No one needs to be told that the pandemic has severely impacted the restaurant industry—at least, no one that eats out with any regularity. For some, more than any other element of the pandemic, the shuttering of bars and restaurants has been the most jarring element of lockdown. Working from home? No problem. Not being able to eat out? That’s a major crisis for some people.
Of course, major crisis doesn’t begin to describe the experience of most restaurateurs. They’re fighting for their very lives and livelihoods, a fight that many have already lost.
Since most of America went into a hard shutdown in the spring of 2020, industry estimates suggest that more than 125,000 have been forced out of business. Mostly small businesses or sole proprietorships, restaurants have been unable to carry the costs of rent, payroll, and outstanding debts through the rollercoaster of full closures, takeout-dining-only restrictions, and limited re-openings that have meant a constant firehose of changing regulations, all steeped with the one thing that is the enemy of any business great or small: uncertainty.
But before uncertainty, there was pain. Pure pain.
As the country went into lockdown, and more than 500,000 restaurants closed their doors, millions of restaurant workers lost their jobs, and roughly $220 billion of revenue evaporated in the second quarter of 2020 alone.
Few people truly understand the scale of the restaurant industry, which directly employs more than 11 million people in the United States. Add in the truck drivers who deliver food, and other adjacent businesses focused entirely on restaurants and the direct and indirect employment number grows to 16 million.
Incidentally, that’s far more than the airline industry (direct employment of 750,000), the auto industry (direct employment of 1.3 million), or the entire financial services industry (direct employment of 6.3 million). Of the roughly 10 million people forced into unemployment by the pandemic, roughly 1 in 4, or more than 2.5 million are from the restaurant industry.
Pandemic relief scorecard thus far?:
Airline industry: $60 billion first round of stimulus, $15 billion, second round; no governmentally imposed restrictions on capacity or general operations.
Restaurant industry: $0 in stimulus; forced closure in some places; multiple complete shutdowns of indoor dining; severe restrictions on operating capacity (50% or 25%) in place for the foreseeable future in most regions, even as reopening occurs.
It’s a constantly fluid number, difficult to measure because there is no central governing body or universal association to which every restaurant belongs, but estimates at the moment suggest that 1 in 6 independent restaurants in America have closed permanently. According to the Washington Post, Chapter 11 bankruptcies among restaurants are up 50% above 2019 levels.
The stimulus program put into place as part of the March 2020 $2 trillion CARES act included $377 billion of relief earmarked for small businesses. But that relief was in the form of one-time $10,000 grants for some businesses, with the vast majority of the $377 billion delivered as the infamous PPP loans, under the Paycheck Protection Program.
The abject failure of the Paycheck Protection Program for many businesses has now been widely reported. Leaving aside for the moment the fact that these are loans, not the grants that many industries received, despite their best efforts many restaurateurs couldn’t manage to get those loans. PPP simply didn’t work for the restaurant industry. You only need to look at the numbers for proof. The restaurant industry made up a quarter of the jobs lost to the pandemic, but restaurants received only 8.1% of the PPP loans issued.
Many small businesses shut their doors, sent their employees home, and had them work from home for months. And many still got PPP loans. With their employees working at more or less full capacity, these loans amounted to a decent boost for organizations that might have flagging sales or some lost productivity due to employees caring for kids or sick loved ones.
The average restaurant in America operates at a profit margin of 3-5%, with significant sunk costs in food and beverages at any given moment in time. The profit lost from merely having to throw out all the food they couldn’t use when the shutdown came was enough to sink some restaurants. Never mind the massive quantities of takeout containers, PPE, and other costs a restaurant has had to incur if they made it to the point of being able to open up again for take-out and delivery.
Unlike grocery stores that can remain open even if a bunch of their employees get COVID-19, in many states restaurants are forced to close and pay sick leave to everyone for two weeks if even a single member of their staff tests positive.
“If relief doesn’t come, we expect 85% of the restaurant industry could be permanently decimated,” says Erika Palomar, Executive Director of the Independent Restaurant Coalition, a grassroots group formed in March to tackle something that the restaurant industry has never done before in its history: lobby Congress on its behalf.
“Washington DC didn’t understand our needs,” says restaurateur Bobby Stuckey, owner of Frasca Restaurant in Boulder, Colorado, and co-founder of the IRC. “They never heard from [the restaurant industry]. Not in the financial crisis of 2008, not after 9/11, not during the stock market crash of ’87. They’ve been hearing from the airline industry in good times and in bad for 50 years.”
The IRC began its advocacy in March and by early June, they had calculated roughly how much money they thought was required to stave off disaster for the 500,000 small-business owners that they adopted as their constituents: $120 billion. They had also built enough relationships to get the RESTAURANTS Act drafted as a bill and introduced into the 116th Congress on June 18th, sponsored by Mississippi Senator Roger Wicker (R) and Oregon Representative Earl Blumenauer (D).
The rest of the summer and fall was spent lobbying anyone and everyone the IRC could get a meeting with in Washington. “We had tremendous support from over half the Congress,” says Palomar, “but with everything going on it just couldn’t move, and they ran out of time.” The bill never came up for a vote.
Palomar and her colleagues began work immediately to re-introduce the bill in the 117th Congress (a requirement when a piece of legislation is introduced but not voted on), and it was successfully reintroduced three weeks ago on February 5th, with two additional co-sponsors, Arizona Senator Kyrsten Sinema (D) and Pennsylvania Representative Brian Fitzpatrick (R).
But before it could come up for a vote, on February 1st, Senate Majority Leader Chuck Schumer and Speaker of the House Nancy Pelosi announced that the proposed $1.9 trillion COVID-19 relief package would include a $25 billion Restaurant Revitalization Fund. And when Palomar and her colleagues read the text of the bill itself, the found themselves looking at some very familiar language.
“This Revitalization Fund utilizes all the principles within the RESTAURANTS Act,” says Palomar. “I’m delighted. We’re all delighted.”
Palomar and all her colleagues were further thrilled this past Friday, February 26th, when the House of Representatives passed the $1.9 trillion American Rescue Act, including the $25 billion Restaurant Revitalization Fund, and sent it to the Senate.
That might sound like victory, but it’s far from it.
As we have already seen with the elimination of the promised $15 federal minimum wage from this process, passage in the House doesn’t mean a given provision will survive passage in the Senate, especially when legislation is being passed through the arcane process of budget reconciliation.
Let’s not forget that the minimum price tag (in reality, the amount is likely twice that) for rescuing the restaurant industry is $120 billion, and this stimulus bill only includes $25 billion, but it’s a serious start.
“This is about both the money and the program,” says Palomar. “Having this program stood up as part of [the stimulus] is huge, and the hope is that future budget bills could refill the program.”
The mechanism of adding more funding for restaurants in future legislation is a walk in the park compared to getting a relief program established in the first place. That’s why everyone is holding their breath to see how this stimulus bill moves through the senate.
That’s also why now, more than ever, the restaurant industry needs all of our help.
“When independent restaurants hurt, neighborhoods hurt,” says Palomar. “Restaurants are the cornerstone of our communities. They are places where dreams come to life—dreams that the pandemic has destroyed or put on hold.”
While I enjoy cooking enough to not have faced a major existential crisis when restaurants closed, I adore eating out, and now count many restaurateurs as friends and acquaintances. I have been doing everything I can think of to support the restaurants we love. It’s not enough, but it’s something.
If, like me, you’d like the restaurants you know and love to survive, here’s a list of what we all need to do, probably for the next year, maybe two.
#1 Call your Senators NOW and ask them to support the RESTAURANTS Act
Wait, but isn’t the RESTAURANTS act no longer necessary because the COVID relief bill now includes a Restaurants Revitalization Fund? That’s what I thought. But I was wrong. There are two very important reasons to tell your Senators to sign on as co-sponsors to the existing bill. The first reason is that a show of support for the bill will ensure that its provisions (and the $25 billion attached to those provisions) remain a part of the stimulus package when and if it passes the Senate. The second is that even if the RESTAURANTS Act never comes up for a vote, having a significant number of Senators signed on as cosponsors means that future funding of the Restaurant Revitalization Fund (we still need at least another $95 billion, remember) will be much easier. This is about building an iron-clad set of bipartisan advocates in the Senate, and that is something that we as individuals can absolutely help with. Call your Senator, tell them how much you love your neighborhood restaurants, how awful life will be without them, and how important it is that they support Senators Wicker and Sinema and their legislation. That’s an easy call to make, or you can use the IRC website to send a message online. Then tell all your friends and family to do it too.
#2 Patronize your favorite restaurants. A lot.
Whether your city is gradually opening up for outdoor and indoor dining, or you’re still stuck on take-out only, show your support for these neighborhood institutions and the people who work at them by being a customer if you can afford it. Order food, buy gift certificates, And if you can really afford it, do it again, and again, and again, and order wine whenever you do. Remember that most of the profit that restaurants make comes from booze, and that for many wineries, restaurants represent more than 40% of their annual sales. If you buy a bottle of wine with your takeout meal, or as you’re sitting in that parklet, you’re supporting two industries with one contactless swipe of your credit card.
#3 Tip like people’s lives depend on it. Yes, even on take-out food.
The folks that are lucky enough to still have jobs working at restaurants aren’t getting hazard pay. They’re likely not getting health insurance either. Yet there they are, working their asses off so that we can all have something to eat other than the recipes we’ve worn out over the past 12 months. Here in the Bay Area, according to government studies, 97% of the people who work in hospitality earn less than a Living Wage. Part of restaurants surviving the pandemic means the people who work there need to survive the pandemic, too, and they need a lot of help, too.
Along these same lines, all of us who are lucky enough to still have incomes ought to expect our favorite establishments to raise their prices, and we should be perfectly content pay more for our food, especially when the alternative might be an empty storefront.
#4 Keep your mask on when dealing with restaurant employees. Even at the table.
Speaking of people who work at restaurants surviving…. Folks in the hospitality industry are literally putting their lives, and the lives of the people they live with, at risk by showing up to serve you dinner. As guests, we should be doing whatever we can to keep them safe. That means following the restaurant’s guidelines, be that temperature checks at the door or answering those ridiculously repetitive COVID-19 questionnaires before we can be served. And most importantly, that means putting our masks back on when servers, bussers, sommeliers, or others approach our tables. It’s at the very least, a gesture of respect and consideration, and at most, an easy way to make sure that your favorite restaurant stays open. One case of COVID on a restaurant’s staff in many cities means a mandatory shutdown. Oh, and make sure to enable COVID exposure notifications on your smartphone.
#5 Cut everyone some slack
Yes, it’s the hospitality industry, yes they live to serve customers, but for pete’s sake, it’s a goddamn pandemic and they’re trying to feed their families. If they screw up your takeout order, or forget to bring you that drink you ordered, take a deep breath and try to remember they’re operating under the most difficult set of constraints that have been imposed on any active business in the United States. Sure, some places like gyms or hair salons have been unable to operate, period, but of any type of business allowed to keep operating, restaurants have been subject to the most ridiculous number of (constantly changing) regulations and rules of any consumer-facing industry. Restaurants and the people working in them are bending over backwards to make it possible for us all to have a decent meal that we don’t have to cook with our own two hands. We all need to bring an extra dose of tolerance and gratitude to an industry that just wanted to feed us, but has ended up fighting for its very life at the same time.
* * *
I sent this piece to a friend who owns a restaurant and asked her if she thought there was anything I should add. Her response was a little surprising.
While she agreed that everything above made sense, she said that more than anything, the thing that is going to help restaurants is getting the virus truly under control. And she wasn’t sure that just vaccinating people and gradually opening back up indoor dining at lower capacity levels was going to make that happen.
In fact, she was quite skeptical of that approach in the near term. She suggested that, among other things, once official bans on indoor dining were lifted, landlords everywhere would be pushing their restaurant tenants to open back up, whether or not they felt safe about it, putting restaurateurs in the awful position of having to choose between paying rent or keeping themselves and their staffs safe.
Her pessimism gave me pause and took some of the wind out of my sails. Like many, I’ve been looking forward to the return of outdoor dining at the very least (not yet having wrapped my mind around whether I’d be comfortable dining indoors again).
It’s worth remembering that plenty of other places around the world opened their restaurants back up, only to have to shut them all back down again. Of course, that was before the vaccine, but it was also before there were new strains of the virus marauding around the planet.
While I’m not exactly sure what the right balance between economic viability and restrictions to curb virus transmission should be at this moment, I do know that no matter what happens, I’m going to do what I can to support the restaurant industry. I hope you’ll join me.
Now go call your Senators and order some take-out.