According to the National Restaurant Association, over 17% of restaurants closed permanently or long-term in 2020, leaving millions of food service workers out of a job and the industry in tatters. After a year of chaos and uncertainty, the light at the end of the tunnel is finally in sight. Vaccines are being distributed across the country, local restrictions on restaurants are easing, and the recently passed federal stimulus package offers restaurants much-needed financial aid. Things are finally looking up for the restaurant industry.
Public Health Bright Spots
In a white house press release, the Biden administration pledged that every adult in the U.S. will be eligible for vaccinations by May 1st, inching the nation one step closer to normalcy. And while public health guidelines remain unclear, the CDC recently said that fully vaccinated people can visit other fully vaccinated people indoors without wearing masks or physical distancing. As more and more Americans become inoculated, we can expect life to revert back to normal — less capacity restrictions, more people comfortable with dining in, and maybe even no masks. As experts have cautioned, the vaccine is not a cure-all solution and only time can tell what our world will look like in a few months, however, there is reason to be optimistic.
Even now, despite the majority of the population being unvaccinated, states have begun to roll back COVID restrictions for restaurants and bars. Being able to operate at an increased capacity means more revenue. As the weather warms up, restaurants will be able to welcome back those uncomfortable with indoor dining to further boost sales.
Federal Stimulus Package and America’s Restaurants
On March 11, President Biden signed into law the third COVID-19 stimulus package known as the American Rescue Plan. A package unlike any other we have seen, it specifically targets restaurants. The bill allocated nearly $30 billion in funds to struggling foodservice establishments, including restaurants, bars, food trucks, and vendors.
These restaurant relief dollars are grants, and unlike the Payment Protection Program funds do not need to be spent exclusively on payroll. If a restaurant has received a PPP loan, that amount will be subtracted from the potential grant amount. Further, over $5 billion will be set aside for smaller venues whose annual gross receipts were below $500,000. Grants will be capped at $10 million for restaurant groups and $5 million for individual venues. Establishments owned by women, veterans, or economically and socially advantaged groups will be prioritized for the first 21 days.
The Small Business Administration will award grants on a first-come, first-serve basis, which might give larger restaurant groups a leg up. The program also does not allocate specific funds to regions like New York City or other major cities hit specifically hard by the COVID-19 pandemic. Whether this aid will be distributed fairly remains to be seen. While the funds will not help every restaurant, it will certainly help many — which is good news for the industry as a whole.