Story at a glance
- In the last week, more than 6.6 million Americans filed for unemployment bringing the total people out of work to over 16.8 million.
- The small business allotment within the $2 trillion dollar CARES Act is being criticized by independent restaurant owners for not providing the necessary aid for them to stay in business.
- The Independent Restaurant Coalition was formed by chefs and independent restaurant owners in order to secure protections for the nation’s independent restaurants and their workers who have been affected by the coronavirus pandemic.
More than a week ago a massive $2 trillion dollar aid package was passed by the Senate — only the third of its kind in the history of the country. Senate Majority Leader Mitch McConnell (R-Ky.) described the legislation, also known as the CARES Act, as necessary emergency relief.
"This isn't even a stimulus package,” said McConnell. “It is emergency relief. Emergency relief. That's what this is."
A large chunk of the package is designated to provide necessary aid to small businesses — $377 billion to be exact. The main features of the small business pot include emergency grants and a forgivable loan program for companies with 500 or fewer employees, as well as changes in expenses and deductions meant to allow those businesses to keep their staff on payroll and their doors open in the short term.
The businesses arguably most affected by government mandated shutdowns and social distancing measures are those that fall within the service and hospitality industry, such as bars, restaurants and catering services. In fact, the Bureau of Labor Statistics (BLS) reported nearly 60 percent of payroll jobs lost in March were in the food and beverage industry, eliminating two years of gains in employment.
Independently owned restaurants on the edge
Chefs and restaurant owners have recently shared deep concerns with the lack of protection they receive through the current model of CARES, describing significant issues with how the act provides too short a time for paycheck protection, an inability to access the capital to reopen and a lack of tax rebates to rehire.
These concerns were echoed by the voices of more than 3,500 chefs, restaurateurs and workers from across the country — who are now supporting an initiative driven forward by what is now called the Independent Restaurant Coalition. The coalition called on Congress this Monday to take urgent new actions to ensure independent restaurants and the 11 million people they employ are able to survive the pandemic.
“The current structure of the Paycheck Protection Program’s loan forgiveness will not ensure restaurant staff will remain employed when the crisis is over. Eight-weeks of pay is a great thing for restaurant employees, but so long as independent restaurants remain closed, our staff will be laid off once again. Additional relief is needed until independent restaurants are allowed to reopen and operate at full capacity,” the group said in a statement.
“There is no more severely distressed, yet systemically critical sector in our economy. These unique circumstances must be addressed independently of other small businesses seeking relief from the CARES Act.“
In a letter sent to Congressional leaders, the coalition lays out a series of critical policy actions that they’re urging Congress to take, which in their opinion would ensure the nearly 500,000 independent restaurants that contribute close to $1 trillion to the U.S. economy are able to not only reopen but stay open through the year as the economy slowly recovers and the nation gradually returns to normal rates of socialization.
Amplifying the voices of small business leaders
Three of the founding members of the Independent Restaurant Coalition expressed frustration with the limitations of the CARES Act on a call with reporters, including Changing America, earlier this week. The three shared roadblocks independent restaurants are facing and distinguished themselves from the National Restaurant Association, saying that while the two organizations share a common purpose of representing the restaurant industry, the coalition has a more acute focus on smaller, family-run businesses.
The coalition formed not long after President Trump held a conference call with executives from some of the country’s largest national restaurant chains, including Domino’s, Subway, McDonald’s, Wendy’s and others. President Trump neglected to include any independent restaurant owners on the call, and seemingly downplayed the effect the pandemic will have on restaurants in the days that followed, quoting a survey which reported that 11 percent of operators said they may close permanently in the next 30 days.
Besides permanent closure, the association also anticipates restaurant sales to decline by $225 billion during the next three months, which will prompt the loss of between five million and seven million jobs.
Unlike national chains, the independent restaurateurs explained how they run their businesses on extremely tight margins, putting them at an even greater risk for closures and necessary layoffs. “What we've realized [by] coming together is that the general public and Washington don’t seem to understand how tight our margins are,” says founding member and Portland chef Naomi Pomeroy of Beast. “Ninety percent of every dollar that a restaurant takes in goes back out into the community...we need some special acknowledgement of what it takes to operate and do what we do.”
And while the provisions allotted for small businesses may be helpful for those that are still operating, the coalition reminds us that many independent restaurants are either limping along as a carryout and delivery operation or shut down completely as a result of local government mandates.
“As a black operator and a minority owner, I feel like we’re especially vulnerable during this crisis,” said Kwame Onwuachi, of Washington DC’s Kith/Kin. “Black-owned and minority-owned businesses often face difficulties in accessing capital, in addition to higher scrutiny in access to small business loans.”
“It’s simple: Without help, many of your favorite restaurants are not going to be there once this crisis is over,” added Tom Colicchio, Chef & Owner of New York City’s Crafted Hospitality. “The longer restaurants remain closed, the larger the risk to the nearly $1 trillion economy they create through their supply chain of farmers, fisherman, linen services, and so many others. Over two million waiters and waitresses need a job when this crisis ends, and we need assurances from Congress that they will listen to the specific needs of independently run restaurants during the next round of discussions. “
The foundational issues the coronavirus shines a spotlight on
The coalition’s push for action by Congress comes in the wake of reports that last week more than 6.6 million additional Americans filed for unemployment, bringing the total people out of work to more than 16.8 million — the highest in recorded history for such a short period of time. The U.S. Department of Labor’s Bureau of Labor Statistics (BLS) reported that two-thirds of the jobs lost in March came from the hospitality industry, and more than half were food and beverage jobs.
Though the current issues plaguing the restaurant industry were technically brought on by the spread of COVID-19, more foundational issues have arisen as a result. For one, a widespread lack of employer-provided health insurance. Low wages and a lack of job security are also a huge problem for those within the industry, and getting laid off by an employer feels like an abrupt dealing when severance is nonexistent for nonsalaried workers.
Also nonexistent is paid time off, as well as protections of any kind for undocumented workers. The current median salary for a full-time restaurant worker is $21,801. The federal tipped minimum wage of $2.13 hasn’t gone up since 1991, while the federal minimum wage of $7.25 hasn’t increased since 2009.
For an industry on the brink, a newfound energy and power has been found in solidarity — perhaps one of the few silver linings to be pointed out in this unprecedented pandemic. And though the future for hospitality workers remains murky, it is during these times of chaos that a long-unacknowledged industry could perhaps emerge stronger and more united than ever, that is, if policy changes and a bulkier aid package can provide them with the support they’ve long needed, the coalition says.
“This is our generation’s World War II,” says Collichio, “and we need to get our arms around this. We actually need to work together.”