December 09, 2020

Association ramps up efforts to get Congress to aid restaurants

In a letter to Congressional leadership, the Association asserted that restaurants are in desperate need of financial assistance as tens of thousands of businesses are having to close.

The restaurant industry needs Congress to prescribe intensive care to its businesses as COVID-19 continues causing grave economic harm that could take months—even years—to overcome, the National Restaurant Association said earlier this week.

To help the industry survive the economic wounds inflicted by the pandemic, the Association fired up efforts to pressure Congress to pass a relief bill that would ease the suffering operators and their employees face daily.

In a letter sent Dec. 7 to House Speaker Nancy Pelosi, Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, and House Minority Leader Kevin McCarthy, the Association asserted that restaurants are under siege and in desperate need of financial assistance as tens of thousands of businesses are shuttering permanently or closing for the long term.

Immediate relief necessary for survival

The Association is asking Congress to provide immediate relief to restaurants so they can remain in business during this most challenging time, mid-winter and infections on the rise. Some states and local governments are reissuing restaurant and bar indoor-dining closures or restrictions.

The much-needed relief would come in the form of a second round of funds from the Paycheck Protection Program (PPP); enhancement of the Employee Retention Tax Credit, which would help restaurants keep their payrolls intact; and ensuring liability-safe protections for restaurants in compliance with federal, state, and local health laws.

Economic free fall

Sean Kennedy, the Association’s executive vice president of Public Affairs, stressed that the industry is in an economic free fall and that as the nation’s second-largest private-sector employer the pain would not only impact the national economy, but also job creation.

“More than 500,000 restaurants of every business type—franchise, chain, and independent—are in an unprecedented economic decline, and for every day that passes without a solution from Congress, thousands more restaurants across the country will close their doors for good,” he told the leaders.

According to the latest Association research, approximately 17% of restaurants—more than 110,000 establishments—have completely closed. Approximately 10,000 restaurants have closed in the last three months alone.

Survey’s statistics tell stark story

The stark statistic is one of several from a new national survey the Association conducted—its fifth since the pandemic began nearly nine months ago.

  • 87% of fullservice restaurants (independent, chain, and franchise) report an average 36% drop in sales revenue. For an industry with an average profit margin of 5%-6%, this is simply unsustainable. 83% of fullservice operators expect sales to be even worse over the next three months.
  • Sales are significantly lower for most independent and franchise owners, but their costs have not fallen proportionately. 59% of operators say their total labor costs (as a percentage of sales) are higher than they were before coronavirus hit.
  • The future looks bleak. 58% of chain and independent fullservice operators expect to continue furloughs and layoffs for at least the next three months.
  • The vast majority of permanently closed restaurants were well-established businesses. Fixtures in their communities, these restaurants had been in business for an average of 16 years; 16% had been open for at least 30 years.
  • Only 48% of these former restaurant owners say it’s likely they’ll stay in the industry in any form in the months or years ahead.

“These results should galvanize Republicans and Democrats to finally reach agreement on a compromise coronavirus relief package for our industry and employees, our suppliers, and the communities that rely on the strength of the industry,” Kennedy stated. “Our nation is losing a generation of industry talent, knowledge and entrepreneurial spirit.”

A plea to act on RESTAURANTS Act

In the letter, Kennedy commended the leadership for highlighting restaurants as an example of businesses needing special attention from Congress. He also told them that the Association’s Blueprint for Restaurant Revival, provides a comprehensive plan that supports both restaurants and the communities they serve.

“The House and Senate each have a version of the RESTAURANTS Act, which was introduced with bipartisan support,” Kennedy said. “While we applaud its sponsors’ efforts, we are able to only endorse the Senate version, which ensures that all restaurant segments that are suffering can receive federal support. We continue to urge immediate passage of this critical bill.”

He added that the Association appreciates the recent efforts of a group of moderate members of the House and Senate to advance “a true compromise between the competing proposals from Democratic and Republican leaders.”

Pundits and lawmakers have indicated that the plan represents a “down payment” for a larger relief package that could happen in the early part of 2021.