Throughout the past year, an industry that has been negatively impacted by the devastating effects of the coronavirus is the restaurant business. Although some restaurants have successfully made the transition to offering only takeout, others have not been so fortunate and have been forced to close their doors permanently. However, things may finally be looking up for the restaurant business.
As part of the recently passed American Rescue Act (ARA), the Restaurant Revitalization Fund will offer nearly $29 billion to help the hospitality industry negatively affected by the coronavirus pandemic get back on its feet. Under the new federal program, restaurants with 20 locations or less are eligible to receive assistance from the designated fund for the next eight months.
The goal is to help support restaurants’ ongoing operations. The amount each individual restaurant will receive will be calculated by subtracting their 2020 revenues from 2019 revenues. This way, restaurants can make up the losses that they suffered in 2020 due to the pandemic.
After the eight month period has ended, the grant becomes a 1% loan.
It is expected that this additional program will provide much needed assistance, with an overwhelming number of restaurants applying since the ARA was announced on March 10, 2021.
Under this fund, the definition of restaurant is expansive, including any business that serves food or drink as its primary function as eligible to receive grants. This definition includes not only restaurants and bars, but also food stands, food trucks, food catering businesses, saloons, inns, taverns, breweries, and licensed beverage alcohol producers. But during the first 21 days of grants, applications from women-, veteran-, and minority-owned businesses will be prioritized, providing businesses that were excluded from funding under the Paycheck Protection Program with the first bite at the apple.
This news comes at just the right time for many restaurants, with the administration of Governor Tom Wolf recently announcing that restaurants may begin operating at 75% capacity beginning in April. Additionally, these restaurants will be allowed to once again offer bar seating, an option that has not been available for nearly a year.
More than 110,000 restaurants have closed permanently a result of the pandemic, with a loss of 2.4 million jobs. Small restaurants alone have lost an aggregate of $135 billion in sales within the last year according to the National Restaurant Association.
As the weather becomes warmer and vaccines become more available, it is expected that state restrictions will be eased across the country. Finally, some good news for an industry that has been struggling for over a year.
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