Restaurants may be in for another stomach-churning dip on their pandemic roller-coaster ride, but some have not been buckled in as snugly as their competitors.
About 101,000 restaurants — including chains and franchises — were recently handed a lifeline from the federal government in the form of grants from a $28.6 billion pot of relief funds known as the Restaurant Revitalization Fund, or RRF. But 177,000 restaurant, bar and catering-business owners, many of whom applied for and were denied grants, are holding out hope that help is on the way for them as well.
As the COVID-19 delta variant spreads, hospitals fill up again and companies decide to keep their employees working from home, restaurateurs who just barely exhaled as business picked back up in the past few months are worried all over again.
The restaurant grants distributed so far “created two categories of people — the haves and have nots,” said Ken Aretsky, who with his wife Diana owns Aretsky’s Patroon in New York City. “We have competition literally a few feet away who got $5 million. How are we going to compete with them, especially now that there’s this variant? It’s very unnerving.”
The couple’s application, submitted 15 minutes after the portal opened up, never got past the “pending” stage, Diana Aretsky said. The couple is dismayed that franchisees of big, and in some cases public, companies were approved for grants while their single-unit, family-run business of 25 years was not.
“It seems to us there was a level playing field last year that has now become non-level,” Diana Aretsky added.
Adding to their dismay: In New York, recipients of the grants include franchisees of companies like Dunkin Donuts, Panera Bread and Hilton Garden Inn.
Each of those franchisees received millions of dollars each, and were among the 64 businesses in New York that received $5 million to $10 million, according to data released by the Small Business Administration.
Other businesses’ grants were rescinded due to lawsuits that alleged the SBA was being discriminatory because it prioritized women, veterans and minorities for the grants for the first 21 days, as ordered by Congress — which was trying to ensure help for historically underserved groups.
Alexandra Morris is owner of a catering and events company in New York whose application was approved in May. She was informed she would receive a grant in five to 10 business days. But in June, the SBA sent her a letter saying her grant had been rescinded.
“Maybe it was discriminatory to give [preference to certain groups originally],” Morris said. “But now this is discriminatory.”
She said she could work for somebody else and close her business of 20 years, but she employs 20 people and doesn’t want to let her vendors down.
“I made it through 2008, and through 9/11, but somehow this is different,” Morris said, adding that her payroll protection program, or PPP, funds ran out in August and that coronavirus variants are worrying her. “I don’t know how many other variants are behind the delta. If there are more strains, I have no idea what to do.”
Some lawmakers are trying to replenish the funds. There are two proposals in the U.S. House of Representatives, including one from U.S. Rep. Earl Blumenauer, D-Oregon, who said through a spokeswoman that he is trying to push for action as soon as possible.
“Hundreds of thousands of local restaurants still desperately need help to keep their doors open,” Blumenauer said in a statement to MarketWatch. “I’ve introduced legislation to add $60 billion to the Restaurant Revitalization Fund, enough to cover all outstanding applicants. We’ve already secured more than 200 bipartisan cosponsors, but time is ticking. We need to act now before it’s too late.”
U.S. Rep. Blaine Luetkemeyer, R-Missouri, is proposing the Entrepreneurs Need Timely Replenishment (for) Eating Establishments Act, or the ENTRÉE Act. He sent the following statement to MarketWatch: “The ENTRÉE Act uses unspent allocated dollars rather than continuing to recklessly print more money to get the job done. This is a commonsense solution that all Members should swiftly support and pass on behalf of American restaurant owners everywhere.”
In the Senate, lawmakers on both sides of the aisle tried in early August to add $48 billion in emergency funding to the RRF, but Sen. Rand Paul, R-Kentucky, objected to the unanimous consent motion and blocked passage.
If the funds are replenished, business owners are wondering how the grants would be distributed. It is unclear whether the pending applications would still be valid. The SBA has not returned a request for comment.
Many restaurants are definitely hoping for another chance, especially as they have seen renewed hesitancy among their patrons and business has slowed down again. A recent poll of more than 5,000 small-business owners by Alignable, an online referral network for small businesses, found that 45% of U.S. restaurant owners couldn’t pay their rent in August, an increase of 5% from July.
Danielle Golik, office manager for Mayes Oyster House in San Francisco, said the restaurant prepared its grant application for months.
“We had a CPA, lawyer, everybody prepped us for it,” she said, adding that the SBA emailed them once to ask for more information. Then they never heard anything again despite calling “every single day for five weeks.” Then they found out through the news that the portal was closed and the money had run out.
One of the things Golik is most frustrated about is that she says she knows other businesses that received millions of dollars in grants and aren’t going to reopen.
In California, 17 businesses received grants of $10 million, almost 60 received $5 million to under $10 million, and 20 businesses received grants of $2,000 or less, according to the data released by the SBA. Among those that received $10 million were bowling and dining chain Lucky Strike Entertainment and Alexander’s Steakhouse, two well-known businesses with multiple locations.
That’s frustrating to Glenn Kaplan, owner of Make Westing, a bar with about 30 employees in Oakland, Calif., whose grant application never made it past the pending stage. He says small businesses don’t have the lobbying power of big industries that get bailed out by the government, like airlines.
“Our revenue was climbing back to near normal about six or seven weeks ago, and now it’s tanked because of the [COVID] surge,” Kaplan said. “It’s impossible to run a small business in this climate. We need help.”
So does Mayes Oyster House, which Golik says is down to 15 employees from 25 employees before the pandemic and is doing everything it can to stay afloat.
“What happens to the little guy?” she asked. “Sometimes it feels like they just flipped a coin.”