The National Restaurant Association Plays "Money Ball" on Behalf of Operators

Since the earliest days of the COVID-19 pandemic, the staff at the National Restaurant Association has stepped up to the plate for its members and the industry. From education to advocation, the association has taken a proactive approach to providing restaurant operators with the money and tools to survive. From two rounds of the Payroll Protection Program to the Restaurant Revitalization Fund, the association’s advocacy has helped pump new blood into the industry, but it isn’t resting in the dugout just yet.

“Restaurants were among the first businesses to be shut down at the start of the pandemic, and will be among the last to recover,” says Mike Whatley, vice president, state affairs and grassroots advocacy at the National Restaurant Association. “Things we can do best to help is provide usable, relatable data and information on the issues facing the industry, and advocacy, both directly with legislators and thought leaders, and by encouraging grassroots efforts of our members to put pressure on lawmakers at the state and local level.”

Heading into last summer, circumstances were looking up. Vaccinations were ramping up, states were beginning to open up, business was picking up and consumers were making up for lost time during lockdowns by going out to eat again instead of ordering in. The $28.6 billion Restaurant Revitalization Fund (RRF), part of the American Rescue Plan Act, gave more than 100,000 restaurants an injection against COVID-19 as potent as the vaccines.

Both the National Restaurant Association and many in Congress had argued for more RRF money in the Rescue Act. To get the legislation passed, however, the RRF ended up with less than what most agreed was needed. Unfortunately, of the more than 278,000 restaurants that applied for the grant money, less than a third were approved before the money ran out.

“The SBA moved quickly to make sure that money got out,” Whatley says. “There just wasn’t enough money. About 177,000 restaurants that applied for $43.7 billion didn’t receive any money. We thought Congress would quickly appropriate more. The need has only grown more acute.”

At least three bills were introduced between June and August to make up the shortfall – the Restaurant Revitalization Fund Replenishment Act of 2021 in June and the ENTRÉE Act in July, both for around $60 billion, as well as a bipartisan bill in August that would have replenished RRF with about $48 billion. None were passed, however, as members of Congress switched their focus to President Joe Biden’s infrastructure bill and the reconciliation package, which started as a $3.5 trillion proposal than has since been trimmed to $1.75  trillion.

The euphoria of early summer faded quickly as fast replenishment of RRF looked less likely and the spreading Delta variant of the coronavirus caused a surge in infections.

“The Delta variant really changed consumer behavior,” Whatley says. “Almost two-thirds of operators said their sales volume in August, typically one of their best months, was lower than it was in 2019. More than three-quarters said there was lower demand for indoor dining in recent weeks due to the variant. One in five diners stopped going out to eat entirely.”

Finding Other Ways

Though legislators on Capitol Hill have turned their attention to Biden’s agenda, the association hasn’t given up on replenishing the RRF. “We’re constantly out there talking to lawmakers about the need for more money in the Revitalization Fund,” Whatley says. “Those who got funds really succeeded as a result, so the key for us is making funds available to allow those 177,000 restaurants to reapply.”

In the meantime, the association has pushed the state restaurant associations to advocate for other money in the American Rescue Plan Act to help members. The legislation provided $350 billion of direct aid to state, local and tribal governments, with the stipulation that 25 percent of it – more than $87 billion – be devoted to the hospitality industry. States like Virginia, New York, New Jersey and Ohio, and cities like Chicago and Boston have already passed legislation or created grant programs for restaurants.

Fairfax County, Virginia, was one of the first to set up a hospitality industry relief program, called PIVOT, that’s become a model for others. And the state legislature passed a one-year extension of an “alcohol-to-go” bill and voted down an increase in the state tipped wage thanks to lobbying by the Virginia Restaurant, Lodging & Travel Association.

“What’s happening in Virginia is in line with key components of the association’s ‘Blueprint for State and Local Rebuilding,’ and can serve as a model for other states,” Whatley says.

New Challenges

But even for those restaurants that have found ways to stay open with modified service and safety protocols in place, by early fall it became apparent that supply chain issues and labor shortages impacting industries like equipment manufacturing and distribution were affecting operators, too.

“Labor was a big issue prior to the pandemic,” Whatley says, “and now it’s the number-one issue again for restaurants. Our data show that 78 percent of restaurants are understaffed. About 47 percent of restaurants are not operating at full capacity and workforce challenges are a big piece of that. Operators are desperate to find and hire people.

“Supply chain issues also are impacting the industry. Some 91 percent of restaurants are paying higher food costs, 95 percent experienced supply delays in the past three months and 75 percent had to change the menu because they couldn’t get a food item. During the pandemic, they were afraid to print menus due to the potential risk of infection; now they’re reluctant to print them due to the menu changing.”

In a letter to the White House, the association outlined its recommendations to address many of these issues.

  • Reform immigration, including creating a path to legalization for the 11 million undocumented individuals in the United States, and overhauling the work visa program to match workers with employers.
  • Expand employment opportunities for formerly incarcerated individuals.
  • Address shipping delays and backlogs at ports by allowing and safely training 18- to 21-year olds to become interstate truck drivers, helping alleviate the shortage of 80,000 drivers.
  • Encourage passage of the Ocean Shipping Reform Act of 2021 (HR 4996), which would establish minimum requirements for service contracts and enact common-sense reforms to address unfair business practices.
  • Suspend or reform the Merchant Marine Act of 1920, (also known as the Jones Act), to allow freight to move more cost-effectively between U.S. ports.
  • Remove tariffs on food and beverages as well as foodservice equipment to ensure that the foodservice industry can continue to grow the U.S. economy and add jobs.

“Congress needs to think big on immigration and supply chain issues,” Whatley says, “but we also need to push for more relief at the local level.”

Some of what the association suggests includes:

  • Encourage states to use American Rescue Plan Act money for restaurant recovery grants.
  • Preserve favorable tax treatment of federal relief funds.
  • Expand access to child care for hospitality workers.
  • Permanently expand outdoor dining allowances.
  • Make expanded off-premises alcohol regulations permanent.
  • Create grant programs to provide licensing relief for the duration of the pandemic emergency.

Ultimately, Whatley says, operators and others can help the industry by supporting grassroots efforts to help accomplish these objectives. Information is available at RestaurantsAct.com.