Rep. Earl Blumenauer (D-OR) hosted a virtual listening session Tuesday with other members of Congress and a handful of bar and restaurant owners to discuss replenishment of the Restaurant Revitalization Fund (RRF).
Blumenauer authored the Restaurants Act in 2020 that created the RRF, which provided $28.6 billion to more than 101,000 bars and restaurants (including breweries and brewpubs). He is now co-sponsoring the Restaurant Revitalization Fund Replenishment Act (House Bill 3807 and Senate Bill 2091) to replenish the fund with $60 billion in additional funding.
During the Zoom session – which was also live streamed on YouTube – four small business owners detailed how the COVID-19 pandemic affected their establishments, and the financial hardship they continued to face when they were not granted funding from the RRF.
“On March 16, 2020, the nightmare began,” Alex Briggs, owner of Reel M Inn Tavern in Portland, Oregon, told lawmakers. “We closed our doors [and] within two weeks we were laying off our entire staff. Uncertainty and fear took over America, mandates were firmly put in place and we stayed closed over 100 days in 2020.
“When we could finally open, it was limited hours and takeaway only; it was more expensive to be open than closed,” he continued. “The pandemic didn’t end in 2020; in 2021, it got worse.”
Reel M’s sales declined from $1.9 million in 2019 to $300,000 in 2020, Briggs said. The tavern – which Briggs took over in 2017, but has been open since the 1940s – was originally approved for a $1.2 million RRF grant in 2021. But after a month of waiting to receive the funds, Briggs said the Small Business Administration (SBA) notified him that “due to lawsuits” the business would not receive its grant.
Jim Woods, founder and CEO of San Francisco-based Woods Beer & Wine Co., and a member of the Brewers Association (BA), said the pandemic was devastating to his business “both from a financial perspective and a spiritual perspective,” noting that his company had to layoff two-thirds of its employees in 2020, when sales dropped 40% year-over-year. In 2021, sales were still -16% below 2019 levels, while the company continued to rely on packaged beer over draft beer sales, which he said cut their profit margin nearly 75%.
Although Woods said he submitted his RRF application before the fund’s official launch date due to the application portal opening early, Woods Beer & Wine did not receive any funding, while some of his neighboring breweries and restaurants did.
“Not only do we miss out on these funds, but we were now expected to compete with these businesses on pricing, purchasing raw materials and hiring employees,” Woods said. “The partial funding of the RRF program caused a massive distortion in the marketplace creating a class of haves and have-nots. I know the Legislature never intended to pick winners and losers, but your failure to fully fund the program has done just that.”
Amanda Cohen, chef and owner of New York City-based Dirt Candy, a vegan restaurant, added that while on-premise shutdowns, lack of consumer traffic, and rising supply costs all contributed to the financial strain her business felt throughout the pandemic, there were also unexpected related costs – such as building structures for outdoor dining, and heating those spaces. She noted that these costs should be taken into account when implementing new relief funding.
“That [outdoor dining] structure cost us over $25,000, but worse than that was heating that structure,” Cohen said. “My electricity bills went from an average of $2,000 in the winter to over $5,000 month after month after month, and that doesn’t even include putting the electricity into that structure.
“We are all tired and frustrated and many of us are on the cusp of closing,” she continued. “I don’t want to be the 90,001st restaurant to close, but I can’t do this without more help.”
On March 11, Blumenauer and more than 150 members of Congress signed a letter to Speaker of the House Nancy Pelosi (D-CA) and House Minority Leader Kevin McCarthy (R-CA), urging lawmakers to pass legislation for the $60 billion RRF replenishment. The new funding would help aid the “more than 177,000 food and beverage establishments that applied for nearly $44 billion in funding” from the SBA, but “received nothing,” members wrote in the letter.
“These entities are the beating heart of every community, but the COVID-19 pandemic continues to put the survival of these small businesses on the line every day,” Congressional members wrote in the letter. “Restaurants are still down nearly one million jobs compared to pre-pandemic levels and at least 90,000 restaurants have already permanently closed. Recent surveys clearly demonstrate that those who did not receive a RRF grant are more likely to lay off workers, more likely to be in danger of filing for bankruptcy, and are more likely to have received or anticipate receiving an eviction notice.
“Simply put, the cornerstone of our communities will not survive unless Congress replenishes the Restaurant Revitalization Fund,” the lawmakers continued.
Replenishment of the RRF is a core legislative priority for the BA in 2022, the trade group stated in its 2021 “Year in Beer” report. An estimated 1,600 craft breweries received about $450 million from initial RRF grants, after trade groups lobbied for the inclusion of breweries, the BA told Brewbound in September.
“It only funded one-third of us, and it left an uneven playing field,” Chris Lohring, founder of Salem, Massachusetts-based Notch Brewing Co., told Brewbound in an email. “I never thought we’d be at a disadvantage due to an unequal distribution of aid.”
Notch Brewing received loan money from the SBA through the Paycheck Protection Program (PPP). The brewery also qualified for $350,000 from the RRF, but the company did not receive the funds due to program money running out, according to Lohring.
“The first round of PPP only allowed us to be the unemployment office, as we paid employees to stay home and pay our rent,” Lohring said. “It was a waste of taxpayers’ dollars and a poorly thought out relief package. The second round of PPP helped immensely, and without it we would not be in business today. However, it only gave us about six months of relief, and did not allow us to get back to the level we needed to be from a cash flow perspective headed into the winter. And then Omicron hit.
“We don’t need another round of RRF, we need the first round to be completed,” he continued. “We have two years of not being profitable to dig out of, and without relief, it will be a very long time before our head is above water.”
Asked by Brewbound how the latest legislation would address the previous fund’s issues of access and competition, Blumenauer said “it’s a challenge that just is one of numbers” and “getting more money into this fund.”
“The legislation was crafted to specifically deal with brewpubs [and businesses] with wine tasting operations,” he added.
Blumenauer said lawmakers are also exploring other loan forgiveness opportunities for businesses, as well as limiting RRF funding access to businesses with up to four locations, to allow for more small grants, rather than a handful of large grants. RRF guidelines allowed for applicants to own and operate up to 20 locations, as of March 13, 2020.
Blumenauer said members of Congress are also exploring ways to “repackage” financial relief as another approach to get it passed by lawmakers.
Rep. Rosa DeLauro (D-CT), chair of the House Appropriations Committee, told businesses during Tuesday’s session that she and her colleagues “can’t make any commitments” to passing RRF-related legislation, and that COVID-19 relief supplemental bills are facing roadblocks in the Senate due to what she said is a lack of Republican support. She encouraged businesses to contact Reps. Nydia Velázquez (D-NY) and Blaine Luetkemeyer (R-MO), and Sens. Ben Cardin (D-MD) and Rand Paul (R-KY) – ranking member of the Senate Small Business Committee – to express support for legislation.
In the House, the bill has 234 co-sponsors, who are mostly Democrats (209); 25 Republicans have signed on. Forty-two Senators have co-sponsored their chamber’s version of the bill, breaking down along similar party lines (36 Democrats, six Republicans). Both were introduced in June, and the House version was referred to the House Committee on Small Business on the day of its introduction. Neither has progressed since.
“It’s not our sympathy that you need, you need our action and you need the funds,” DeLauro said. “We cannot guarantee an outcome, but by God we’re going to be there every step of the way like you have been for all of us.”
Other members of Congress who expressed support on the call included Reps. Lloyd Doggett (D-TX) and Susie Lee (D-NV).