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Two weeks ago I wrote about how the Paycheck Protection Program (PPP) in the CARES Act is woefully ill equipped to provide real bailout assistance to small, independent restaurants. Since then, it's become more clear that the PPP is sometimes padding the pockets of large corporations, which made procuring a loan through the program practically impossible even before its money ran out after only two weeks.
Just 9 percent of the total PPP loans have gone to the hospitality sector, and it's been revealed that much of those loans have gone to huge, and in some cases publicly traded, chains. Ruth’s Chris, a steakhouse chain based in Florida, received $20 million, while Potbelly, the Chicago-based sandwich chain, got $10 million. Shake Shack was approved for $10 million, despite making a $20 million net profit in 2019.
All of these huge companies exploited a loophole in the PPP which allows for businesses with fewer than 500 employees at each location to be eligible. They also benefited from having legal and financial teams at the ready to navigate the application process and received priority over small businesses from the banks approving applications. (There’s a class action lawsuit on the books right now against banks that prioritized big business PPP loans over small.)
What About Milwaukee?
Here in Milwaukee, Dan Jacobs, co-owner of DanDan and Fauntleroy, told the Journal Sentinel that they applied for a PPP loan for both businesses. One was rejected because of an error, and the other did not even make it to the bank before the PPP program was out of funds.
There is some hope that more independent restaurants like Fauntleroy will get funding, though. Shake Shack, after swift outrage from the public and hospitality industry, has decided to return their PPP loan to the government and has already gotten funding elsewhere, something that's easy for massive corporations. That puts pressure on other chains to do the same.
Congress’ new aid bill would add billions more funding to the PPP, with some of the funds reserved for small- and medium-sized community lenders and banks. That would hopefully make it easier for independent restaurants to get funding, but with no other earmarks—and all the original problems with the PPP still in place—it remains to be seen whether restaurants will actually get the help they desperately need or not.
Restaurant Announces New Charitable Partnership
There was also some great news this week: The Tandem on Milwaukee’s North Side announced it has been chosen as a partner restaurant with World Central Kitchen. The non-profit organization was founded by José Andrés and feeds millions of people each year in the wake of natural disasters worldwide. It's partnering with select restaurants to feed people who are most affected by the pandemic.
The Tandem’s owner, Caitlin Cullen, has been coordinating an effort among many area restaurants to provide free meals to anyone who needs them since March 18. With the new World Central Kitchen partnership, The Tandem will be able to distribute more funds to area restaurants that are providing meals and continue to pay its own staff for production and distribution. This is a big boost to a philanthropic restaurant that's providing meals to an area that's hardest hit by both the virus and economic downturn.
