RRF Replenishment Hopes Dashed
4 Min Read
The U.S. Senate failed to advance the Small Business COVID Relief Act of 2022 (S. 4008), ending the possibility of replenishing the Restaurant Revitalization Fund (RRF).
"Throughout the pandemic, restaurants focused on serving their communities. When government-mandated closures shuttered dining rooms, restaurants found a way to shift operating models and keep employees on the payroll. When first responders needed a hot meal, restaurants stepped in to help in cities and towns across the country," said Michelle Korsmo, President & CEO of the National Restaurant Association. "When Congress offered these restaurants the RRF lifeline, restaurant owners and operators made business decisions based on those commitments. Restaurants that are still trying to make up for what was lost in the pandemic today are struggling with workforce shortages, record-high inflation, and supply chain constraints. Today's vote will further exacerbate those challenges and result in more economic hardships for the families and communities across the country that rely on the restaurant and foodservice industry."
"Today, a Senate filibuster dashed the promise made to more than 177,000 small business owners in communities across the country" said Sean Kennedy, Executive Vice President of Public Affairs for the National Restaurant Association. "These restaurant owners believed the creation of the Restaurant Revitalization Fund was a down payment, and that the Senate would complete the mission with this vote. A bipartisan majority voted to begin debate on this critical legislation, but it wasn't the 60 votes needed. While there are valid questions about government spending and inflation, restaurants should not be caught in the crossfire. We applaud the leadership of Senate Majority Leader Chuck Schumer (D-NY), as well as Senators Ben Cardin (D-MD), Roger Wicker (R-MS) and Kyrsten Sinema (D-AZ) for their work in creating and pressing to replenish the RRF."
The $48 billion Small Business COVID Relief Act of 2022 (S. 4008), introduced by Sens. Ben Cardin (D-MD) and Roger Wicker (R-MS), included $40 billion for RRF replenishment and $8 billion in support for other industries deeply impacted by the pandemic. The House passed the Relief for Restaurants and other Hard Hit Small Businesses Act of 2022 (H.R. 3807), that included $42 billion to replenish the RRF on April 7. Both political parties agreed that the RRF should be replenished but couldn't reach a consensus on how to pay for it. Democrats generally wanted to treat replenishment as emergency spending, while Republicans generally wanted existing funds reallocated.
The American Rescue Plan established the RRF with $28.6 billion that Senate Majority Leader Charles Schumer (D-NY) called a down payment to restaurants. More than 278,000 restaurants applied for funds from the RRF, but only 101,000 applications were funded before the Small Business Administration ran out of funding. By leaving 177,000 without aid, the Federal government essentially picked winners and losers, among direct competitors, based on chance, not need.
The program's initial round of funding, which operators used primarily to pay off debt and meet payroll, was a resounding success. According to Association research, more than 900,000 restaurant jobs were saved, and 96 percent of recipients report that the funds helped their establishments remain open. But those that did not receive funds are still languishing. In fact, 62 percent of operators says their restaurant accumulated additional debt since the beginning of the pandemic; 57 percent said their restaurant fell behind on expenses. Industry-wide, eating and drinking establishments lost $300 billion in sales the first year of the pandemic.
“Local restaurants across the country expected help but the Senate couldn’t finish the job,” said Erika Polmar, Executive Director of the Independent Restaurant Coalition. “Neighborhood restaurants nationwide have held out hope for this program, selling their homes, cashing out retirement funds, or taking personal loans in an effort to keep their employees working and their doors open. We estimate more than half of the 177,300 restaurants waiting for an RRF grant will close in the next few months as a result of Congressional inaction.”
Polmar continued: “The IRC was born out of the first and darkest days of the pandemic. Independent restaurants came together to create a strong collective voice. For two years, that voice has spoken forcefully and effectively, advocating for relief. Now, that same voice will fight for the issues critical to independent restaurants and will remain engaged in Washington, DC and local communities. And make no mistake, we will keep fighting for a sustainable future for independent restaurateurs, their employees, and the communities they support. We remain grateful to the elected officials and their staffs who have worked tirelessly for independent restaurants, including Majority Leader Schumer, Sens. Wicker and Cardin, Speaker Pelosi, and Representatives Blumenauer and Fitzpatrick. There would be no Restaurant Revitalization Fund without their efforts and they will continue to be outspoken champions for neighborhood restaurants in Congress.”
At least 90,000 restaurants and bars have closed since the beginning of the pandemic. Almost 300,000 restaurants applied for RFF grants in 2021, but nearly 200,000 restaurants did not receive funding – 52% of which reported that they are on the verge of permanent closure if the RRF is not replenished. Ninety senators voted to create what became the Restaurant Revitalization Fund last February.
Earlier this week, ChowNow, Toast, and over twenty other businesses and trade associations penned an industry letter urging Congress to act quickly so that the tens of thousands of independent restaurants that did not receive relief could keep their doors open. The group of businesses and trade associations warned Congress that as many as four in five restaurants and bars are in danger of closing permanently, threatening the livelihoods of farmers, bakers, and thousands of employees.
A recent IRC survey of nearly 1,000 members of the independent restaurant and bar community in 48 states found that more than half of businesses that did not get RRF grants 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:
86 percent of restaurants reported that a grant would allow them to be able to hire more staff;
77 percent of restaurants reported that a grant would allow them to to pay their rent;
48 percent of restaurants without federal grants reported are in danger of defaulting on a loan compared to 22% of businesses that received RRF.
40 percent of restaurants without federal grants reported are in danger of filing for bankruptcy compared to 25% of businesses that received RRF.
83 percent of restaurants reported that a grant would allow them to increase their wages;
44 percent of restaurants reported that a grant would allow them to expand their menu;
51 percent of restaurants reported that a grant would allow them to expand outdoor dining options; and
91 percent of restaurants reported that a grant would allow them to withstand rising food costs without significantly increasing menu prices.
Full results of the survey can be found here.