25% of restaurant PPP went to 1% of operators, new report finds

A version of this article appeared on 12/15/20 in Eat.news, a free weekly newsletter from Back of House with news, resources, and more curated by our team. It goes out to thousands of restaurant operators each Tuesday morning. Subscribe today to get our coverage of the restaurant technology space directly to your inbox!


The Industry Appetizer

A quick snack on some headlines that caught our editors' eyes this week.

  • $1B in PPP went to fast-food "vultures": By sorting through loan disclosure data, The Counter discovered that about a quarter of all PPP dollars issued to the restaurant sector went to just 1% of restaurant operators—mostly fast-food franchises run by third-party hospitality firms. It's just one complaint in a scathing new op-ed at Business Insider that lambasted chains as "vultures feasting on the carcasses of independent restaurants." Though to be fair, that piece ultimately laid blame at the government's feet. (The Counter / Business Insider)

  • Tipping point on autograt: The U.S. 4th Circuit Court of Appeals ruled last week in a case between a North Carolina restaurant and its employees that automatic gratuities were not "tips" as defined by the Fair Labor Standards Act. Rather, those funds are to be classified as "commissions." Of course, the elephant (er, donkey?) in the room remains—President-elect Joe Biden has signaled his support for a $15 minimum wage and an end to the tip credit, both of which would remake the compensation landscape much more dramatically. (Restaurant Dive / Restaurant Business)

  • NYC, Mass restrict dining: NY Governor Andrew Cuomo ordered restaurants in New York City to shut down indoor dining indefinitely as the city's hospitalization rate broke 5,000 for the first time in nine months. The regulation officially went into effect Monday. If hospitalizations number continue to climb, the governor warned of "red zone" closures to come. Meanwhile, Massachusetts just announced new regs of its own, including requiring masks at all times within restaurants (except when eating or drinking) as well as putting a cap on both the number of diners per/ table (6 people max) and time spent at the table (90 minutes max). (Nation's Restaurant News / Restaurant Dive)

Tech Talk

The restaurant software, hardware, and solutions stories we've been chewing on lately.

  • Grubhub drops commission-fees: The 3PD platform will wipe marketing fees in favor of a new tool will drive traffic to stores by providing a direct-order link that can be customized for websites, QR codes, as well as social media and email marketing campaigns. Processing and delivery fees, however, remain intact. (Eater)

  • Shares up, "Squares" up, the DoorDash story: Speaking of delivery apps, after just one day on the market, DoorDash's stock skyrocketed 86%, and now holds a value of $60.2 billion. Wowza. Square, the payment processor, announced plans to integrate its software with DoorDash Drive, which it says will allow restaurants to fulfill orders made directly via Square on their own website. So that's nice. (CNBC / Hospitality Tech)

  • "Apps are helping gut the restaurant industry": Was the title of another scathing op-ed, this one in the New York Times, highlighting an emergent narrative in the restaurant business since the pandemic began. Roughly: that (some of) the platforms and technologies built to "save" the industry are actually profiteering off its downfall. The column cites DoorDash in particular for implementing $1.50 fees in some markets to offset fee caps imposed by local governments. (New York Times / Crain's Chicago)

Back of House Banter

>>>Read our interview with Ian Christopher of Galley Solutions, a BOH Verified Vendor.

Pantry Staples

Resources for restaurant operators, created and curated by our team.

  • Cloud kitchen standouts: With many restaurants striving to transform their business into a digital/delivery-only machine, there has been a boom in cloud/ghost kitchen companies to help them do just that (for a price, of course.) We rounded up the seven best ones in the game. (Back of House)

  • A tale of two houses: A restaurant has two major operating areas: back of house and front of house. So what are the actual differences between the two? We break it down for you. (Back of House)

  • Learning the lingo: Speaking of restaurant jargon, we put together a comprehensive glossary that contains all the lingo and restaurant slang commonly used in the hospitality business. (Back of House)

[Photo: Burst via Pexels]