Restaurant Revitalization Fund opens May 3. Is it the lifeline Ohio eateries need?
Another round of help is coming for Ohio’s beleaguered restaurants in the form of the Restaurant Revitalization Fund, which industry experts say is sorely needed despite an improving economy and widespread availability of coronavirus vaccinations.
Congress created the more than $28 billion fund through the COVID relief package signed into law earlier this spring. The Small Business Administration is distributing the funds to eateries across the nation in the form of grants. Applications open May 3.
But restaurateurs have concerns about the fund’s rollout. The pot of money set aside for them might be too small, and potential applicants worry the technical difficulties that mired previous rounds of aid will return.
Even as unemployment falls and customers return, restaurant owners said they bear the scars of the pandemic economy. Landlords and utility companies offered breaks on payments, and those bills are slowly coming due. Restaurant workers, still wary of passing coronavirus on to at-risk relatives and seeking better-paying work elsewhere, are reluctant to return to the industry.
Some businesses took out loans to make it through the worst of the COVID-induced downturn, and now find themselves raising wages to attract workers in a difficult job market, tightening already razor-thin profit margins.
The downturn hit the service industry especially hard, shuttering dozens of bars and restaurants throughout central Ohio and cutting employment in the state’s hospitality sector in half at the height of the pandemic. Roughly 20% of restaurants nationwide closed their doors, according to the National Restaurant Association. The industry has yet to fully recover, and many restaurant owners say they need a stopgap measure to carry them through the pandemic.
“Restaurants were the first ones to get hit, and we’ll probably be one of the last ones out of this,” said Joe Galati, who owns Comune, a vegan and vegetarian restaurant on the South Side.
Comune turned to carryout at the height of the pandemic, employing creative strategies like dinner kits to entice customers to continue patronizing the plant-focused eatery.
While those tactics kept Comune afloat during the worst of the pandemic, “we’re still nowhere close to where the restaurant was in its prime prior to COVID,” Galati said.
Details about the fund
An online portal will be available to restaurant owners at some point in the coming weeks, the SBA said. Here is the information it’s made available so far.
The amount of money available to an individual establishment depends on, among other things, the depth of its losses and how much money it received through previous rounds of aid.
For the first 21 days applications are open, grant awards will focus on minority owners and the smallest restaurants. Previous rounds of aid flowed disproportionately to white-owned businesses and companies on the larger end of the small business spectrum, a group that already has more resources and closer relationships with the banks issuing Paycheck Protection Program loans.
Matt Rootes, who co-owns Pat and Gracies in Downtown and Clintonville and Matt and Tony’s Wood Fired Grill in the Brewery District, is optimistic he’ll be approved for a grant big enough to make up for 2020’s lost sales.
“That would be a godsend,” he said.
Restaurants used PPP money to pay employees and keep current on their bills, he said. Another grant, Rootes said, should give his businesses a needed boost to power through the coronavirus pandemic.
Is the money needed?
Even with the economy improving and the end of the pandemic in sight, uncertainty hangs over a still-recovering industry.
While profits are up and customers are coming back, not every establishment is experiencing a renaissance. Around half of Ohio restaurants said their sales are still down compared with the spring of 2019, according to an Ohio Restaurant Association survey released earlier this month.
And news of deadlier and more infectious COVID-19 variants spreading in other countries, along with widespread vaccine hesitancy in the United States, keeps restaurateurs awake at night.
Those concerns make Bob Szuter, co-founder of the Wolf’s Ridge Brewing in Downtown, wonder when conditions will return to normal.
“We’re still getting benefit from the Paycheck Protection Program,” he said. “So once that goes away, are things still going to be like they are right now?”
Prior to the pandemic, Ron Jordan, owner of Hen Quarter in Dublin’s Bridge Park development, paid his dishwashers around $12 per hour. To attract workers from a reluctant workforce, he raised that salary to $16 an hour, squeezing his profits and potentially forcing him to cut back on other expenses.
“Right now, the biggest problem is employment,” he said. “It has really put us in a crisis for hiring, and what we’ve had to do now is increase wages across the board.”
Jordan stressed that the job applicant shortage may remain a problem as restaurant workers move on to other, higher-paying industries, and grants to restaurants won’t solve that problem.
“What I would have liked to have seen is a way to incentivize folks to go back to work,” he said.
Propping up restaurants has a ripple effect benefiting other industries. While Watershed Distillery doesn’t qualify for the grants, co-founder and CEO Greg Lehman is cheering the program for assisting the eateries that buy his liquor.
“Ultimately, we want them to be in a great position so they can stay in business,” he said. “That helps us and it helps the community.”
Applications opening
The SBA plans to use a seven-day pilot period to test the application system to make sure it can handle a deluge of applicants.
But entrepreneurs like Szuter still have flashbacks to previous applications, when glitches and a flood of applicants stymied the process.
“My biggest concern is (strong demand) overwhelming their system and not being able to apply,” he said.
Technical difficulties marred the first round of Paycheck Protection Program applications, although by all accounts, the second round ran much more smoothly. When the Ohio Development Services Agency set up a portal through which small businesses could apply for grants, the overwhelming demand led to hours of delays.
An SBA representative did not respond to multiple messages seeking comment, but Ohio Restaurant Association spokesperson Homa Moheimani said, “I’m sure the SBA is doing everything they can for the volume of applications.”
Szuter also worries the fund won’t have enough money for everyone who applies. An early version of the relief packaged included more than $100 billion for restaurants. The amount was eventually negotiated down to just over $28 billion.
“That’s likely a sign it’s underfunded,” he said.
“There are already discussions regarding future funding that would be allotted for the restaurant industry. It is very likely that not everyone will get money, even if they’re eligible,” Moheimani said. “We believe that if Congress sees that there is high demand, there could be another round of funding.”
The restaurant association continues to advocate for more restaurant-focused help, she said.
@PatrickACooley
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