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A closed sign hangs in the glass door of a restaurant in front of a closed security gate. Dani Berszt/Shutterstock

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Is the Government Just Going to Watch the Restaurant Industry Die?

Without a bailout, independent restaurants face a disastrous fallout

A few months ago, as restaurants suffered through the first months of a devastating pandemic, chefs and restaurant owners across the country went on social media to call for a government bailout. In their pleas, they said that without government support, their restaurants would close for good. Neighborhoods would be reshaped; beloved watering holes would dry up and disappear. It was a bleak image of the future, with an urgent call to action — one that was more or less ignored by the federal government.

At the time, it was hard for me to imagine what a world without restaurants might look like. In the past several weeks, it’s gotten much easier. Since the onset of the pandemic, each day has brought a slow trickle of restaurant closures, but now, they’re coming in waves.

In New York, where the magnitude of closures is still unclear, the much-loved Thai restaurant Uncle Boons closed permanently on August 10, citing an inability to come to an agreement with their landlord. One of the city’s last Cuban-Chinese restaurants, La Caridad 78, also shuttered. After 41 years, Los Angeles Koreatown mainstay Dong Il Jang closed its doors, too. The last of the nation’s lesbian bars might not make it to the other side of the pandemic. Already, these closures are reshaping the landscapes of our cities. It’s hard to fully process the weight of each loss as the casualties stack up at an accelerating rate.

The shuttering restaurants are in every town and city, but the message is more or less the same wherever you look: The money ran out, options have been exhausted, the government assistance never came. According to numbers provided to Bloomberg by restaurant consultancy firm Aaron Allen & Associates, one-third of restaurants in the U.S. could close permanently this year. And according to a Yelp report, 60 percent of restaurants that have already closed won’t reopen.

With each announcement of another closing I find myself wondering if I could have done more as a customer. I bought the gift cards, the tote bags, and the branded swag; I ordered takeout and left tips as substantial as I could afford. But no amount of individual action — a $50 gift card here, a 30 percent tip there — will save the restaurant industry. What restaurants need is a show of financial support only the government can provide.

In the absence of that support, restaurants scrambling to pay rent, repay vendors, or meet the forgiveness requirements of their Paycheck Protection Program (PPP) loans — namely, keeping a majority of staff on payroll — have gone to dystopian lengths to stay open. In San Francisco, for instance, a restaurant seats its wealthy clientele in plastic domes to insulate them from the threats of the outside world. “We’re talking about domes because our nation’s pandemic response didn’t take advantage of the lessons learned by other nations,” writes San Francisco Chronicle restaurant critic Soleil Ho. “[B]ecause our healthcare system isn’t accessible to people at all income levels; because there is no stimulus for the undocumented immigrants who feed the country … because both restaurateurs and working class people who cannot do their jobs remotely have had to choose between their health and their livelihoods.”

A chaotic and disjointed response from the federal government and a patchwork of local guidelines and ordinances have forced restaurants and their workers into an impossible position. Restaurant owners have little choice but to stay open for business, and their employees risk serious illness — or death — to collect a paycheck.

These aren’t the kinds of choices restaurateurs should be making during a deadly pandemic. This ultimatum shouldn’t be forced upon often-underpaid waiters, line cooks, and dishwashers. It’s a monumental failing that we have made restaurant owners and workers choose between their livelihoods and their lives.

As the coronavirus pandemic first spread across the country, restaurants should have been provided with the resources to remain closed, protecting both their workers and the general public. Instead, the pressure to fuel the economy and meet the requirements of loan forgiveness pushed restaurants into hastily reopening.

Among the PPP program’s many shortcomings was its failure to reach businesses owned by women and people of color, with enormous sums of money instead being directed to franchise locations of national chain restaurants. For restaurant owners who did receive funding, a majority of that money was expected to be used on payroll, and for the loan to be forgiven a majority of staff had to be rehired. This was, from the start, illogical, since restaurants in most states still haven’t been able to reopen at full capacity, and rehiring a full staff to operate a mostly empty restaurant only spells a slower demise.

Where restaurants and bars do reopen for indoor dining, COVID-19 cases tend to spike. In response to the frightening rise in cases, government officials who so recently preached the importance of getting back to businesses as usual walk back reopenings, workers are once again unemployed, and restaurateurs must adjust and try to figure out how they’ll pay another month’s rent. It is, to put it simply, a total mess.

As the weather begins to cool off and outdoor dining in chillier parts of the country loses its appeal, the situation will only become more dire, and the need for government action more urgent. Restaurants in states that have yet to reopen for indoor dining and rely on patio spaces or sidewalk tables likely won’t have the cash to last more than a single cycle of rent or payroll. Unless help comes soon, there will be an immense rush of closures this winter.

Financially propping up restaurants to make it through the end of the year won’t insulate the industry from many of the challenges ahead — particularly if the support, like PPP loans, fails to reach many of those who need it most — but it would significantly help prevent the wave of closures we’re seeing now. A bill like the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive (RESTAURANTS) Act of 2020, introduced in late May by Rep. Earl Blumenauer of Oregon, would go a long way in providing this support. Tailored more specifically to small businesses than PPP funding was, the bill would make $120 billion accessible to restaurants, in the form of grants that — unlike PPP loans — would not need to be paid back.

The bill faces an uphill battle, and if it does see the light of day, it will likely do so only after hundreds — if not thousands — more restaurants have closed. Negotiations over a fifth coronavirus relief package have stalled, and with funding for a service as essential as sending a postcard or a ballot up for debate, it’s hard to imagine restaurant relief will come soon. In an email statement to Eater, Blumenauer says his office is “doing everything we can to try and pass this bipartisan bill quickly to ensure that restaurants — and their workers — get the support they need to get through this unprecedented health crisis.”

If passed, a program like the RESTAURANTS Act could incentivize an action that should have been taken months ago: a national pause on indoor dining. Restaurant workers shouldn’t have to put themselves in harm’s way to make a living, and restaurant owners should be given a choice other than to reopen hastily or to close for good. Grant money could infuse these businesses with enough cash to keep their dining rooms closed, while offering takeout and curbside pickup. In addition to a bill propping up restaurants, enhanced unemployment benefits must be strengthened and extended past the end of the year — this comes with its own challenges for struggling state governments — before what is likely to be a brutal convergence of COVID-19 and flu season this fall.

Restaurants that manage to hold on through the end of the year still won’t be out of the woods: There’s still the question of how they’ll sustain operations into 2021. In San Leandro, California, Noodles Pho Me is one of very few Bay Area restaurants serving Lao-style pho, and was on the brink of closure earlier this month when its owners negotiated a deal with the landlord. The lowering of rent will allow the restaurant to remain open through the end of the year. This news brought a sigh of relief, a relaxing of the shoulders for Noodles Pho Me’s owners and many fans. “We teetered almost to the verge of bankruptcy,” the restaurant’s co-owner Tong Sengsourith tells Eater SF. It wasn’t just a question of how the restaurant was going to pay rent month-to-month, but also how they could afford to pay what would amount to more than $30,000 in missed rent at the end of the year.

At B&H Dairy, one of New York’s last kosher lunch counters, a sign in the window welcomes customers. But on August 19, a message on the restaurant’s Instagram account warned that the struggle is far from over for the diner, which has been in business since 1938. “Anyone who is under the impression that because a restaurant [is] ‘open,’ all is ‘back to normal,’ is not grasping the reality of the pandemic and its consequences,” the post reads. The restaurant, which, according to the post, is only bringing in about 10 percent of the revenue it did before the pandemic, still has rent, payroll, and utilities to cover. To pay its bills, the restaurant launched a crowdfunding campaign. “We applied for all appropriate relief loans and grants from various city and government agencies, none of which have been granted so far, except for one tiny grant early on, which covered a fraction of one month’s rent, and has since been repaid,” the Instagram post continues. “To date, though several applications are pending, we have received no further government assistance or relief.”

For restaurants like Noodles Pho Me and B&H Dairy, which avoid being swept up in the first wave of closures, 2021 will bring more challenges. Businesses will scramble to make up for thousands of dollars in lost income, to repay debts to vendors, to pay back months of rent. They, too, will need government support.

“Restaurants don’t typically maintain enough cash flow to get through a week of closure, never mind half a year,” says Lana Porcello, co-owner of the restaurant Outerlands in San Francisco. “Many of us carry a fair amount of debt as part of our long-range model. It’s the nature of our industry, and hopefully one that will change now that so many of its fractures have been revealed through this experience.” Porcello, who opted to close her restaurant for the duration of San Francisco’s shelter-in-place, says that restaurants need “creative autonomy” to decide how to spend relief funds, and that one size won’t fit all when it comes to a solution. “Restaurants will not survive without direct relief, and the freedom to structure how that relief must be applied based on their circumstances,” she says. “Right now, the RESTAURANTS Act is our most viable potential lifeline.”

In Emeryville, California, Fernay McPherson, chef-owner of Southern restaurant Minnie Bell’s, echoes just how bad things will get if help doesn’t come soon. “Many of us are definitely at jeopardy of closing if there is no bailout,” McPherson recently told me via email. “A lot of restaurants are accumulating debt via loans or depleting whatever funds they have left, the hole is going to be too big to get out of which will result in many more restaurant doors closing.”

We’ve been so focused on an urgent return to normalcy that in the process, we’ve chipped away at any real chance we have of saving the restaurants and bars we miss so much. As Eater’s Jaya Saxena puts it: “the question is being presented not as ‘when will the pandemic be under control?’ but rather ‘when can we start making money again?’ That framing puts the wellbeing of business over the wellbeing of people, to already confounding results. It’s pretty clear that where dining rooms have reopened, safety measures often exist in direct opposition to how a restaurant is supposed to operate.”

If restaurants don’t see monetary relief soon, and restaurant workers aren’t provided with the financial support they need to safely make it through the pandemic, the suffering will needlessly continue, and there will be no normal to return to.


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