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‘The Big Guys Get Bailed Out’: Restaurants Vie for Relief Funds ‘The Big Guys Get Bailed Out’: Restaurants Vie for Relief Funds
(10 days later)
Buried deep in the 900-page stimulus package that Congress passed in March, a single paragraph has sparked an outcry from small restaurants as major chains and mom-and-pop places alike scramble to survive a devastating financial crisis.Buried deep in the 900-page stimulus package that Congress passed in March, a single paragraph has sparked an outcry from small restaurants as major chains and mom-and-pop places alike scramble to survive a devastating financial crisis.
The provision, in a section outlining which small businesses qualify for loans from the federal government, allowed big chains like Shake Shack, Potbelly and Ruth’s Chris Steak House to get tens of millions of dollars while many smaller restaurants walked away with nothing when the $349 billion fund was exhausted last week. On Monday, Congress and the White House were nearing a deal to replenish that fund with $300 billion in additional relief.The provision, in a section outlining which small businesses qualify for loans from the federal government, allowed big chains like Shake Shack, Potbelly and Ruth’s Chris Steak House to get tens of millions of dollars while many smaller restaurants walked away with nothing when the $349 billion fund was exhausted last week. On Monday, Congress and the White House were nearing a deal to replenish that fund with $300 billion in additional relief.
The inequity caused widespread outrage. Independent owners said it would create a post-pandemic landscape in which chains dominated and small, vibrant restaurants collapsed. Some lawmakers said the outcome had violated the spirit of the legislation.The inequity caused widespread outrage. Independent owners said it would create a post-pandemic landscape in which chains dominated and small, vibrant restaurants collapsed. Some lawmakers said the outcome had violated the spirit of the legislation.
“The big guys get bailed out, and the little guys don’t,” said Danny Abrams, who has laid off all 310 of his employees across six restaurants he owns in New York.“The big guys get bailed out, and the little guys don’t,” said Danny Abrams, who has laid off all 310 of his employees across six restaurants he owns in New York.
On Sunday, Shake Shack, with 189 outlets and nearly 8,000 employees in the United States, acknowledged that the Small Business Administration’s Paycheck Protection Program had been carried out unevenly, and said it would return the $10 million it had received.On Sunday, Shake Shack, with 189 outlets and nearly 8,000 employees in the United States, acknowledged that the Small Business Administration’s Paycheck Protection Program had been carried out unevenly, and said it would return the $10 million it had received.
But the potential new funding and Shake Shack’s return of its money may come too late for the thousands of independent restaurateurs across the United States who are grasping for a lifeline.But the potential new funding and Shake Shack’s return of its money may come too late for the thousands of independent restaurateurs across the United States who are grasping for a lifeline.
From the beginning, the federal loan program has been plagued by glitches, as overwhelming demand and confusion about how it would work slowed the approval process in many industries. Banks turned away some would-be borrowers because there were too many applicants. Other companies lost valuable time because their bankers didn’t know all the details about how the program would function.From the beginning, the federal loan program has been plagued by glitches, as overwhelming demand and confusion about how it would work slowed the approval process in many industries. Banks turned away some would-be borrowers because there were too many applicants. Other companies lost valuable time because their bankers didn’t know all the details about how the program would function.
In the restaurant industry, small-business owners who have been forced to close their dining rooms are concerned that the program’s fine print ended up helping large chains.In the restaurant industry, small-business owners who have been forced to close their dining rooms are concerned that the program’s fine print ended up helping large chains.
Under the terms, businesses that employ fewer than 500 people are eligible for loans, which will be forgiven if the borrower does not lay off workers or rehires them by June 30.Under the terms, businesses that employ fewer than 500 people are eligible for loans, which will be forgiven if the borrower does not lay off workers or rehires them by June 30.
But a subsection of the legislation, under the heading “business concerns with more than 1 physical location,” states that certain types of businesses, including restaurant and hotel chains, with no more than 500 employees “per physical location” are also eligible.But a subsection of the legislation, under the heading “business concerns with more than 1 physical location,” states that certain types of businesses, including restaurant and hotel chains, with no more than 500 employees “per physical location” are also eligible.
Restaurant and hotel trade associations lobbied for that provision. On March 18, the National Restaurant Association sent a letter to Congress requesting a recovery fund specifically for its industry. But as drafts of the legislation started circulating, it became clear that Congress was not going to grant a restaurant-specific bailout.Restaurant and hotel trade associations lobbied for that provision. On March 18, the National Restaurant Association sent a letter to Congress requesting a recovery fund specifically for its industry. But as drafts of the legislation started circulating, it became clear that Congress was not going to grant a restaurant-specific bailout.
So the group called members of Congress to advocate for a carve-out in the small-business program that would make all restaurants eligible for loans, regardless of size.So the group called members of Congress to advocate for a carve-out in the small-business program that would make all restaurants eligible for loans, regardless of size.
“There was no one in the industry that was calling against this at that point — everybody was in support of this carve-out,” said Sean Kennedy, the executive vice president for public affairs at the National Restaurant Association. “This pandemic is a tidal wave that is crashing against every restaurant, no matter how big, small or well funded it may be.”“There was no one in the industry that was calling against this at that point — everybody was in support of this carve-out,” said Sean Kennedy, the executive vice president for public affairs at the National Restaurant Association. “This pandemic is a tidal wave that is crashing against every restaurant, no matter how big, small or well funded it may be.”
Meanwhile, at lunches last month, Senate Republicans were asking one of the architects of the federal loan program, Senator Marco Rubio of Florida, who heads the small-business committee, why the funding did not extend to larger companies. He responded that it was meant for small businesses, and that he was negotiating its parameters with the Democrats.Meanwhile, at lunches last month, Senate Republicans were asking one of the architects of the federal loan program, Senator Marco Rubio of Florida, who heads the small-business committee, why the funding did not extend to larger companies. He responded that it was meant for small businesses, and that he was negotiating its parameters with the Democrats.
During those negotiations, Mr. Rubio and several colleagues from both parties, including Senator Chuck Schumer of New York, the Democratic leader, agreed to expand the program to cover some hospitality establishments so more employers would have access to the loans.During those negotiations, Mr. Rubio and several colleagues from both parties, including Senator Chuck Schumer of New York, the Democratic leader, agreed to expand the program to cover some hospitality establishments so more employers would have access to the loans.
But the program was not large enough to fund everyone, pitting companies of different sizes from various industries against one another in a race for cash. In an open letter on Sunday, Shake Shack’s chairman, Danny Meyer, and its chief executive, Randy Garutti, said the chain had decided to return the government loan after securing additional capital through an equity transaction.But the program was not large enough to fund everyone, pitting companies of different sizes from various industries against one another in a race for cash. In an open letter on Sunday, Shake Shack’s chairman, Danny Meyer, and its chief executive, Randy Garutti, said the chain had decided to return the government loan after securing additional capital through an equity transaction.
“We’re thankful for that, and we’ve decided to immediately return the entire $10 million P.P.P. loan we received last week to the S.B.A. so that those restaurants who need it most can get it,” the letter said.“We’re thankful for that, and we’ve decided to immediately return the entire $10 million P.P.P. loan we received last week to the S.B.A. so that those restaurants who need it most can get it,” the letter said.
Potbelly, a chain of 400 restaurants, also received $10 million. And the parent company of Ruth’s Chris Steak House, Ruth’s Hospitality, which has more than 5,000 employees, landed $20 million by seeking loans for two separate subsidiaries. Representatives for Potbelly and Ruth’s Hospitality did not respond to requests for comment.Potbelly, a chain of 400 restaurants, also received $10 million. And the parent company of Ruth’s Chris Steak House, Ruth’s Hospitality, which has more than 5,000 employees, landed $20 million by seeking loans for two separate subsidiaries. Representatives for Potbelly and Ruth’s Hospitality did not respond to requests for comment.
After those loans became public last week in securities filings, chefs, food critics and restaurant owners across the country expressed outrage that a federal program intended to help small businesses was channeling funds to corporate chains with other sources of funding.After those loans became public last week in securities filings, chefs, food critics and restaurant owners across the country expressed outrage that a federal program intended to help small businesses was channeling funds to corporate chains with other sources of funding.
“There was a lot of anger and frustration,” said Andrew Rigie, executive director of the New York City Hospitality Alliance. “We need to get the money into the hands of independent restaurant owners.”“There was a lot of anger and frustration,” said Andrew Rigie, executive director of the New York City Hospitality Alliance. “We need to get the money into the hands of independent restaurant owners.”
Updated July 7, 2020
The coronavirus can stay aloft for hours in tiny droplets in stagnant air, infecting people as they inhale, mounting scientific evidence suggests. This risk is highest in crowded indoor spaces with poor ventilation, and may help explain super-spreading events reported in meatpacking plants, churches and restaurants. It’s unclear how often the virus is spread via these tiny droplets, or aerosols, compared with larger droplets that are expelled when a sick person coughs or sneezes, or transmitted through contact with contaminated surfaces, said Linsey Marr, an aerosol expert at Virginia Tech. Aerosols are released even when a person without symptoms exhales, talks or sings, according to Dr. Marr and more than 200 other experts, who have outlined the evidence in an open letter to the World Health Organization.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles.
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
Mr. Abrams, the restaurant owner in New York, said the episode recalled the 2008 financial crisis, when big banks were bailed out by the federal government while small businesses suffered. “It felt a little bit like déjà vu,” he said.Mr. Abrams, the restaurant owner in New York, said the episode recalled the 2008 financial crisis, when big banks were bailed out by the federal government while small businesses suffered. “It felt a little bit like déjà vu,” he said.
As soon as the loans became available, Mr. Abrams said, he sent the relevant documents to his bank, Capital One, to start applying. But Capital One was unable to process his application before the funds were exhausted. “It just doesn’t seem equitable,” Mr. Abrams said.As soon as the loans became available, Mr. Abrams said, he sent the relevant documents to his bank, Capital One, to start applying. But Capital One was unable to process his application before the funds were exhausted. “It just doesn’t seem equitable,” Mr. Abrams said.
Practically overnight, the pandemic has upended restaurants across the United States. Many large chains and well-funded restaurant groups have the resources to ride out a protracted shutdown. But independent restaurants, which make up about two-thirds of the American dining landscape, may not survive.Practically overnight, the pandemic has upended restaurants across the United States. Many large chains and well-funded restaurant groups have the resources to ride out a protracted shutdown. But independent restaurants, which make up about two-thirds of the American dining landscape, may not survive.
Some restaurants have tried to continue as delivery or grocery operations, but the economics of those models are difficult to master. Since March, eight million restaurant employees, or two-thirds of the work force, have been laid off or furloughed, according to the National Restaurant Association. And the industry has lost $30 billion, with an additional $50 billion expected to disappear by the end of April.Some restaurants have tried to continue as delivery or grocery operations, but the economics of those models are difficult to master. Since March, eight million restaurant employees, or two-thirds of the work force, have been laid off or furloughed, according to the National Restaurant Association. And the industry has lost $30 billion, with an additional $50 billion expected to disappear by the end of April.
While industry leaders have urged unity, a division between the haves and the have-nots has quickly emerged. In contrast to struggling mom-and-pop restaurants, fast-food companies like McDonald’s and Burger King have continued to record decent sales at their drive-throughs.While industry leaders have urged unity, a division between the haves and the have-nots has quickly emerged. In contrast to struggling mom-and-pop restaurants, fast-food companies like McDonald’s and Burger King have continued to record decent sales at their drive-throughs.
The corporate muscle of those fast-food companies also put their franchisees in an enviable position compared with most small restaurants. Most U.S. franchisees at Restaurant Brands International, which owns Burger King and Popeyes, applied for the small-business loans, with help from “franchisee liquidity teams” that walked the owners through the process, according to Jose Cil, the company’s chief executive.The corporate muscle of those fast-food companies also put their franchisees in an enviable position compared with most small restaurants. Most U.S. franchisees at Restaurant Brands International, which owns Burger King and Popeyes, applied for the small-business loans, with help from “franchisee liquidity teams” that walked the owners through the process, according to Jose Cil, the company’s chief executive.
“The CARES Act is several hundred pages. These are complicated, technical regulations,” Mr. Cil said, referring to the federal stimulus legislation. “So our teams are quickly becoming expert at that.”“The CARES Act is several hundred pages. These are complicated, technical regulations,” Mr. Cil said, referring to the federal stimulus legislation. “So our teams are quickly becoming expert at that.”
But industry officials maintain that the stimulus package is not enough to keep restaurants in business.But industry officials maintain that the stimulus package is not enough to keep restaurants in business.
In a letter on Monday, the National Restaurant Association asked Democratic and Republican leaders in Congress to dedicate a recovery fund for the restaurant industry. The restaurant group is also calling for changes to the loan program that would allow borrowers to spend more of the funds on nonpayroll expenses and push back the date by which employees must be rehired for loans to be forgiven.In a letter on Monday, the National Restaurant Association asked Democratic and Republican leaders in Congress to dedicate a recovery fund for the restaurant industry. The restaurant group is also calling for changes to the loan program that would allow borrowers to spend more of the funds on nonpayroll expenses and push back the date by which employees must be rehired for loans to be forgiven.
“The restaurant industry has been the hardest hit by the coronavirus mandates — suffering more sales and job losses than any other industry in the country,” wrote Mr. Kennedy, the group’s public affairs official. “For an industry with sales that exceed the agriculture, airline, railroad, ground transportation and spectator sports industries combined, a restaurant relief and recovery program is desperately needed.”“The restaurant industry has been the hardest hit by the coronavirus mandates — suffering more sales and job losses than any other industry in the country,” wrote Mr. Kennedy, the group’s public affairs official. “For an industry with sales that exceed the agriculture, airline, railroad, ground transportation and spectator sports industries combined, a restaurant relief and recovery program is desperately needed.”
Austin Ramzy and Jim Tankersley contributed reporting.Austin Ramzy and Jim Tankersley contributed reporting.