As Congress discusses a new economic-relief package, a bipartisan group of lawmakers is pushing for $120 billion in aid for restaurants that aims to prevent further closures and job losses due to the coronavirus outbreak.
Sen. Roger Wicker (R., Miss.) and Rep. Earl Blumenauer (D., Ore.) are taking the lead on the idea, which calls for direct grants administered by the U.S. Treasury. The lawmakers, who say they were brought together by a group representing smaller, independent restaurants, plan to unveil differing versions of their restaurant-stabilization fund on Thursday.
“This is a significant part of our economy and it is more at risk than almost any other segment,” Mr. Wicker said.
Overall, the food-services industry lost almost six million jobs in March and April, when coronavirus hot spots formed in major cities, requiring the closure of sit-down dining. The industry recovered about 1.4 million of those jobs in May, when governors in some states began reopening their economies.
The prospects for direct restaurant aid are uncertain, in part because some Republicans in the GOP-led Senate see the economic rebound limiting the need for new federal relief for households and businesses, after previous rounds added trillions of dollars to the federal deficit. The Democratic-controlled House passed a new $3.5 trillion round of aid last month, but the Senate has taken a go-slow approach.
Messrs. Wicker and Blumenauer are hoping that their bipartisan coalition, which also includes Sens. Lindsey Graham (R., S.C.) and Chris Coons (D., Del.), and the restaurant industry’s reach into every congressional district will help the aid attract broader support.
Under the House version of the bill, restaurants that aren’t part of a larger chain would be eligible for direct grants covering the difference between quarterly revenues generated last year and this year. Owners with more than 20 restaurants wouldn’t qualify. The funds could be used to cover rent, payroll, utilities, and supplies—including to pay money owed before the pandemic struck.
The Senate version is designed for a broader set of restaurants and would permit restaurants that are part of a chain to receive aid. Some big chains such as Shake Shack would be excluded under both bills, which ban grants from going to publicly traded companies.
While there is no requirement that companies retain workers, restaurants would have to certify that the funds would be used to retain workers, maintain payroll and for other expenses. The stabilization fund was proposed by the Independent Restaurant Coalition, a group that includes restaurateurs such as notable chef José Andrés.
The plan would represent a dramatic expansion of aid to restaurants from what the businesses received through the $500 billion Paycheck Protection Program, which allocated almost $41 billion to accommodation and food-services companies, according to data from the Small Business Administration.
The PPP “was at best a six-month solution…for what is going to be an 18-month problem,” Mr. Blumenauer said. “If we can get these folks stabilized, stay in business, they can work through it.”
The funding saved many restaurants, which pivoted to takeout and delivery to replace lost sit-down dining. But the PPP aid wasn’t sufficient to give other owners confidence about the future of their businesses, and some have already closed.
“Everything you do in restaurants everything is based on seating capacity,” said Robert St. John, a restaurateur in Mississippi, who has already had to permanently close one of his outlets, the Purple Parrot, but says his other operations can survive with direct grants. “The business model will not hold—it’s just not going to happen.”
A stabilization fund would represent an approach that is different from the one that President Trump has pushed to help restaurants. President Trump has repeatedly called for expanding tax deductions for business meals and entertainment as a way to revive the industry once stay-at-home orders are lifted.