Although restaurants appreciate the assistance of the federal government in the form of loans and grants from the CARES Act, it has not been enough. Employees without work are scrambling to cover basic living expenses. Bankruptcies are rising. As of today, there are over 11,000 deaths and 400,000 confirmed cases of COVID-19 within the U.S., and restaurant workers are among the hardest hit.
“This is an unprecedented situation,” said Tom Colicchio of Crafted Hospitality and founder of the Independent Restaurant Coalition during a federal conference call. “We need a huge federal response to support workers, restaurant owners, and all of the ancillary businesses that we connect to.” Colicchio said he founded his coalition to advocate for the needs of small restaurateurs. His fellow members include former White House chef Sam Kass and Alinea co-owner Nick Kokonas.
Restaurants employ roughly 15 million workers nationwide, contributing $1 trillion to the economy. Many of the country’s 500,000 independent restaurants remain open specifically to support doctors, nurses, and support personnel at hospitals.
“I’ve been in the industry professionally for 30 years,” said Anthony Anton, President of the Washington Hospitality Association. “There is nothing that remotely touches what is going on. There is no comparison.” Anton summed up the dire financial situation of many restaurant owners with a reminder of the slim profits generated by owners. “Restaurants live on a 4% margin when times are great. Times are not great.”
Initiatives like the U.S. Small Business Administration’s Paycheck Protection Program (PPP) are a start for restaurateurs seeking cash assistance for payroll and rent expenses. Applications opened April 3. Although some banks like Wells Fargo have closed applications due to overwhelming response, many other banks are still accepting applications.
This week, the Independent Restaurant Coalition’s 9,000 members mailed letters to members of Congress pleading four concessions:
Many other restaurant coalitions are forming, as well. Celebrity chefs like Wolfgang Puck, Jean-Georges Vongerichten, and Daniel Boulud have joined trade lobby groups for federal grants. The Small Business Majority, led by John Arensmeyer, is lobbying for $250 billion in direct grants, mostly for independent restaurants.
A major challenge for restaurants has been insurance claim denials for COVID-19 related losses. Insurance companies are denying claims primarily for two reasons: no physical loss or damage if a restaurant is mandated to close during lockdown procedures, or Act of God exemptions due to the global pandemic announcement by the World Health Organization.
“Lawsuits will take forever to make their way through the courts, and we don’t have time to wait on this,” said a restaurant owner during a press conference with the White House. “Anything that will take that amount of time, we don’t have that luxury right now.” Many insurance policies require a property to have suffered physical damage, and some contain explicit exclusions for losses tied to pandemics.
There will be many small and medium restaurants that do not survive coronavirus’ economic complications. The U.S. Department of Labor reported that two-thirds of the jobs lost in March 2020 came from the hospitality sector, half of which were food and beverage jobs. Interested readers can access the National Restaurant Association’s letter to Congress here, and the Independent Restaurant Coalition’s letter here.