Dive Brief:
- President-elect Joe Biden expressed his support for providing restaurants with grants instead of loans during an economic roundtable Tuesday, stating that the restaurant industry "affects the ability of the economy to continue to grow."
- Restaurateur and Independent Restaurant Coalition member Dan Jacobs, the only small business owner on the panel, asked the president-elect to back the Restaurants Act and said that Payment Protection Program loans have not been enough to financially support restaurants amid the pandemic, especially since funding for many restaurants has run out.
- The Restaurants Act is co-sponsored by Vice President-elect Kamala Harris and passed the House of Representatives, but has been slow to gain traction in the Republican Senate. On Monday, however, Sen. Patty Murray (D-Wash) became the 49th senator to sign the bill, putting roughly half of the chamber in support of the proposed legislation. The bill would establish a $120 billion grant fund to support restaurants and bars.
Dive Insight:
Biden's support for direct aid to restaurants is no small statement, especially as the industry continues to push for specific aid. The industry wasn't a topic of discussion during the presidential debates, either, and isn't mentioned on the Biden-Harris transition plan website.
President Donald Trump did urge Congress to support restaurants in a tweet on Nov. 27, stating that the segment "is being absolutely devastated." He also met with industry leaders in May about ways to fix the Paycheck Protection Program and brought representatives from 17 different chains onto his reopening panels in April. Biden also pushed Congress Tuesday to pass a bill before his administration begins on Jan. 20.
Congress has been mired in a stalemate that's delayed the passage of the next coronavirus relief package, with Democrats supporting the $2.2 trillion Heroes Act and Republicans favoring a $500 billion economic relief bill. On Tuesday, Senate Majority Leader Mitch McConnell also shot down a new bipartisan $908 billion stimulus proposal created to end the stalemate.
The Restaurants Act's proposed $120-billion restaurant grant program is part of the Heroes Act, which would "prioritize awarding grants to marginalized and underrepresented communities, with a focus on women- and minority-owned, and women- and minority-operated eligible entities" for the first two weeks. During that time period, restaurants that make more than $1.5 million in annual revenue wouldn't be eligible, but Eater reports that the grants would be open to any restaurant afterward.
"Small business is the economic engine of the country. And restaurants are a major part of that small business," Biden said during the roundtable.
The Heroes Act will still include PPP loans, as well, but offering a financial solution designed for restaurants would eliminate restaurant fears over loan forgiveness and eligibility which have plagued the industry since the fund's first round, with several large chains like Ruth's Chris Steakhouse and Shake Shack returning their loans amid backlash.
"For restaurants specifically, the PPP program falls far short. Only 8% of the businesses that received PPP loans were restaurants, however our industry was the hardest hit, mainly because restaurants' first or second largest expenses are food and beverages costs, and these are not eligible as grant expenses," Jacobs said during the roundtable. "Our company personally exhausted our PPP loan in October. It’s winter here in Milwaukee ... add that to the exploding COVID positivity rate, that's come to form a perfect storm of loss of revenue."
Biden has made other campaign promises that would affect the restaurant industry as well, though these measures — such as ending the tip credit and raising minimum wage to $15 — are controversial among the restaurant community.
