months if they do not receive an RRF grant:
24% of businesses that did not receive RRF are in danger of closing their business in up to 3 months compared to 13% of businesses that received grants.
28% of businesses that did not receive RRF are in danger of closing their business in 4 to 6 months compared to 11% of businesses that received grants.
RRF grants would help businesses address the issues threatening their longevity:
48% of restaurants without federal grants reported are in danger of defaulting on a loan compared to 22% of businesses that received RRF.
40% of restaurants without federal grants reported are in danger of filing for bankruptcy compared to 25% of businesses that received RRF.
28% of restaurants without federal grants reported are in danger of being evicted compared to 20% of businesses that received RRF.
Survey results show that RRF grants would afford businesses the flexibility to modify their operations, improve working conditions, and the overall dining experience:
83% of restaurants reported that a grant would allow them to increase their wages;
44% of restaurants reported that a grant would allow them to expand their menu;
51% of restaurants reported that a grant would allow them to expand outdoor dining options; and
91% of restaurants reported that a grant would allow them to withstand rising food costs without significantly increasing menu prices.
Last week, the House of Representatives passed the Relief for Restaurants and Other Hard Hit Small Businesses Act of 2022 (H.R. 3807). This legislation would allocate $42 billion for the RRF and $13 billion for other businesses impacted by the pandemic. It also establishes robust oversight and reporting requirements to verify proper grant awarding, use of funds, and provide maximum transparency. In the Senate, Senators Cardin and Wicker recently introduced the Small Business COVID Relief Act of 2022 that would add $40 billion to the RRF and provide additional funding for other hard hit industries.
In January 2022, over 80% of restaurants that did not receive an RRF grant reported they are on the verge of permanent closure. At least 90,000 restaurants and bars have closed since the beginning of the pandemic. The strained supply chain has caused food prices to climb higher and higher. The recent Producer Price Index (PPI) report released by the Bureau of Labor Statistics (BLS) indicated food prices rose 12.8% over the past year, including major jumps for ingredients critical to restaurants like beef and veal (43.9%), grains (22%), shortening and cooking oils (36.4%), and eggs (40.9%).
Earlier this year, over 11,000 restaurant owners, suppliers, diners, and workers sent a letter to the Biden administration, urging action on the RRF. In the letter, business owners wrote “[T]his program's limited funding failed to support roughly two-thirds of the eligible businesses that applied. Nearly 200,000 small businesses have been overlooked and now four out of five of these restaurants and bars are in danger of closing permanently, threatening all of the livelihoods we support.“
The IRC has continued to organize its grassroots movement to put pressure on members of Congress to replenish the RRF. In January, the IRC generated over 10,000 calls to congressional offices after a social media day of action. Local leaders have also joined relief efforts — in early January, mayors from 31 cities representing more than 19 million Americans urged Congressional leadership to continue the vital program, saying not giving restaurants relief would be “catastrophic.”
ABOUT THE IRC:
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 500,000 independent restaurants and the more than 11 million restaurant and bar workers impacted by the coronavirus pandemic.
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