Sondra Bernstein, owner of the Girl and the Fig, a restaurant in Sonoma, Calif., told the House Ways and Means Subcommittee on Select Revenue Measures that she closed her restaurant and laid off 170 workers when the novel coronavirus pandemic first hit in March.
Using funds from the Paycheck Protection Program in the Coronavirus Aid, Relief and Economic Security Act , which was enacted that month, Bernstein retained about 80 workers and focused on outdoor dining to stay afloat. But being "mean and lean" will keep the doors open for only so long, she told lawmakers.
"We've since used our money. The money is gone," she said. "We need help, like, yesterday. Once winter happens and we can't serve outside, we're going to have to lay off another 60 people."
Buddy Dyer, the mayor of Orlando, Florida, said restaurant owners in his community are facing the same plight. He asked lawmakers to make the PPP more flexible, expand the employee retention tax credit program and provide tax credits to offset the cost of personal protective equipment used to safeguard the health of employees and customers.
Melvin Rodrigue, who chairs the National Restaurant Association's board of directors, said that restaurants facing lower revenue would benefit from a refundable tax credit for investments in equipment and facility upgrades.
Congress should also pass legislation clarifying that business expenses paid with PPP can be deducted from federal taxes, said Rodrigue, who is president of Galatoire's Restaurant in New Orleans.
"Regardless of size, virtually every restaurant operates on single-digit margins," he said. "Fixing this looming tax liability will help all restaurants that have relied on PPP as a lifeline."
He also issued a warning for lawmakers if they fail to act.
"If Congress leaves town without approving a second round of PPP, I promise you that more restaurants will close for good before you return in November," he said.
House Democrats are expected to vote on a new $2.2 trillion virus relief package next week even as negotiations with Treasury Secretary Steven Mnuchin and White House officials have failed to reach an agreement that can pass muster with Senate Republicans. The Health and Economic Recovery Omnibus Emergency Solutions Act, a $3 trillion virus relief bill, passed the House in May, but Senate GOP leaders have refused to consider the measure.
Rep. Mike Thompson, D-Calif., who chairs the subcommittee, noted that the pandemic's fatal impact on restaurants is reverberating throughout the economy.
"So far, COVID has claimed over 30,000 restaurants," he said, referring to COVID-19, the respiratory disease caused by the virus. "It's leveled such a direct hit that one in four unemployed Americans today are restaurant workers."
Saru Jayaraman, director of the Food Labor Research Center at the University of California, Berkeley, said Congress needs to provide tax relief to restaurant owners who have decided to pay a full minimum wage, with tips on top, as their workers are bearing the brunt of the pandemic.
Higher wages, she said, would benefit the roughly 45% of restaurant workers who are people of color and aren't hired at the same establishments or tipped at the same rates as their white counterparts, she said. Nationwide, tipped restaurant workers who are white men earn fully $4.79 more per hour than their Black female counterparts, Jayaraman said.
"The pandemic and the economic aftermath have only sharpened the existing inequities and injustices in the restaurant industry even further," she told lawmakers. "Now, as restaurants have reopened, tipped workers are being asked to risk exposure to the virus by returning to work for a subminimum wage when reports suggest that tips are down anywhere from 50 to 75%."
--Editing by Robert Rudinger.
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