The US Senate has ended the restaurant industry’s hopes of receive additional government funding to offset operational difficulties related to COVID-19 on May 19.
The Senate voted against passing the Small Business COVID Relief Act of 2022 (S. 4008), ending any realistic possibility of replenishing the Restaurant Revitalization Fund (RRF).
The United States House of Representatives passed the Relief for Hard-Hit Restaurants and Other Small Businesses Act of 2022 (HR 3807)which included $42 billion (€39 billion) to replenish the RRF, in early April 2022. The Senate’s version of the now-defeated legislation provided $40 billion (€37 billion) for the replenishment of the RRF and $8 billion (€7.5 billion) in support of other industries deeply affected by the pandemic.
“The vote is a devastating blow to the restaurant industry and small business operators,” the National Restaurant Association said in a news release.
The bill was unlikely to pass after an official in US President Joe Biden’s administration said in January 2022 that another major economic stimulus package tied to COVID-19 relief would not was not on the table. But Independent Restaurant Coalition executive director Erika Polmar said most U.S. restaurant owners were unable to tap into the RRF before it ran out, and many were relying on funding.
“Neighborhood restaurants nationwide have kept their hopes up for this program, selling their homes, cashing in retirement funds or taking out personal loans in an effort to keep their employees on the job and their doors open,” Polmar said in a statement. A press release.
Following the vote, the IRC estimates that more than half of the 177,300 restaurants awaiting an RRF grant will close in the coming months.
“Throughout the pandemic, restaurants have focused on serving their communities. When government-mandated shutdowns shuttered dining rooms, restaurants found a way to change operating models and keep employees on the payroll. When first responders needed a hot meal, restaurants stepped in to help in cities and towns across the country,” said NRA President and CEO Michelle Korsmo.
When Congress offered these restaurants the RRF lifeline, restaurant owners and operators made business decisions based on those pledges, according to Korsmo.
“Restaurants still trying to make up for what was lost in the pandemic today are grappling with labor shortages, record inflation and supply chain constraints,” Korsmo said. “[This vote will] further exacerbate these challenges and cause more economic hardship for families and communities across the country that depend on the restaurant and foodservice industry.
Even though the restaurant industry appears to be recovering from a consumer spending perspective, the challenges continue to worsen for restaurants, which operate with pretax profit margins of 3-5%, the NRA said.
“Spiking food prices, supply chain constraints and labor shortages are preventing many restaurants from repaying debt accumulated during the pandemic,” the organization said.
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