No, Senator Rubio – the PPP hasn’t executed sufficient to assist eating places
I am proud that at the start of the pandemic my own Senator, Marco Rubio, worked quickly to put together a program of assistance to deal with our country’s economic disaster. The swift action he and other members of Congress have taken under the paycheck protection program has helped stabilize our economic free fall in the face of immense uncertainty.
As a restaurant owner in Florida and Ohio, however, I have to disagree with the Senator’s claim that PPP is a “life raft” for all industries.
Since I took out a PPP loan earlier this year, I haven’t been able to hire all of my staff, as my restaurants in Florida are only generating 25% to 50% less revenue than in 2019 and my business in Cleveland is making a whopping 80% less and just through survive the good graces of a benevolent landlord. Overall, my company will close the year with less than half of 2019 sales.
Another 10 weeks of payroll just won’t nearly make up for the carnage that has hit my company and my industry. It’s a life jacket, not a raft, and while we’re paddling the dog as hard as possible, there doesn’t seem to be anything right now that could save us.
Take a drive through your own neighborhood and check out the growing number of rental signs replacing laughs, music and hot food on the sidewalk windows. In a survey conducted in April when restaurant owners were still optimistic about the outlook for PPP lending, up to 85% of restaurant owners said they were not confident they could stay in business if the pandemic was six months lasted. The pandemic has now lasted 10 months and more than one in six restaurants across the country or 110,000 have closed as a result. Up to a third can be closed until the end of December.
The problem isn’t that the PPP is fatally flawed. It’s a one-size-fits-all solution that doesn’t take into account the creativity, diversity, and ingenuity of American businesses.
In the best of times, restaurants and bars operate with very tight profit margins. With the sales as they are now, those profits are all gone and now we are just desperate to try to contain the losses. Serious losses. Today we are one of the few legally mandated industries to shut down in cities and states across the country.
And even when we’re not closed, curfews and capacity constraints dramatically reduce our valuable dinner sales. Month after month of dramatically reduced earnings, restaurant owners have accumulated bills for unpaid rents, utilities, and debt services, lowered grocery costs, and depleted the savings they’d paid for employee salaries and benefits.
We shouldn’t have to decide whether to use the 10 week payroll provided to us through PPP to pay our employees – who deserve and need a wage – or whether to have to pay the bills, that we need to keep them busy for another 10 months. Ten weeks of payroll does not make up for 36 weeks of losses that we have already suffered through no fault of our own.
When I got my PPP loan in May, I had problems with the fact that many of the expenses I needed to cover the most could not be forgiven. The PPP is primarily intended to help with wage and salary costs. While I was thrilled to get my staff back on, these loans cannot be used for vital costs like supplies, running costs (insurance, maintenance, cleaning, landscaping, etc), grocery bills, and PPE. All of this is a huge cost to restaurants being asked to reopen, close, and reopen without notice. This creates a massive gap in our tight budgets.
We have all done our best to limit the damage. We were creative and resourceful. Restaurants simply don’t have the flexibility to address these severe shortcomings. How many companies could survive an 80% drop in sales over an extended period of time?
Today, 2.1 million people in the hospitality industry are unemployed after Rubio’s “emergency brake” was supposed to prevent people from leaving the workforce – that is more unemployed than in any other industry.
Restaurants can only hire our employees again when we can fill our dining rooms again. When roles like chefs, waiters, hosts, dishwashers, and janitors are running at less than 100% of our normal sales, it is difficult to keep them busy even with al fresco dining and a take-out program. They are among the 11 million restaurant jobs across the country at risk from this pandemic.
PPP was also inaccessible to many neighborhood restaurants across the country. In the second quarter of this year, restaurants lost over $ 220 billion in revenue but received less than $ 42 billion in PPP loans, or 8% of all loans granted. Restaurants and lodging ranks fifth among industries in terms of loans granted, despite being the largest contributor to national unemployment month after month.
Why? Smaller companies just don’t have the same relationships with banks as larger companies do. Since PPP lending is coordinated through banks – many banks even choose not to participate – it was clear from the start that this program would not be easily accessible to the smallest and most vulnerable companies in our industry.
Independent restaurants first organized in the spring, forming the Independent Restaurant Coalition, and devising a plan specifically tailored to meet the needs of these 500,000 locally owned businesses. Over 50 senators and 215 MPs from both parties listened. The bipartisan RESTAURANTS bill they backed would set aside $ 120 billion in a Treasury, non-bank, program that grants companies – not loans – based on lost revenue, not payroll.
It would help my business and tens of thousands of others survive. The RESTAURANTS Bill would create economic benefits of up to $ 271 billion in boosting tourism, supporting the supply chain industry, and saving unemployment benefits that would otherwise benefit millions of displaced restaurant workers.
Our government represents us and has rightly said that we are cautious about Covid-19 for the benefit of our own health and the benefit of the community. One of the most important ways to be careful seems to be to avoid eating out. We keep hearing it. Avoid us. We in the restaurant industry have absolutely and willingly supported our country’s efforts to contain the tide of this terrible virus. And we will continue to do so.
But for many of us to still be on the other side, restaurants need something tailored to their needs in order to come out at the end of this long tunnel. Congress should listen when restaurants and bars – America’s second largest employer in the private sector – sound the alarm.
Let’s work together to make the PPP program a viable economic engine for all businesses, not just those with large bank accounts. Otherwise, when the vaccine prevails and we’re all ready to eat, drink, and be happy again, there simply won’t be many places left to do this.
Sunil Bhatt is the CEO of Genuine Hospitality Group, which operates six award-winning restaurants in Miami and Cleveland. He is a member of the Independent Restaurant Coalition.