Struggling US restaurant owners pin their hopes on a new recovery fund
The U.S. federal Restaurant Revitalization Fund launched last week, aiming to offer direct aid to struggling restaurant owners and caterers — who were among the hardest hit by pandemic restrictions on gatherings, reports CNN.
The White House said that more than 180,000 applications were submitted in the first few days after the $28.6 billion program’s May 3 launch.
And on Monday, the Small Business Administration said it had already approved more than 16,000 applicants. Those applicants were drawn from a pool of women-owned, vet-owned and minority-owned restaurants, groups which are being given priority in the program’s first three weeks.
Here are a few owners who’ve applied and how they’re hoping the grant might help.
Scrambling to make rent
Among the lucky ones to get approval so quickly is Leonardo Williams, who co-owns the Zimbabwean restaurant Zweli’s in Durham, North Carolina, with his wife, Zwelibanzi, also known as Chef Zwe.
The two federal Paycheck Protection Program loans they received helped them stay afloat for awhile but just barely. Williams is hopeful the grant money — which offers them more flexibility to spend as they see fit — will help get their business back on track as the economy reopens.
Started in 2018, Zweli’s has been featured on “best of” lists in the Durham area. But the pandemic threatened to shut them down for good, not only because they lost all of their catering orders and sit-down customers for months, but also because of their high rent.
Typically they owe $6,800 a month for their restaurant space, Williams said. But now they’re paying over $8,000 to compensate for the several months during the pandemic when the landlord agreed to accept half the normal rent without evicting them.
The RRF grant they’ll receive — which the SBA calculated at $118,000 based on the difference between their 2019 and 2020 revenue, minus the $40,000 they received in PPP loans — will initially be used to catch up on back rent, Williams said.
But they will also put it toward boosting efforts to hire and train more staff, who have been hard to come by lately.
“Literally everyone is hiring,” Williams said.
In addition, they plan to invest more in equipment to improve air quality in their restaurant and expand their outdoor dining options.
“We’re still not out of this thing,” Williams said of the pandemic. Beyond takeout orders, he added, “we’re getting a lot of reservations for outdoor dining.”
Hoping to keep paying a living wage
For Amanda “AJ” Dixon, who owns the casual fine dining restaurant Lazy Susan MKE in Milwaukee, the RRF grant will make a big difference in her goal of paying her staff a living wage.
Dixon received two PPP loans totaling $88,000 as well as a $92,000 Economic Injury Disaster Loan, which has helped her restaurant stay afloat over the past year with a skeleton crew of seven, down from 12 staffers before the pandemic.
If her RRF application is approved, Dixon plans to use the $33,000 grant she would get to help with payroll from June through December, and she also may use some of it to cover the $10,000 she spent to build out a wooden patio over a street parking spot to accommodate outdoor diners.
For most of the pandemic, Lazy Susan MKE only provided a daily four-course dinner for takeout. But the plan is to open to in-person dining in June.
Dixon’s restaurant normally seats 45 people indoors, but under current pandemic restrictions in Milwaukee she will only be able to seat 22, so the outdoor dining space will help make up for some of the lost indoor seats.
While the pandemic was especially tough on Dixon’s psyche given that her 7-year-old restaurant was on track to have its best year in 2020, she said the experience has made her a better business owner and employer.
“We’ve lost money every month in the pandemic because we haven’t been bringing in enough to make payroll and because we opt to pay a living wage and split the tips so everyone was making $20 an hour during the pandemic,” she said. “We’re sticking to that.”
Noting the shortage of restaurant workers to hire in the wake of the pandemic, “I want to attract and retain qualified people who want to stay in the industry,” Dixon said.
Trying to attract new workers
La Posta de Mesilla, a well-known Mexican restaurant in Mesilla, New Mexico, has been family owned since 1939.
Curbside service has been a constant at La Posta throughout the pandemic. But in terms of seating capacity — normally the space can seat 450 — the restaurant has been operating on a “yo-yo” schedule due to frequently changing pandemic restrictions, said Tom Hutchinson, who took over the restaurant with his wife, Jerean, in 1996.
In just the past three months, Hutchinson said, La Posta has gone from offering just outdoor seating at 25% capacity; to 50% outdoor with 25% indoor capacity; then back to strictly outdoor seating at 25%; then 50% indoor and 75% outdoor capacity; to now 75% indoor and outdoor capacity.
The pandemic cut the restaurant’s revenue roughly in half, Hutchinson said. The two PPP loans he and his wife got helped them cover labor costs in the first several months of the crisis. But now the biggest challenge they face is hiring, having laid off up to 90 of their 120 employees as the pandemic wore on.
Should their RRF grant application be approved, Hutchinson said the couple plans to use the money to get more aggressive in what they pay. “The majority of it will go to labor,” he said.
One idea is to offer new hires a minimum of $200 as a signing bonus if they stay for 90 days. Another is to partner with a nearby hotel and restaurant school to attract candidates with the promise of tuition assistance on top of their regular pay.
Jerean Hutchinson, whose great aunt started La Posta, noted just how strange it has been trying to stem steep revenue losses that occurred through no fault of their own.
“This is a tough thing. We’ve worked really hard in this business for 25 years. Never in our wildest dreams would we expect to receive government money,” she said. “But we appreciate it.”
By Jeanne Sahadi edition.cnn.com