If the Stimulus Package Fails Independent Restaurants, It Fails America

A $2 trillion stimulus package — “the largest of its kind in modern American history” — has just been signed into effect by President Donald Trump. The numbers are big. $377 billion in small business loans. $100 billion to hospitals. But as restaurant industry observers like my colleague Ryan Sutton comb through the details, it’s clear that the bill isn’t the bailout or disaster relief the restaurant industry — independent restaurants or their employees — were counting on to make it through this unprecedented crisis.

The stimulus is meant to put cash — up to $1,200 — into Americans’ pockets, to prevent widespread economic collapse amid mass lay-offs, a volatile stock market, and a panicking population. For business owners, it offers forgivable loans to help pay rent, utilities, and mortgage interest payments, kicking the can down the road for those and other expenses until businesses can open to the public again. If they can reopen to the public again.

The stimulus doesn’t do enough for the restaurant industry, and so it doesn’t do enough for the rest of America. The restaurant industry and its workers, which were uniquely vulnerable to the effects of the pandemic, are an all-too-perfect stand-in for the parts of America and its economy that politicians claim to support the most, and yet listen to the least — small businesses built on the backs of hard-working Americans.

According to the Bureau of Labor Statistics, there were more than 657,000 food and drinking establishments in the U.S. in the fall of 2019, totaling 6 percent of all domestic businesses. Statistics from the National Restaurant Association suggest that the majority are what we’d consider “small business” (7 in 10 restaurants are single-unit). More than 12 million people work in restaurants, according to the BLS; industry estimates put the number even higher. Per Planet Money, 1 in 20 American workers works in food preparation and service. Restaurants are not only a cultural backbone of America’s small-town main streets and its biggest cities, they’re an economic one, as well.

Estimates by the National Restaurant Association suggest the industry will sustain a $225 billion loss in 2020 — a loss in a year the organization previously expected the industry to generate some $899 billion in sales; for scale, that’s equal to roughly 4 percent of the GDP. Of nearly 1,500 respondents to a survey from the James Beard Foundation — which included chefs, restaurateurs, and beverage professionals — more than 60 percent of all respondents said that they didn’t “have enough operating capital to sustain a closure for one full month,” and had to let go of 78 percent of their hourly workers and 58 percent of their salaried employees.

More than 3 million workers across various industries lost their jobs and filed for unemployment last week, with states reporting huge numbers of claims from people-facing sectors like accommodations and food service. The National Restaurant Association estimates 5 to 7 million restaurant workers could lose their jobs within the next three months.

A one-time, $1,200 check for those who made under $75,000 in 2019 and unemployment insurance that is temporarily more generous — eligible workers will receive an additional $600 a week until July 31 — is meant to soften the blow. Certainly cash in hand won’t make things for these workers worse, but it’s not just that these workers are out of a job; for many, they’re out of a career. Livelihoods are at risk of collapsing, at an incomprehensible scale.

For small businesses, there’s some hope to be found in the newly established loan program, but it’s not enough. The forgiveness provisions of the promised small business loans are heavily weighted toward companies that rehire staff by the end of June, a measure that sets a high bar for restaurants without cash reserves to reopen, as Sutton explains. It looks like fast-food franchise locations are allowed to apply, too, potentially crowding out small operations from accessing funds. And the loans — even loans that function more like grants — won’t change the fact that restaurants have had to operate on scant or no revenue, potentially for months. Too few restaurants have the cash reserves, especially after weeks (if not soon months) of forced dining room closures, to make fully accessing this benefit possible.

Restaurant workers, like the rest of America, have faced rising costs of living when it comes to rent, slow wage growth, and uneven access to employer-provided health benefits. A check and better unemployment pay won’t change the fact workers will have ongoing expenses and uncertain job prospects, even after the pandemic subsides. For undocumented workers, it’s even worse, as the stimulus bill says it does not apply to “non-resident alien individuals,” even though undocumented restaurant workers pay taxes out of their paychecks.

Restaurants and its workers have been especially devastated by the effects of social distancing, even as many continue to put their health on the line to keep working. Now, an entire network of small businesses could be crushed out of existence by a public health crisis the federal government did precious little to protect us from; millions of workers face precariousness compounded by the preexisting structures that left so many to live paycheck to paycheck in the first place.

It’s in that precariousness that the restaurant industry holds a mirror up to the rest of the country, which may soon see itself reflected back. A stimulus plan that leaves them without all of the aid they need demands all of us ask: What will our main streets and cities look like without restaurants that aren’t part of enormous chains? And how will we care for the millions left without jobs because of that consolidation? What will happen if the rest of us need the same level of support?

Because it’s not just that our economy won’t fully recover if we leave these small businesses and service workers holding the bag. It’s our communities, which rely on restaurants as a public theater, a backdrop and setting for life’s celebrations, on the one hand, and daily routines, on the other. It’s us. We won’t recover if they don’t.