While the coronavirus stimulus package provides money and unemployment benefits for individuals and bailouts for big companies, it is becoming increasingly clear that the CARES Act comes up woefully short for the restaurant industry. More experts are weighing in on the topic, and they all agree that independent restaurants will not be able to reap many benefits from the CARES Act because of the unique challenges of running a hospitality business.
In a letter to Congress minority and majority leaders already signed by thousands of service industry members, the recently formed nationwide Independent Restaurant Coalition (IRC) outlined the major problems with the CARES Act along with requests for the next stimulus bill to address. They include:
- Fixing the flaws within the Paycheck Protection Program (PPP). The PPP allows small business loans to turn into grants if a business hires back the same number of employees two months after the loan originated as it had before pandemic. But right now, no one even knows when restaurants will be allowed to be fully open again, and even then, it’s likely that business won't be enough to sustain that many employees immediately. Restaurants and bars won't be able to take full advantage of the PPP benefits, so the IRC is asking for extended periods of time to meet the requirements, along with more favorable loan terms.
- Creating a restaurant stabilization fund to cover payments to vendors and other costs associated with reopening beyond payroll.
- Creating new tax rebates for independent restaurants based on how many people a restaurant employs and a rent rebate to ensure landlords can be made whole.
- Requiring insurers cover COVID-19 business interruption. Insurance companies have been broadly denying business interruption claims from restaurants and bars, denying that this crisis falls under the categories of natural disaster or civil authority shutdown.
Ultimately, the CARES Act focuses on short term fixes, but it’s increasingly clear that this isn't a short term crisis with an easy solution, especially for restaurants. The IRC is working toward long term relief in an industry where one expert predicts that 40-50% of independent restaurants won't ever reopen.
Milwaukee Restaurateurs Form Coalition
Locally, restaurateurs came together to form their own coalition earlier this week. The Milwaukee Independent Restaurant Coalition was formed by many prominent owners, including Dan Jacobs of DanDan and others, John Revord of Boone & Crockett and others, Pam Ronnei of Strange Town, and Jordan Burich of Voyager.
According to its website, the Coalition “envisions a future in which independently owned restaurants and bars are connected, supportive of one another, and consistently supported by city, state and federal policies that ensure the security and well-being of small businesses and their employees.”
The group’s goals include ensuring relief for the thousands of service industry workers employed here in Milwaukee, providing a forum for independently owned restaurants and bars to collaborate and communicate, better disseminating information about relief to service industry workers, advocating for the establishment of a social and economic safety net for local hospitality businesses, and uniting voices of the people who own and work in independent restaurants and bars to enact legislative change.
If you’re a local, independent restaurant or bar owner or employee, sign up to join the Coalition on their website. They promise to be a good source of information and it will be interesting to see what change they can affect with a united voice.
