Independent Restaurant Owners Want $120 Billion To Get Them Through COVID. Where’s The Accountability To Workers And Taxpayers?

This week, 20 governors from across the country pledged to create a job training network aimed at helping the nation’s workers uplevel their ability to better succeed in a post-pandemic world. The impetus: to get low-skilled workers out of the service industry.

“The pandemic has disproportionately affected lower-income workers who are concentrated in service-sector jobs that do not lend themselves to telework,” reads the press release sent out by the National Governors Association, which is helping to spearhead the program.

This week, the American Civil Liberties Union ran a campaign – in tandem with the nationwide Strike for Black Lives — to target McDonald’s

MCD
for letting its franchisees off the hook for paying sick time to its hourly employees, even those who have COVID.

This week, Congressional Republican leaders revealed their vision for the next set of coronavirus economic relief packages. Restaurant workers may find some solace in the proposal, which calls for a second round of Paycheck Protection Program (PPP) loans, an enhanced employee retention tax credit and deductions employers can take for testing and buying personal protective equipment for staff. (Workers lose, however, if the business liability protection provision passes.)

Also this week, some of America’s most prominent chefs, restaurant owners, food foundations and corporations are spending their time trying to convince the public to convince their elected officials to act on a separate federal bill, nicknamed the Restaurants Act, which calls for $120 billion in direct funding for independent entities licensed as a “restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, or other similar place of business.” The bill, while a solid starting point for discussion, does nothing to guarantee the recipients of that money use it to protect those workers who keep their restaurants running.

The act, introduced in mid-June, enjoys bipartisan support in both chambers. Created to make up for the disastrous allocation of previous PPP money that favored megalithic corporations over the small businesses it claimed to support, the Restaurants Act would provide no-payback, tax-free grants to privately held restaurant entities with unlimited locations, as long as no more than 20 operate under the same brand name. The individual grant amounts would cover the difference between 2019 revenues and those projected for 2020.

The Independent Restaurant Coalition (IRC), formed in April to lobby for just this kind of restaurant revitalization fund, cites, “The $120B Independent Restaurant Revitalization Fund would grow the economy up to $271 billion, reduce national unemployment by up to 2.4%, and revitalize supply chains nationwide. Without the fund, 85% of independent restaurants could permanently close.”

Restaurant owners, particularly independent ones, are in a legitimately precarious position, with nearly three-quarters reporting debt obligations of more than $50,000, plus net profits at just four percent of gross pre-COVID, according to the IRC. But if these entrepreneurs worry about losing their businesses, the workers they employ worry about losing their ability to cover rent, food, utilities, childcare, medical expenses, and their lives, and the Restaurants Act wouldn’t necessarily prevent that from happening.

The bill states that eligible expenses may include, as summarized by primary House sponsor Earl Blumenauer (D-Portland, OR): “payroll (not including employee compensation exceeding $100,000/year), benefits, mortgage, rent, utilities, maintenance, supplies (including protective equipment and cleaning materials), food, debt obligations to suppliers, and any other expenses deemed essential by the Secretary of the Treasury.”

Therefore it seems a grant recipient MAY spend the money on payroll, benefits and PPE but doesn’t have to. Unfortunately, the IRC joins organizations like the National Restaurant Association (NRA) in appearing to trot out sad unemployment numbers to leverage their bail-out requests while failing to ensure protections for anyone below the top-tier of ownership. The NRA, which supports the Restaurants Act, sent a letter to President Trump and Congressional leaders in March asking for a dozen provisions to help mitigate the disastrous economic situation social distancing measures were imposing on eateries. Four mentioned employee welfare; of those, two would encourage employee retention and the rest would fall on government. 

The NRA didn’t respond to an emailed request for comment late Friday afternoon.

Restaurant Opportunities Center United, a national group that advocates for restaurant workers, has asked bill sponsors to include worker protections – paid sick leave, PPE, hazard pay, and the right to return to their old job once rehiring starts — as a requirement for accepting the money.

ROC United National Policy Coordinator Anthony Advincula says, “The strategy for some owners is to use COVID as an excuse not to bring back senior workers with high salary grades but high seniority means experience dealing with health and safety concerns.”

When asked about linking funds to worker protections, a spokesperson for the IRC said, “From the very beginning, the IRC’s mission and advocacy has been directly shaped and informed by the experiences, challenges, and urgent needs of independent restaurant workers who deserve to have their voices represented before Congress. This is why we are fighting for The RESTAURANTS Act; the only proposal in both the House and Senate that will help independent restaurants avoid permanent closure and help protect up to 16 million jobs.”

What’s more, if the grant recipient goes out of business before their money runs out, they have to repay the balance but the bill, as written, puts no screening process in place to determine whether an applicant has any likelihood of success.

However, a functioning business that either doesn’t use all of the money or makes more in one quarter of 2020 than the same quarter in 2019 will have to pay back the difference over ten years at 1% interest.

A spokesperson for Blumenauer, the chairman of the Ways and Means Trade Subcommittee Chairman, returned a phone call but was unable to secure a comment from the representative by press time.

This bill has good intentions. Restaurants do form part of the backbone of the American culture and economy, and that goes far beyond an indulgent evening out to the tired night-shift nurse who picks up her urgent-care cup of coffee on the way in to work and the struggling fourth-generation fisherman who starts every day dark and early at the same dingy diner that lovingly fed his great-grandfather.

Independent eateries legitimately couldn’t survive under the original PPP restrictions, if they managed to access the program in the first place. Chef Jose Andres, who help found the IRC, deserves credit as one of the greatest humanitarians of his generation. And the bill notably sets aside $60 million in funds to reach out to underrepresented and marginalized communities and, for the first two weeks of the application window, prioritizes female and BIPOC applicants and those who operate with annual revenues under $1.5 million.

Still, questions surround the issue of worker appreciation, accountability to tax payers and, additionally, transparency. The IRC sent a letter to Congress on April 6 asking for at least $120 billion in direct funding then sent a follow-up with more specifics on April 29. The actual bill, containing more fully developed parameters than the IRC’s proposals, was filed June 18. Over that time, the IRC frequently communicated these activities and asked for public support through press releases, social media posts, emails and a Zoom townhall with approximately 3000 viewers.

However, the sophisticated marketing and strategy team has not linked to or posted a detailed breakdown of the actual bill despite continuously promoting the message to support the fund and “Tell Congress to pass the RESTAURANTS Act.” Today its website contains mountains of supporting data plus dozens of testimonials, downloadable promotional materials and entreaties to donate, join or take action but does not direct visitors to more information about the bill content itself. A few posted newspaper stories do cover the introduction of the act but someone who wants to know exactly what they’re being asked to support has to leave the site and search on their own.

When asked to comment on criticism of the bill’s accountability to taxpayers as well as its own perceived lack of full transparency, the IRC provided the comment above.