Without help, Asheville restaurants face an uncertain future
ASHEVILLE – A stimulus program put in place to sort out the damage to small businesses and their employees dried up on Thursday morning, leaving many independent restaurateurs wondering how they will recover from the COVID-19 crisis.
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As of April 16, the Small Business Association has not accepted new applications for the CARES Act paycheck protection program, citing a “insufficient credit. “
Still, that didn’t stop steakhouse chain Ruth’s Chris from taking on more than $ 20 million in SBA loans before they disappeared.
There isn’t even a silver lining in this area, with all the money going to the chain’s corporate restaurants, none reaching the Asheville franchise store and its 60 employees.
That’s according to Jeff Conway, whose Asheville Prime LLC group owns the Biltmore Village restaurant, which now only has a small team to handle takeout orders.
“For the record, we didn’t receive any PPP funding,” Conway said. “We’re definitely trying, but it looks like the program is on hold at this point.”
Many restaurateurs, including Conway, say PPP does not address the unique challenges of their industry anyway.
“PPP was created as one size fits all, and it doesn’t work for restaurants,” said Cúrate chef and owner Katie Button, which closed its restaurants in March and laid off 130 employees.
This is because to take full advantage of the loan forgiveness program, which essentially makes it a subsidy, companies must use 75% of it to cover salary costs while keeping staff levels at 100% or more of pre-numbers. COVID.
Only up to 25% can be spent on rent, utilities and other operating expenses.
After approval, companies only have 8 weeks until the loan expires. Locally, this expiration would likely come as dining rooms are compulsorily closed, meaning restaurant owners would have to pay employees not to work.
Any part of a loan that cannot be canceled must be repaid over two years.
Button was recently approved for a PPP loan, but she is still begging for critical adjustments to the terms.
If Congress cannot pay restaurants on terms that work for them, the future of foodservice looks bleak.
“We won’t get there if the aid doesn’t change,” Button said. “It’s just a fact.”
Loan terms don’t help restaurants
Amber Arthur recently learned that she had secured loans for two of her five small businesses: PennyCup Haw Creek and PennyCup Downtown.
“I actually cried,” she said. “I immediately called my business partners and we were delighted. We thought this was going to be our saving grace, keeping all invoices up to date when it was time to reopen. Well, we were wrong. . “
She said the eight-week deadline for businesses to distribute nearly all of the funds to full-time employees has made loans essentially unnecessary for restaurants, especially those in states with door-to-door orders.
And until the “curve is flattened” and a significant number of COVID-19 tests become available, she said, it appears to be asking too much of employees to potentially expose themselves to the virus just for she can get into more debt.
Unemployment benefits cover to a certain extent the financial needs of its employees, allowing them to shelter in safety.
“Should I ask my amazing and hardest working general manager to quit her unemployment and come back to work, risking her health and that of her daughter?” Arthur asked.
Not only does she fear that the SBA’s demands will force companies to open doors prematurely, potentially unleashing a second wave of COVID-19, she also believes the bill blatantly neglects working parents.
“All (my manager) and I have children,” Arthur said. “How are we supposed to work when the school is closed and camps and daycares are not an option? “
Once local governments approve the reopening of restaurants, it may be months before people go out to eat at the same levels.
The Buncombe County Tourism Development Association forecasts no tax revenue for hotels until June, then around 20% of last year’s total in July, 30% in August, 40% in September and 50% in October.
Button said local restaurant owners can expect similar numbers.
“And if we were to try to operate with 100% full-time employees on the first day with 20% revenue, that would immediately bankrupt the restaurant industry,” she said.
Melissa Gray, including the River Arts District restaurant RosaBees is still open for take-out, said she had not yet applied for the loans for this reason.
“I’m in no rush,” she said. “The eight week directive is not working for us because who knows when we will (fully) open.”
“We need more than payroll”
Survey data released on April 16 by the James Beard Foundation and the Independent Restaurant Coalition revealed that of 1,400 independent restaurants, 38% have closed temporarily or permanently.
Almost half of those surveyed ranked slow customer return as the biggest challenge to reopening
More than half say they have incurred at least $ 50,000 in new debt due to COVID-19, which is why they do not need to take more.
Restaurant owners also said paying rent and reimbursing vendors would be bigger challenges for reopening than filling payroll.
“What makes the restaurant industry different and unique is that our inventory is highly perishable,” Button said. “We need more than payroll.
When Cúrate and sister restaurant Bagels Button and Co. closed, this inventory was handed over to staff.
But the restaurant still has to pay. Some bills still need to be paid before the vending machines deliver any more food.
What about the cost of fully stocking the pantries of a restaurant that has been closed for a long time? “It’s not a small amount of money,” Button said.
Button said the restaurant industry can’t restart without capital to help restaurateurs adjust to the new normal.
“What restaurants need to do is create a whole new business model and a whole new way of working that takes us from where we are now to when a vaccine is available,” she said. “We’re smart, but we can’t do it in eight weeks.”
Restaurants employ 11 million
The intricacies of restaurant management are many and complicated, and Button doesn’t expect Congress to understand them all.
But it’s important to give it a try, as independent restaurants employ over 11 million people nationwide.
She’s not the only one hoping Congress will make funding fixes in the next round of federal relief.
In a letter to Congress last week, signed by more than 25,000 chefs and restaurateurs, the Coalition of independent restaurants said the PPP was “written in a way that prevents restaurants from enjoying the benefits of the program.”
However, independent restaurants do not have the same leverage as large chains and need the help of the general public to get help that works.
“We need them to talk about it, ask senators and representatives, tell them how important this is to them,” Button said.
To do this, visit www.saverestaurants.com/take-action ask your reps to change the PPP requirements to work for restaurants, she said.
Button is hoping that a flood of emails can show voters care about the future of independent restaurants.
“The system works if you use it,” she said. “Maybe. Worth it. I have to hold on to something.”
Mackensy Lunsford has lived in Asheville for over 20 years and has been an editor for the Asheville Citizen Times since 2012. Lunsford is a former professional cook and former restaurant owner.
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