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Kwame Onwuachi, a Washington, DC restaurant owner and chef, is one of the founding members of the Independent Restaurant Coalition.
- More than 110,000 US restaurants are expected to shutter in the next month in a "restaurant apocalypse" as the industry takes a $225 billion hit, according to the National Restaurant Association.
- In March, a group of chefs banded together to form the Independent Restaurant Coalition to advocate for small, independent restaurants affected by the coronavirus pandemic.
- The $350 billion pool of loans created by last month's $2.2 trillion federal stimulus package isn't enough to keep small restaurants afloat, according to the coalition.
- The industry needs its own recovery fund of up to $100 billion, the coalition says.
- On top of the recovery fund, the group wants Congress to fix "flaws" in the $350 billion small business loan program, create new long-term tax rebates for restaurants, and require business interruption insurance to cover lost revenue due to COVID-19.
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The US is home to nearly 500,000 independent restaurants. Collectively, they contribute almost $1 trillion to the economy - and right now, they are collectively struggling.
That's according to the Independent Restaurant Coalition (IRC), which was formed in March by a group of chefs including Tom Colicchio, a "Top Chef" judge whose hospitality group operates seven restaurants in New York, Los Angeles, and Las Vegas. Other founding members include chefs Kwame Onwuachi, Naomi Pomeroy, and José Andrés.
The $2.2 trillion stimulus bill signed into law by President Trump on March 27th, known as the CARES Act, set aside $350 billion in loans to help small businesses stay afloat during the coronavirus crisis. But independent restaurants, the IRC insists, need their own rescue package to survive the pandemic.
The restaurant industry overall, which employs 15.6 million people across the US, will take an estimated $225 billion hit because of the outbreak, according to the National Restaurant Association. More than 110,000 restaurants are expected to shutter in the next month in a "restaurant apocalypse." Thousands of food service workers have already been laid off.
Business Insider/Andy Kiersz
The coalition is calling on Congress to expand the CARES act and create a separate recovery fund and tax rebates for independent restaurants.
"The CARES act is a small step on a giant staircase and more is required to ensure our businesses can reopen," Onwuachi, a former "Top Chef" contestant who owns Kith and Kin in Washington, DC, said in a call with reporters on Monday.
In the call, Colicchio, Onwuachi, and Pomeroy outlined the coalition's four-point request to the federal government, which they also sent in a letter to Congress signed by more than 3,500 restaurateurs and employees.
1. Fix the 'flaws' of last month's $2.2 trillion stimulus package
The Paycheck Protection Program was created as part of the $2.2 trillion stimulus package that passed in March. It offers eight weeks of cash-flow assistance in the form of government-backed loans of up to $10 million to employers who retain their workers during the pandemic. The money can be used for expenses including payroll, mortgage and rent payments, and utilities.
But the bill was written in a way that keeps many restaurants from taking advantage of its benefits, according to the IRC.
Craig F. Walker/The Boston Globe via Getty Images
Owner and chef Anthony Caldwell looks out from 50Kitchen in the Field's Corner neighborhood of Boston, MA on March 18, 2020.
Pomeroy, a founding member of the coalition who owns Beast, a fine dining restaurant in Portland, said many restaurant owners are unable to apply for the loans if they don't have a prior debt with the bank.
"Most banks were prioritizing people who already have loans with them, and so obviously that cuts out people who have decided to fund in different ways, which a lot of restaurants do," Pomeroy said in the call.
Another issue is the eight-week limit, a timeline restaurant owners say isn't nearly long enough. The coalition is asking Congress to extend that period to three months after restaurants are allowed to reopen at full capacity.
"After the 8-week clock runs out, independent restaurants will still be closed and we will be forced to lay off our entire staffs again," the IRC restaurateurs wrote in the letter to Congress. "Relief is needed until independent restaurants are allowed to reopen and operate at full capacity."
The coalition is also asking that the $350 billion loan pool be expanded. Demand for the loans could exceed $1 trillion, the IRC estimates.
The program should be limited to businesses that make less than $500 million in gross annual revenue so that larger businesses with more resources won't take away funds from small, independent restaurants, the IRC says.
The third update to the program proposed by the coalition is to increase the loan repayment from two years to 10 years. The original Senate bill said loans would be forgiven in 10 years if all requirements were met, but the Treasury later provided guidance setting the term to two years - a timeline that would saddle small restaurants with debt for years, the coalition says.
2. Create a $50 to $100 billion recovery fund for restaurants
The coalition proposes the creation of a "Restaurant Stabilization Fund" in the form of grants - not loans - to help restaurateurs hire back their employees and survive in the long term.
"What we really don't want to do is have a bunch of restaurants open, we hire back our staff, restaurants open, and then they fail because there's not business there," Colicchio said in the call with reporters on Monday. "So we need additional funding. And we're not looking for a bailout. We're looking to get back to work when we can get back to work."
Dale Berman/Bravo/NBCU Photo Bank/NBCUniversal via Getty Images
"Top Chef" judge Tom Colicchio is one of the founding members of the International Restaurant Coalition.
3. Create new tax rebates to help restaurants survive after the coronavirus crisis
The restaurant industry won't immediately spring back to normal after the pandemic, according to the IRC. The coalition estimates that business will be down by at least 30% through 2021.
The group is asking the government f0r a "jobs provider" tax rebate, which would give tax relief to restaurants based on how many people they employ, as well as a "rent rebate" so that can restaurants are able to keep their leases through the recovery period.
Many restaurateurs had been calling for rent freezes to be included in last month's stimulus package.
"Obviously if we're not open, we have no way to pay the rent," Scott Gerber, CEO of Gerber Group, which owns and operates 10 bars and restaurants across New York City, Washington, DC, and Atlanta, told Business Insider last month before the bill was passed. "So to me, that's the most important part. And hopefully [the government] will step in and help employees with a little bit more relief than just unemployment."
In New York City, where both commercial and residential rents are higher than most places in the country, 20 tenants - some of which are food vendors - at Grand Central Station have gone on strike and refused to pay April rent to the Metropolitan Transit Authority (MTA), which operates public transportation in the state of New York.
4. Require business interruption insurance to cover COVID-19
After they were mandated to close last month, many restaurants filed claims business interruption claims with their insurance providers only to find that the provider didn't cover loss of revenue due to a pandemic, as Eater recently reported.
Alan Lyons, chair of insurance and reinsurance at Herrick Feinstein LLP, told Eater that some policies contain clauses that exclude cases of viruses and bacteria. Or if those clauses don't exist, restaurant owners must prove any revenue loss was caused by direct or physical damage to the property.
"That can be difficult to demonstrate with a virus, because we're not dealing with the type of damage you see with fires or flooding," Lyons told Eater.
The IRC is asking that Congress require insurance companies to cover restaurants during the pandemic, whether the firms have virus exclusions or not.
At the time of publication, more than 6,400 people had co-signed the coalition's letter, a copy which was sent to congressional leaders on Monday.
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