US Senate nixes restaurant industry rescue package

The U.S. restaurant industry’s hopes of receiving additional government funding to compensate it for COVID-19-related operational difficulties were extinguished by the U.S. Senate on 19 May.

The U.S. Senate ended the restaurant industry's hopes of receiving additional government funding to compensate it for COVID-19-related operational difficulties on 19 May.

The Senate voted against passing the Small Business COVID Relief Act of 2022 (S. 4008), ending any realistic possibility it will replenish the Restaurant Revitalization Fund (RRF).

The U.S. House of Representatives passed the Relief for Restaurants and other Hard Hit Small Businesses Act of 2022 (H.R. 3807), which included USD 42 billion (EUR 39 billion) to replenish the RRF, in early April 2022. The Senate's version of the now-failed legislation included USD 40 billion (EUR 37 billion) for RRF replenishment and USD 8 billion (EUR 7.5 billion) in support for other industries deeply impacted by the pandemic.

“The vote is a devastating blow to the restaurant industry and small business operators,” the National Restaurant Association said in a press release.

The bill was unlikely to pass after an official in the administration of U.S. President Joe Biden said in January 2022 another large economic stimulus package related to COVID-19 relief was off the table. But Independent Restaurant Coalition Executive Director Erika Polmar said most U.S. restaurant owners were not able to tap into the RRF before it was depleted, and that many had been counting on the funding.

“Neighborhood restaurants nationwide have held out hope for this program, selling their homes, cashing out retirement funds, or taking personal loans in an effort to keep their employees working and their doors open,” Polmar said in a press release.

As a result of the vote, the IRC estimates that more than half of the 177,300 restaurants waiting for a RRF grant will close in the next few months.

“Throughout the pandemic, restaurants focused on serving their communities. When government-mandated closures shuttered dining rooms, restaurants found a way to shift operating models and keep employees on the payroll. When first responders needed a hot meal, restaurants stepped in to help in cities and towns across the country,” NRA President and CEO Michelle Korsmo said.

When Congress offered these restaurants the RRF lifeline, restaurant owners and operators made business decisions based on those commitments, according to Korsmo.

“Restaurants that are still trying to make up for what was lost in the pandemic today are struggling with workforce shortages, record-high inflation, and supply-chain constraints,” Korsmo said. “[This vote will] further exacerbate those challenges and result in more economic hardships for the families and communities across the country that rely on the restaurant and foodservice industry.”

Even though the restaurant industry appears to be recovering from a consumer spending perspective, the challenges continue to mount for restaurants, which operate on 3 to 5 percent pre-tax profit margins, the NRA said.

“Soaring food prices, supply chain constraints, and workforce shortages make it impossible for many restaurants to pay off debt that was accumulated during the pandemic,” the organization said.

Photo courtesy of rblfmr/Shutterstock


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