Insights / COVID-19 Resources / Restaurant Revitalization Fund Replenishment: The Situation Now and What's Predicted in the Coming Weeks
Restaurant Revitalization Fund Replenishment: The Situation Now and What's Predicted in the Coming Weeks

Two years into the pandemic, restaurants nationwide remain in a struggle to survive, with staffing shortages, supply chain disruptions, inflation, new COVID-19 variants, and the ever-evolving rules and restrictions that continue to plague the industry. As a result, we’re seeing operators across the industry begging Congress to take action, fighting for a replenishment of the Restaurant Revitalization Fund (RRF).

First introduced in March of 2021, the RRF was part of the American Rescue Plan stimulus bill, allocating $28.6 billion in federal funds for restaurants as tax-free grants. More than 370,000 restaurants applied. But only 105,000 received funding. By the end of June of 2021, the RRF was depleted, leaving more than two-thirds of applicants without a dime. Many of those are now on the brink of closure. We take a look at the situation now, and what’s predicted moving forward.

A dire situation

“Restaurants aren’t asking for more aid – we’re looking for the aid we never received,” says Matt Kelly, an independent restaurant owner and chef in Durham, North Carolina. 

Last spring, Kelly applied for RRF and received confirmation that three of his restaurants were approved for funding. But as time passed, he began to realize that those confirmation letters were false hope.

“We were waiting and waiting to reopen. And the funding just never showed up,” says Kelly. “We’ve since reopened three out of four restaurants. But I’m losing $37,000 a month. I’ve been very fortunate, I had never had a down month in my entire existence, but now I’m in a total nightmare.”

In a recent survey among 4,200 restaurant operators by the National Restaurant Association, nearly 50% of respondents who didn’t receive an RRF grant said it’s unlikely that they’ll stay in business beyond the pandemic without one. And after two full years of devastating losses, many are drowning in debt.

In a survey of 1,200 operators, the Independent Restaurant Coalition found that 41% of respondents that didn’t receive RRF reported taking out new personal loans to support their businesses since the start of the pandemic. This was only true for 19% of respondents that received a RRF grant. More than 25% of restaurants that didn’t receive an RRF grant reported having to support their business by selling a personal asset.

“People are closing, while getting crushed with debt and lawsuits from landlords – and those landlords need their money, too. We have people’s livelihoods that are probably wrecked beyond repair. Their debt’s not going away,” says Kelly, who plans to keep holding on. “Absolutely I’m nervous about that, too. I’m going into significant debt. It’s brutal.”

Among those who received RRF, most say it was a critical lifeline. The National Restaurant Association estimates that the initial round of RRF grants saved over 900,000 restaurant jobs.

“Just this past month, our restaurants were at 50% of the expected revenue. It’s almost like being back to spring of 2020,” says Ellen Yin, co-founder of High Street Hospitality Group and member of the Independent Restaurant Coalition, noting that Omicron has caused notable impacts. “The amount of cash that's required to survive that kind of decrease in business is substantial. I was lucky enough to be in the group of minority-owned businesses who received RRF, and I wouldn’t have been able to survive without it.”

Potential impact beyond the industry

The National Restaurant Association estimates that a full replenishment of the RRF could save more than 1.6 million restaurant jobs currently at risk. Without it, many say the impacts are likely to stretch far beyond the industry.

“Restaurants contribute so much to the economy,” says Lynn Minges, President and CEO of the North Carolina Restaurant and Lodging Association, noting that in North Carolina alone, restaurant sales were down by five billion during the height of the pandemic. “We’re going to see a loss of jobs, a loss of tax revenue, and then there’s the whole supply chain that’s fueled by restaurants that’s being disrupted – restaurants support a lot of other local businesses, including local farmers, breweries, and wineries.”

The restaurant industry is the nation's second largest private sector employer. The pandemic’s effect on the industry’s labor market has been tragic. The industry still hasn’t recreated the more than 650,000 jobs lost early in the pandemic, a loss 45% more than the next closest industry, says the National Restaurant Association’s executive vice president of public affairs Sean Kennedy.

“The fact that we're able to say confidently that 900,000 jobs have been saved by RRF shows that it's a strong investment in public funds. And the fact that we're able to say that it would save an additional 1.5 million jobs if the RRF is replenished shows that there is not only continued need but why there's an economic incentive, why this is worthy of every member of Congress's attention,” said Kennedy in a recent press conference.

Can a RRF replenishment pass, and when?

While time is quickly running out for many restaurants, most industry leaders and professionals say they remain hopeful that an RRF replenishment will pass. 

“I want to be optimistic because that's the nature of hospitalitarians. But we need to make sure our legislatures know restaurants are suffering and it’s really difficult during this time,” says Yin. “If you received Restaurant Relief funds, it’s really important to let people know how important it was to the survival of your business. And having as many people who can call their local representative is vital, too – whether you’re a customer, a staff member, or a restaurant owner, it’s one of the biggest things you can do.”

In June of 2021, Sen. Kyrsten Sinema (D-Ariz.) introduced bipartisan legislation with Sen. Roger Wicker (R-Miss.) that aims to add $60 billion in additional restaurant aid. Despite drawing 42 co-sponsors of the bill – 36 Democrats and six Republicans – the bill went nowhere. But with Omicron causing restaurants to take another hit, the conversation is making a rebound, with a bipartisan group of senators led by Sen. Ben Cardin (D-Md.), head of the Small Business Committee, and Sen. Roger Wicker (R-Miss.) working to negotiate a new round of funding. The amount of funding is still under discussion.

“We are confident that the Democratic controlled House would support any legislation that comes out of the Senate. So right now from an advocacy perspective, the Senate is ground zero,” said Kennedy in a press conference. “The numbers vary as to how many senators we have right now – it is probably around 57. But it's been stuck. We haven't been able to push through, bring it closer to 60.”

Kennedy points out that one of the discrepancies is where the funding will come from.

“You generally have Democrats that are leaning more towards saying they want to continue spending the funds that have already been appropriated, and would like this to be new spending. Republicans [are] saying let's pump the brakes on new government spending, and reprogram more of what's coming in here,” says Kennedy.

Some say, however, that the bipartisan support is what’s sustaining hope.

“We are optimistic that Congress will find a way to fund it and work together,” says Minges. “At the end of the day, restaurants don’t care where the funding comes from. We just need it to come soon so that we can save restaurants across our country.”

As for when that funding may come, Kennedy is hoping to see it confirmed within the next month.

“The timing of this is critical. Congress is facing a February 18 deadline to pass a government spending bill to continue government operations. President Joe Biden is going to be offering his address to a joint session of Congress, State of the Union, on March 1,” says Kennedy. “At some point in between those dates, Congress is going to pass critical legislation to fund government operations. And what this data supports is that the time for action is now.”

For now, restaurant operators wait in anticipation.

“Is it frustrating beyond words? Yeah. But you have to be positive. That’s all you got – your attitude,” says Kelly.

[Photo by Andrew Seaman on Unsplash]

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