An urgently needed $120 billion rescue package targeted at the needs of independent restaurants.
By Earl Blumenauer as told to Marisel Salazar
Zagat Stories presents Restaurants 20/21, a collection of interviews with leading voices in hospitality, food, media, tech, politics, design, and more. Each story takes the turning of the calendar as an inflection point to consider what happened in 2020, or what’s likely to happen in 2021, in the world of restaurants and hospitality. See all stories here.
Since 1996, Earl Blumenauer has been the United States Representative for Oregon’s 3rd congressional district. His district includes most of Portland, one of the leading dining capitals in the country. A Democrat, he is currently sponsoring the bipartisan RESTAURANTS Act of 2020 in Congress in response to the economic effects of COVID-19 on the hospitality industry. This legislation would establish $120 billion for an independent restaurant revitalization fund.
Chefs and restaurants are important constituents of mine—they are the lifeblood of my community. From the beginning of the pandemic, I’ve been involved in heartbreaking conversations with chefs and restaurant owners. I’ve received texts in the middle of the night explaining their painful current circumstances.
Portland wouldn’t be Portland without our independent restaurants. Food culture is baked into the fabric of what makes this city unique. Losing these restaurants would be heartbreaking, especially when a bipartisan solution like our RESTAURANTS Act could save them.
This is rescue legislation to preserve the critical role of independent restaurants in our communities. The legislation we passed earlier in April, the Paycheck Protection Program, was ill-suited for restaurants—it was an eight-week window for loans that may or may not be forgiven. But restaurants didn’t know if they would even be in business for eight weeks.
The RESTAURANTS Act of 2020 is legislation designed for the nearly half-million independent restaurants in the United States. In April of this year, half of the unemployment in the United States was from 11 million independent restaurant employees. The restaurant industry has more jobs than the government itself, and it’s staggering how hard the industry has been hit. It’s clear that if we don’t have a tailored rescue for independent restaurants, we are going to lose as many as 85 percent of them permanently in the months ahead.
The restaurant industry shed nearly 50 percent of its jobs between February and April of this year—about 5.9 million jobs. At least 4.5 million of those jobs were from independent restaurants, according to an economic report in June. This report found that the relief provided in the RESTAURANTS Act would bring back these 4.5 million jobs, accounting for the 2.4 percent reduction in unemployment rate.
Independent restaurants anchor neighborhoods. They supply the meeting space for friends, where families come together, and where business is conducted. They are essential for a safe and rapid economic recovery.
The $120 billion in federal relief requested by the RESTAURANTS Act of 2020 is a big chunk of change to be sure. But that $120 billion will make a direct impact of $183 billion net positive and other secondary benefits that will in turn bring in a further $271 billion in primary and secondary economic benefits. These critical businesses are so intertwined with the overall economy, we need to keep them functioning. Let them keep their employees on payroll instead of on unemployment benefits. Give them the means to keep paying taxes rather than going bankrupt. Let them pay rent instead of being evicted.
Otherwise, all of these dire outcomes are very expensive for the public. It would cost us twice as much as a society to lose these businesses than to keep them operational. Unemployment is not cheap. Unemployment benefits are going to take a great deal of federal money, exhaust government funds, or require transfusion. It costs money if people cannot pay mortgage or rent. That churn is super expensive.
I am excited that with the initial moves of the incoming Biden administration, things we should have done six to eight months ago will happen soon.
There will be a time for restaurants to resume semi-normal operations. We must keep them alive, afloat, and give them hope until then, so that as we return to normal, they can return to normal too. That is going to save all of us a great deal of heartburn and money that would otherwise be wasted in their failure, due to unemployment and breakdown of the supply chain. Producers provide high-value products, who in turn provide business. Think of all the elements that are a part of a restaurant—linens, plates, uniforms, plants, and so on.
This RESTAURANTS Act was the outgrowth of conversations we had with people in the food space who were deeply troubled about the PPP. They didn’t know if they could afford to accept it, even on what appeared to be favorable terms. The Independent Restaurant Coalition coalesced very quickly at the beginning of the pandemic. They are a fiercely creative group of independent restaurant owners, willing to be strategic partners with us. Together we started creating the RESTAURANTS Act legislation.
The main questions we asked ourselves is, “How would our legislation work? How do we strip away the regulations that made PPP unacceptable?” We specified the exclusion of the big chains. Those businesses weren’t seriously damaged by the pandemic and were already geared for takeout and drive-through. We limited the size of the restaurants that qualified because there was deep concern that PPP got scarfed up by those who weren’t the most deserving or actually in need. Some who were well-connected, and clients of big banks got concierge service to receive PPP. These people got to the head of the line.
The RESTAURANTS Act is designed to be simple. Terminology was reworked and simplified. There is a provision that calls for early access for smaller operations that made $1.5 million or less last year, and preference for BIPOC and women-owned businesses in the prioritization of how the $120 billion fund is dispersed. These smaller operations would be allowed to apply for the first two weeks of funding, and so would be first in line.
Restaurants are unique in terms of employing large numbers of people of color and women. The ownership of independent restaurants is very diverse. There are lots of ethnic groups and immigrant populations that use their culinary skills and food cultures to start their own businesses with low overhead, like food carts and small neighborhood restaurants. Restaurants are the path for them to make progress in an adoptive country. So we want to help diverse populations, women, minorities and low-income folks that were impacted.
Currently, there isn’t a consensus as to the scale of the package. I don’t want to make this unduly partisan, but some Republicans have balked at the cost. They would like to include chain restaurants, even though that would make the bill even more expensive. And the National Restaurant Association hasn’t helped small independent restaurants. They helped their biggest members that pay the most dues, not the majority of their members that were hurt by the effects of the pandemic. I was mystified. Their reluctance to get on board froze some Republicans in place.
We have not yet agreed on the next relief package to go forward. Speaker Nancy Pelosi of the United States House of Representatives is working on another version to get support and move it forward. She is having conversations with the White House and Secretary of Treasury. The Independent Restaurant Coalition made a great case at the White House and to President Trump, but the election shut everything down. In the meantime, the clock is ticking and time is growing short.
However, I am pathologically upbeat by nature. I am totally convinced of the righteousness of this effort. Keeping restaurants afloat is key to having a rapid and sustainable nationwide recovery. We desperately need another bill or two. We need money in people’s hands. Not just restaurants, but also for healthcare, education, and those who need enhanced and extended unemployment benefits. I hope people come to their senses and can compromise on a big chunk.
If restaurant relief doesn’t happen during the Trump administration, I hope the new Biden administration will help clear away any underbrush to negotiating in a constructive way. The biggest impediment we have had is Donald Trump and his incoherent response. Even though he had a compelling meeting at the White House, and a case was made, it didn’t galvanize the issue for him. I don’t know what motivates him. There are no strategic visions—if there were, we would have an economic plan and be better off fighting COVID.
I am totally committed to getting as much help to the restaurant industry as humanly possible. And not just in the short term. I am hopeful that in addition to passing provisions of the HEROES Act, we will talk about programs regarding food waste at restaurants. And why is it that we have the highest healthcare by a factor of two, but spend the least on food? We have agricultural policies in place to produce cheap, unhealthy calories. People with congestive heart failure and obesity due to a bad diet are prone to rehospitalization. If you get people healthier and prevent two unnecessary hospitalizations a year, that alone would probably pay for medical prescriptions. The American public has been cheated. We are subsidizing a diet that makes Americans sick. We spend billions for people to grow the wrong food, in the wrong way, and we provide so little to support the local institutions who need it.
The problems we face—Big Food, Big Meat—are struggles we will have for the next 10 years. It is imperative we align our food and farm policies. What we are doing is inordinately expensive—over half of Americans suffer from chronic disease directly related to inadequate diet, obesity, and diabetes. These diseases are expensive and painful.
In the wealthiest country in the world, it is unacceptable that millions of people live in food deserts and face food insecurity. One way we can combat this is by ensuring small, local producers have access to available federal subsidy dollars to better reach consumers with healthy food. Currently, 94 percent of those subsidies go to a concentration of commodities including corn, wheat, and soy—not local farmers or food infrastructure. My proposed Food and Farm Act would help us get back to growing more nutritious food closer to home, and feeding more people.
Restaurants are the vehicle to make the supply chain real. They are poised to play a critical role helping promote more sources of healthy, sustainably produced food. The huge problem, however, is the strength of their supply chain, which we have now come to see as so brittle in light of the coronavirus.
We must be insistent that the federal government step up and make it a priority to protect independent restaurants. Even if the RESTAURANTS Act is passed, the fight does not stop. It’s going to be brutal for the rest of the year. The public may not recognize how vulnerable we are to losing restaurants right now. It’s helpful for the media to highlight and profile the industry and its leaders—such as Dan Barber, Naomi Pomery, Kim Malek, and others who have made successful restaurants in local supply chains. It’s not just about the celebrity chefs.