Unless something changes, many independent restaurants will close permanently, no matter how much delivery and take-out we order.

By Khushbu Shah
Updated August 05, 2020
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It’s been over a month since things last felt normal. Over a month since anyone could pop into a bakery for a buttery croissant and a foamy cappuccino. Over a month since lines of hungry office workers on their lunch break snaked out of the shop that makes the good sandwiches. Over a month since it was possible to sit at a bar, cold beer in one hand, cheap burger in the other. Over a month since dim sum carts loaded with dumplings clattered around a busy dining room on a Sunday afternoon. Since then, restaurants have shuttered, and paper now covers the windows of places that used to have three-hour waits for tables. Ovens that used to turn out loaves of bread and pizzas now sit cold. Entire staffs have been laid off (estimates say over 8 million people in total), and the only sound is that of bills piling up and exasperation. Who is going to rescue restaurants? 

Some restaurants have managed to pivot to selling groceries, doing take-out, or delivery—which has its own set of problems —and they are making enough to scrape by. It’s enough to live to cook another day, but by no means are these restaurants thriving. Over several interviews, multiple chefs estimate that they are making 20-30 percent of what they used to make, if they are lucky, running skeleton operations. Many are making nothing at all and struggle to figure out what health and safety measures to implement without clear guidelines from any governing body. There are a lot of conversations about what restaurants might look like when they are allowed to fully reopen—50-percent-capacity dining rooms, a heavy emphasis on take-out, cashless payments—but the reality is, without major financial help, most restaurants will not even have a chance to figure out what the new normal looks like.

The PPP, or Paycheck Protection Program, is completely inadequate for what restaurants need. The program was set up to offer small businesses loans to help get them through the pandemic. Unfortunately, the first round of funding for the PPP ran out in a matter of days, with only nine percent of the funds going towards the restaurant and hospitality industry, even though the food and beverage industry currently makes up 60 percent of the total unemployment claims, according to the Independent Restaurant Coalition

Of the nine percent of funds given to the hospitality industry, it was revealed that millions of dollars were given to large chain restaurants like Shake Shack, which was awarded $10 million in loans. Ruth’s Chris Steakhouse was given $20 million, and Sweetgreen, the billion-dollar salad chain, was given $10 million. These companies never should have applied for these loans in the first place, but they were allowed to do so due to a provision in the law that said that restaurants with less than 500 employees per location could apply. Thousands of small restaurants—the actual small businesses that these funds were meant for—were left high and dry. 

What perhaps is most frustrating for small-restaurant owners is that they don’t need millions of dollars to stay afloat, and yet they are having a difficult time getting access to capital. According to a survey from the James Beard Foundation and the IRC, 68 percent of restaurant owners said they could keep the doors open for at least another month with a cash infusion of $50,000 or less. For the loan Shake Shack received, the money could have instead helped at least 200 independent restaurants. Same goes for the loan Sweetgreen received. For the loan Ruth’s Chris received, the money could have instead helped at least 400 independent restaurants. It’s easy to see why small-restaurant owners remain frustrated: The government could have helped at least 800 restaurants with the money they awarded to just three major chains that have other means to access capital. 

Sure, Shake Shack returned the loan this week—but only after they were able to raise even more money by selling several million new shares of their  stock. This is not an option for the majority of restaurants. And for the $10 million the chain returned, it seemingly received $20 million worth of positive press. Other chains like Sweetgreen and Ruth’s Chris have followed suit, thanks largely in part to public pressure and outrage. And now, the major restaurants that have not returned their loans will be asked to do so by the federal government. Still, there is no guarantee that this money will be distributed to smaller restaurants. 

The PPP has been replenished with $310 billion dollars, but even if small restaurants are able to qualify for loans this round, it’s likely not worth it. The language surrounding the PPP is incredibly complicated, but one thing is clear: The terms are impossible for restaurants to adhere to. The loans are only forgivable if a restaurant is at close or full payroll by June 30. That means restaurants will have to re-hire all of their staff, only to lay them off again in a few weeks because there is no real timeline available for when they will be able to fully reopen safely. This is why chef Matt Poirer, who was approved for a loan, turned it down, as he explains in an Instagram video. Furthermore, owners are not given the ability to use the funds as they see fit to ensure their survival. As chef Gabrielle Hamilton writes in an essay for the New York Times: “I couldn’t really use the loan for what I needed it for: rent for the foreseeable future and the stack of invoices still haunting me in the office.” 

What restaurants desperately need right now is a specific fund geared toward the stabilization of the restaurant industry. Not the PPP, and not Trump’s proposed tax deductions that just benefit the restaurants owned by the buffoon advisory council Trump has created that consists solely of fast food CEOs and chefs of high-end fine dining restaurants with rich clientele. As food writer Max Falkowitz notes on Grub Street, “The fast-food industry and the fine-dining world are two sides of the same golden coin.” The government has specifically bailed out other industries—so why not small restaurants? Especially when they contribute billions of dollars to the economy. 

The harsh reality is this: Without specific government assistance, most the restaurants you love will close permanently, no matter how much merch you buy, take-out meals you order, and GoFundMe campaigns you donate to. 

When you lose small restaurants, you aren’t just losing a place to eat. You lose one of the few industries that employees the undocumented and the formerly incarcerated. You lose an economic hub that supports other industries like farming and tech. You lose places to gather and to celebrate. You lose the foundations of neighborhoods. And there will never be enough Shake Shack burgers, Sweetgreen salads, or Ruth’s Chris steaks to fill that void.