Only 1 in 5 independent restaurant owners in locked down cities are certain or somewhat certain that they would be able to come back after business operations resume, according to a James Beard Foundation survey of 1,400 small and independent restaurant operators nationwide, in partnership with the newly formed Independent Restaurant Coalition, or IRC. The survey also revealed that nearly three in five restaurant operators said they could only survive between one week and one month more given the current economic climate and local lockdowns.
This information reflects the dire needs of struggling independent restaurant owners for more outside assistance while dining rooms are closed to limit the spread of the virus, according to the Beard foundation and the IRC, a grassroots organization formed by high-profile chefs and restaurant owners like Tom Colicchio of New York-based Crafted Hospitality.
“Last week, I felt optimistic,” Colicchio said during an IRC press conference on Thursday. “But this is a dire situation we’re in, most restaurateurs don’t believe they’ll survive when [the country reopens]. We are looking at something that will completely gut an industry that employs 11 million people.”
On Thursday, the Small Business Administration said its COVID-19-related small business loans were tapped out and needed more funding. The IRC has been lobbying lawmakers for fixes to the program, including extensions of the loan deadlines to allow more time for restaurants to reopen, and investing more funds into what is supposed to be a program for smaller businesses.
“The fact that restaurant owners are more fearful shows just how futile [the PPP] has been,” Clare Reichenbach, CEO of the Beard foundation said. “The urgent need right now is to fix the PPP so it serves a purpose for independent restaurants.”
The IRC maintains that many small businesses are struggling to get access to a PPP loan. In fact, according to new data from the Texas Restaurant Association, half of reported Texas restaurant loan applicants did not get a response from their loan application.
However, large chains like Ruth's Chris Steak House has received $20 million in PPP loans, and both Potbelly and Fiesta Restaurant Group (parent of Taco Cabana and Pollo Tropical) have each received $10 million, all with JPMorgan Chase Bank.
But as many independent restaurants struggle to hear back from their prospective lenders, confidence levels are waning. Here are more findings from IRC’s recently published survey data:
- On average, small restaurants have laid off 91% of their hourly workforce and 70% of their salaried workforce since April 13.
- More than 38% of restaurants surveyed closed temporarily (or possibly permanently).
- 28% of restaurants in cities with mandatory closures said they don’t believe they can survive the month.
- More than half of restaurants surveyed reported needing $100,000 over the next quarter in order to reopen successfully.
- The biggest challenge operators believe they face is a slow return of customers (41%), while the most immediate cash challenge is rent (39%).
- More than half of restaurants have taken on $50,000 or more in new debt since the coronavirus crisis started
“Right now, we need longer term protections,” Colicchio said during the press conference. “We are in dire straits.”
Contact Joanna Fantozzi at [email protected]
Follow her on Twitter: @JoannaFantozzi
