Loyola University Chicago School of Law, JD 2022
We are now in the heart of winter, and many restaurants have not made it since Covid first shut-down Chicago in March 2020. When dining resumed in June, it came back as outdoor only. However the fear was, what would happen once it cooled down and outdoor dining wasn’t feasible? Chicago, like many other cities, has had to be creative and many restaurants have made it work. From dining igloos and greenhouses, to shutting down streets for more patio space, Chicago has been very creative. For the restaurants that have managed to survive, it has not been an easy path. The restaurant industry has been hit especially hard compared to other businesses, and they are not receiving the same protections and support as other industries. The Paycheck Protection Program (“PPP”) was designed to support small businesses, however restaurants have not been protected as they should have been.
Restaurant owners coming together for support
Although the restaurant industry is clearly a major part of the United States, restaurants are not getting the same protections as other small businesses have from the government. In March, Kevin Boehm, founder of the Boka Restaurant Group in Chicago, joined with many other restaurant owners and chefs to create the Independent Restaurant Coalition (“IRC”). The IRC’s goal is to help save the restaurants, bars, and all 11 million people they employ whose jobs have been affected by this pandemic. The coalation was founded on the belief that “small businesses have the power to affect legislative change if we unite our voices.” On their website, they have many resources for restaurant owners, including a Paycheck Protection Program Question and Answer to help restaurants and bars who are trying to secure the loans to stay in business. The IRC has worked hard to try and get more support and bail out for restaurants, as the industry truly needs the support more than ever.
Why the PPP is not enough
Although the Paycheck Protection Program has provided relief for some restaurants, it ultimately has not been close to enough support for the restaurant industry. The Paycheck Protection Program was widely criticized at first because of how big businesses such as Ruth’s Chris originally was able to take advantage of the program even though it was designed to help small businesses. The steak chain Ruth’s Chris was able to secure two separate $10 million loans despite how large of a company they are. News of these loans were widely criticized because the Paycheck Protection Program was targeted to help businesses with fewer than 500 employees. However due to the hit the hospitality and restaurant industries were taking, Congress designed this act to be very flexible and thus other chains were also able to secure loans.
According to Kevin Boehm, one issue with the Paycheck Protection Program for restaurant owners was that banks prioritized applicants who had previous debt with them, and rarely any restaurants are financed through banks. Thus, restaurants were not able to get these loans easily and they were not getting the support they desperately need to stay in business through the pandemic. Only 8% of PPP money went to restaurants even though 25% of those unemployed were previous restaurant employees. The Paycheck Protection Program did not support the Restaurant industry like it should have.
The proposed RESTAURANTS Act
After the Paycheck Protection Program was rolled out, the RESTAURANTS Act, a bill by Oregon Congressman Earl Blumenauer in June 2020, was proposed to address the needs of these restaurants. According to the Act, even with the Paycheck Protection Program, still four in ten restaurants have remained closed during COVID, thus showcasing the dire need of this Act. The Act was created because restaurants need more support. The Act was passed by the House in October, however it was never passed by the Senate and therefore never signed into law. In President Trumps final days in office, Congress did pass a $2 trillion relief spending package, however the IRC commented that “this bill falls woefully short of what restaurants need” and continued to push for swift action for the the Act.
It remains uncertain if the \ Act will ever be passed. While many industries have been hit hard by COVID, restaurants have not seen the same support that healthcare, manufacturing, or the construction industry has received from the PPP. The restaurant industry will have to continue to have deal with the constantly changing COVID dining restrictions, and they need more support from the government to stay in business and support their employees.