Business & Lobbying

Restaurant industry divided over who should get aid

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The restaurant industry is criticizing one sector of it, a coalition of independent restaurant owners, for requesting a specific stabilization fund to provide relief for its workers.

The Independent Restaurant Coalition (IRC) urged Congress in a letter on Wednesday to create a $120 billion stabilization fund to provide relief to half a million restaurants struggling to stay afloat during the coronavirus pandemic.

Conditions of the relief include that funds approved by Congress cannot be granted to any publicly traded restaurant or “large restaurant chain or franchise.”

The franchise industry, represented by the International Franchise Association (IFA), bashed the principal on the basis that the entire restaurant industry is struggling due to the coronavirus pandemic.

“It’s unfortunate these celebrity chefs have decided their employees serving foie gras in New York City are more important to save than someone making ends meet at a franchise in middle America,” Matthew Haller, IFA senior vice president of government relations and public affairs, told The Hill. “Coronavirus has hurt restaurant operations across the board, regardless of the restaurant’s name on the door, and policy proposals should reflect that.”

Celebrity chefs were part of IRC’s roll out, which involved a Zoom townhall promoting the stabilization fund on Wednesday with independent restaurant owners and prominent chefs like José Andrés, Nina Compton, Rosa Garcia, Naomi Pomeroy and Andrew Zimmern.

Sixty percent of all restaurant employees work for non-chain restaurants, and are not part of a franchise, according to data from the National Restaurant Association. 

The National Restaurant Association, which has some overlap of members with IRC, noted that it believes all restaurant employees – regardless of where they – work deserve assistance.

“Right now, eight million restaurant employees are sitting at home with an uncertain future. They work for restaurants large and small. Each of these team members deserves our support and we will fight on behalf of all restaurant workers,” Sean Kennedy, National Restaurant Association executive vice president, told The Hill.

An IRC spokesperson pushed back, acknowledging that all restaurants are hurting and every job should be saved, but added that independent restaurants are in a unique situation.

“Independent restaurants are uniquely hurting. They operate with razor thin profit margins and limited access to capital. Nearly three quarters of restaurants in the country are independently operated, and a survey conducted this month after the first round of [Paycheck Protection Program] PPP relief was distributed found that 80% of those business owners were not certain they would be able to reopen after the crisis,” the spokesperson said. 

IRC touted that the restaurant industry has 11 million employees in its letter to congressional leadership. The National Restaurant Association estimate is 12 million employees, and the group says that its number includes tavern, bar and food service restaurant workers.

The National Restaurant Association has called for changes to the Paycheck Protection Program (PPP) so that restaurants can spend 50 percent or more of the loans on non-payroll expenses, as opposed to the 25 percent mandated currently. 

The group also called for flexible timing to use loans, including extending the eight-week period to use the loan and allowing for restaurants to have at least 90 days from when they fully reopen to rehire employees.

Tags CARES Act Coronavirus coronavirus stimulus National Restaurant Association ppp Restaurants small business loans

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