Small Restaurants Ask Congress For $120B In Virus Grants

By Joyce Hanson
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Law360 (April 29, 2020, 6:01 PM EDT) -- Hundreds of independent restaurant owners joined together Wednesday to urge Congress to give them $120 billion in grants to keep the industry alive during the COVID-19 pandemic, saying loans offered under the federal government's Paycheck Protection Program aren't helping them.

The owners met online with industry leaders and celebrity chefs such as José Andrés and Naomi Pomeroy to support the newly formed Independent Restaurant Coalition's demand for the $120 billion stabilization fund. Their drive to lobby U.S. lawmakers to help what was a $1 trillion industry of 500,000 small eateries nationwide comes as they now face the potential loss of 11 million jobs and a predicted 80% business closure rate if funds don't come through soon, they said.

Andrew Zimmern, a founding member of the coalition and host of TV shows "What's Eating America" and "Bizarre Foods," said during a Zoom town hall that restaurants need a long-term restructuring plan, not a quick bailout, when they open for business again as governments lift stay-at-home orders around the country.

"We are in urgent need of the stabilization fund that we are asking Congress for. We saw a 60% job loss rate last month in the food and beverage industry," Zimmern said. "The PPP is not enough to sustain us. An eight-week Band-Aid isn't enough to keep over 11 million people employed in our industry."

Congress last week authorized an additional $310 billion for Paycheck Protection Program loans, which are backed by the Small Business Administration, on top of the nearly $350 billion budgeted in March. Despite reports of glitches and system overload on Monday, the SBA reported that it had approved nearly $52.2 billion for over 475,000 loans as of noon Tuesday. The program guarantees private two-year loans of up to $10 million at a 1% interest rate to cover payroll costs, health care benefits, mortgage interest payments, rent and more.

But owners of small restaurants say the PPP funds are of little help to them because they need outright grant money immediately. The Independent Restaurant Coalition recently conducted a survey with the James Beard Foundation and found that after the first round of PPP was distributed to businesses around the country, 80% of independent restaurant owners still weren't sure they would be able to reopen after the crisis. The owners reported that the accommodations and food services industry has received only 9% of PPP loan money.

Nina Compton, owner of the Compère Lapin and Bywater Bistro restaurants in Louisiana, said during the town hall that she had to close one of her restaurants on March 15 and realized after running the numbers that PPP loan funds wouldn't help her reopen.

"My husband looked into PPP and it doesn't work for us," Compton said, noting that safe social distancing requirements will reduce her 70-table eatery to 35 tables and cause a 50% drop in revenue. "How are we going to pay back PPP loans? We're already feeling the effect after six weeks. What about a year from now?"

Similarly, Naomi Pomeroy, owner of Beast restaurant in Portland, Oregon, and a founding member of the coalition, said she seriously doubts she would be able to open her now-shuttered business even if she received a PPP loan.

"We're asking Congress for a $120 billion stabilization fund. A fund is a small price to pay," Pomeroy said. "I closed on March 15 and furloughed all my employees. I'm also out of work right now after 12 years of building Beast. The PPP is, like Andrew says, a Band-Aid. Restaurants are already low-margin businesses, with 90 cents on the dollar going back into the operation."

According to a letter the coalition sent Wednesday to U.S. House and Senate leaders, the proposed $120 billion stabilization fund would fix the shortcomings of the PPP. The letter said that struggling restaurants are the No. 1 contributor to America's record unemployment numbers, but that the duration of state and municipal closures has prevented the PPP from throwing them a lifeline due to the program's loan requirements.

"We need Congress to act or we will not be able to survive," the letter said. "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."

The coalition said stabilization grants should go specifically to small restaurant owners and women- and minority-owned businesses, and exclude publicly traded restaurant companies and large restaurant chains and franchises with more than 20 restaurant entities under the same name.

Andrés, a celebrity chef who settled litigation in 2017 with the Trump Organization over the president's allegedly disparaging remarks about immigrants, said during the town hall that the coalition launched only weeks ago and already has 51,000 members, many of whom are cooking meals for seniors and health care workers affected by the pandemic as restaurants wait to reopen.

"We are the voice to Congress for all these small operators who don't have access to lawmakers in Washington," Andres said, noting that these business owners have so far received no direct aid from Congress during the COVID-19 crisis. "The way to show respect for all of us in the restaurant industry is by supporting the right bill."

--Additional reporting by Andrew Kragie. Editing by Haylee Pearl.

For a reprint of this article, please contact reprints@law360.com.

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