Black-owned restaurants, and eateries overall, have been devastated by COVID-19 to a much larger extent than other types of businesses. Since the pandemic’s start, restaurant and foodservice sales are down nearly $300 billion from expected levels, the National Restaurant Association (NRA) reports. And some 90,000 restaurants are closed permanently or long-term. Lack of funding and insufficient support are among the biggest obstacles Black restaurateurs face.
Simultaneously, diverse firms keep getting hit hard. Alignable’s July Rent Poll revealed many industries and groups remain hindered by COVID’s lingering effects. The poll of 5,911 small business owners revealed 52% of minority-owned businesses still could not pay their rent in July. That figure compared to the U.S. national average of 35% and Canadian average of 43%.
Conversely, the NRA reports that restaurants have added jobs in each of the last three months and are now within 1 million jobs of returning to the pre-pandemic employment level of 12.3 million.
Yet, the industry is not completely free of challenges, notably amid COVID.
“From the outside looking in, the industry appears to be recovering, but looks are deceiving. Restaurants that have been closed or operating under often severe capacity restrictions have months of debt that they are balancing with increased food and labor costs,” Sean Kennedy, executive vice president of Public Affairs, National Restaurant Association, told Black Enterprise via email.
“Many are caught in a vicious cycle of wanting to fully open but lacking the resources they need to meet demand. For many of the operators stuck in limbo as they wait to hear about the RRF Replenishment Act, a grant could put them on solid ground.”
Pending legislation may offer some hope for Black-owned restaurants. The Restaurant Revitalization Fund Replenishment Act of 2021 is among two bills that could be a lifeline for restaurants. The other is the Entrepreneurs Need Timely Replenishment for Eating Establishments (ENTRÉE) Act. Both bills would provide $60 billion in extra funds for the Restaurant Revitalization Fund (RRF), a federal relief effort run by the U.S. Small Business Administration.
The much-needed money would be used to restock the RRF, which closed July 2, 2021, after running out of money and leaving a huge chunk of grant requests unfulfilled. If approved, the new funding from one or both bills, if merged, would reportedly go largely to some 177,000 applications that totaled $43.6 billion in grants that were not awarded in the first round of RRF.
Neither bill has gained adequate backing to become law. But their existence offers some potential new financial relief to restaurant owners and other proprietors that serve one of the nation’s largest industries.
The SBA closed the RRF after awarding the program’s entire $28.6 billion to about 101,000 restaurants, bars, and other restaurant-type businesses. The average grant to applicants was $283,000, showcasing how badly small businesses needed the cash. But the RRF received more than 278,000 submitted eligible applications representing more than $72.2 billion in requested funds as of June 30, the SBA reports. That meant the RRF was oversubscribed by about 2.5 times based on the dollar amount it had available.
Patrick Kelley, the associate administrator for SBA’s Office of Capital Access, stated by email:
“During the pandemic, Black restaurant owners were among the first forced to close their doors and the last to re-open them. The SBA has worked diligently to distribute relief equitably, awarding approximately $18 billion in grants to underserved populations which includes Black restaurant owners. Black-owned restaurants are often the cornerstones of communities across our nation, and we are committed to helping them build back better.”
SBA Administrator Isabella Casillas Guzman has stated: “Restaurants are at the center of our neighborhoods and propel economic activity on Main Streets. As among the first to close in this pandemic and likely the last to reopen, many are still struggling to survive. The SBA will continue to work hard to ensure they get the resources they need to recover, rebuild and be resilient.”
The RRF was set up in March this year as part of the American Rescue Plan. It was a President Joe Biden-backed effort geared to assist restaurants of all sizes. However, much like SBA’s Paycheck Protection Program, the RRF program was marred with problems from the start.
Thousands of approved RRF applicants were revoked after judges ceased a policy that gave preference to underserved groups, the New York Times reported. The court order resulted in about 3,000 restaurant owners whose grants were approved then being informed they could not be paid.
News outlets reported the SBA’s grants to those Black-owned restaurants and other establishments owned by women, socially or economically disadvantaged individuals, and veterans were stopped due to lawsuits filed by white business owners. Those owners essentially disputed a policy they claim prioritized applicants for COVID relief grants based on race and gender.
Asked about the lawsuits, the SBA provided Black Enterprise this statement.
“While the SBA cannot comment on ongoing litigation, from day one, Administrator Guzman’s priority has been to serve the hardest-hit, most underserved, and smallest businesses in our country,” SBA Spokesperson Christalyn Solomon stated.