National Restaurant Association Says 500,000 Restaurants Are In Free Fall

National Restaurant Association Says 500,000 Restaurants Are In Free Fall

National Restaurant Association Says 500,000 Restaurants Are In Free Fall Photo by Andrea Piacquadio from Pexels

Uber Eats, Door Dash, and other food delivery services may have helped some restaurants survive during the covid-19 pandemic but with restrictions still in place in many U.S. cities, thousands of restaurants are shutting their doors.

It’s already a tough industry, with 60 percent of restaurants failing their first year and 80 percent going out of business within five years, according to industry trade publication FSR.

The new stimulus package offers some relief for restaurants, but they’re saying it’s not enough.

For small businesses in need, the bill sets aside $284 billion to reopen the Paycheck Protection Program (PPP) for forgivable loans. Restaurants are getting special provisions.

“Most borrowers can receive up to 2.5 times their average monthly payroll cost one year prior to the loan. But those in the restaurant industry can get up to 3.5 times their average payroll cost. The maximum amount per ‘second draw’ loan is $2 million (as opposed to the first round’s maximum of $10 million), and like the first round, 60 percent must be spent on payroll and alike expenses to qualify for forgiveness,” CNBC reported.

“We need a bill for stimulus that will help not only pay salaries, but pay our vendors and rent,” Luca Di Pietro, owner of the Tarallucci e Vino restaurant group, told CNBC. The restaurant has closed three of its five locations and let go 40 employees.

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As of December, 110,000 restaurants that have closed since the pandemic began in New York City, a city known for its world-class dining, Wine Spectator reported.

Restaurants are in “free fall,” to the National Restaurant Association, which sent a letter sent to Congress prior to the stimulus agreement. About 10,000 restaurants around the country have closed in just the last three months, Sarasota Magazine reported.

“What these findings make clear is that more than 500,000 restaurants of every business type—franchise, chain, and independent—are in an unprecedented economic decline,” wrote Sean Kennedy, the executive vice president for public affairs for the Restaurant Association. “And for every month that passes without a solution from Congress, thousands more restaurants across the country will close their doors for good.”

About 17 percent of restaurants—more than 110,000 —have completely closed. 

The restaurant industry has seen its revenue sink by $130 billion compared with 2019. 

House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles E. Schumer (D-N.Y.) issued a joint statement highlighting key provisions of the $900 billion coronavirus relief package, including important modifications to the PPP that they said would “better assist independent restaurants.”

There was a more comprehensive and restaurant-specific Restaurants Act that got ignored, The Washington Post reported.

“Make no mistake, (the) modest changes we secured to PPP will help, but they won’t remedy enough deficiencies in the program to meet the desperate needs facing local restaurants,” Rep. Earl Blumenauer (D-Oregon) said in a statement to The Post. Blumenauer introduced the Restaurant Act in June, which would have provided $120 billion in relief to independent restaurants.

Blumenauer wrote, “These half a million restaurants, diners, coffee shops, and bars employ 11 million Americans and are the cornerstones of communities large and small. It is as irresponsible as it is heartless that Republicans rejected this targeted aid. We need to immediately take this up with the new Congress and the Biden administration to deal with the serious shortcomings of this bill and save our restaurants.”

The Independent Restaurant Coalition, which was created in 2020 to lobby for the dining community, also complained about the new stimulus bill. The coalition released a statement saying, “This bill falls woefully short of giving 11 million independent restaurant workers the job security they need before the holidays.”

It continued, “Congress understands that dining restrictions, a surging pandemic and winter weather are a perfect storm for a restaurant employment crisis that is disproportionately impacting single mothers, people of color, immigrants, the formerly incarcerated and young people. When we’ve been asked by the government to change the way we do business, our elected officials need to help us stay in business. It’s clear Congress wants to help us and we gave them a plan to do that. This legislation isn’t it.”

For many restaurants, alcohol represents a large percentage of their daily take. Some politicians are looking at ways to boost business for restaurants that are still operating by selling more alcohol, which usually has to be consumed inside the establishment. Two Florida state senators introduced bills to make a temporary order a permanent law allowing alcohol in a sealed container to be purchased with food from restaurants, the Orlando Sentinel reported.