Still Struggling, Restaurants Call for More Relief
From Congress. Advocates for the battered restaurant industry are calling on Congress to replenish the now depleted revitalization fund dedicated to helping ailing establishments get back on their feet after more than a year of COVID-related starts and stops. The pandemic created a challenging environment that forced roughly 90,000, or about 1 in 10 restaurants, to close as owners struggled do business in any kind of way that made financial sense for them. Those that remain are still saddled with debt from the government’s paycheck protection program and other temporary relief measures. They also face a new set of challenges as they try to claw their way back to profitability. “Restaurants are still dealing with a crushing amount of debt that they’ve taken on over the past 15 months when they were forced to be closed,” said Sean Kennedy executive vice president of public affairs for the National Restaurant Association. “This project should be an absolute lifeline for the restaurant industry, the nation’s second largest private sector employer.”
SBA to Drop its Review of PPP Loans
$2 Million and above. After months of requiring financial documentation proving need from borrowers with PPP loans of $2 million or more, the Small Business Administration took steps this week to roll back some of those requirements. The effort marks an about-face for the agency that landed in hot water after allowing publicly traded companies to access the program intended for small businesses. It also signifies a swifter forgiveness process for some borrowers. On Tuesday, the SBA began informing lenders that it plans to eliminate the loan necessity review for PPP loans of $2 million or more, adding that it intends to publish a FAQ on the subject “shortly.” And effective immediately, the SBA says it will no longer request the loan necessity questionnaire (SBA Form 3509) for any PPP loan reviews. (It will also pull the nonprofit loan necessity questionnaire, SBA Form 3510.) The agency did not respond to a request to confirm its plans to roll back its financial reviews of larger borrowers; Inc. reviewed a copy of the letter it sent lenders.
What Will Become of Restaurant Delivery?
When COVID-19 is gone. Few topics felt the COVID-19 tailwind more than delivery. In the U.S., the category’s share of foodservice sales doubled to more than 15 percent, according to financial services company Rabobank. And even as delivery catches its breath, the group expects 2022/2023 to usher in a fresh era of growth, with sales sticking 40 to 80 percent above 2019 figures in nearly every major market. As always, though, delivery isn’t a simple numbers game. Will an unprecedented rise prove incremental to overall industry sales? There’s reason to think it won’t. In which case, the implications will be significant, and perhaps one of the true lasting imprints of the global crisis. The number of limited-service salad, dessert, and sandwich segments offering delivery increased 42.9, 40.2, and 28 percent, respectively, from June 2020 to December 2020. Quick-service Mexican upped 23.4 percent, chicken 20.1 percent, burger 15.5 percent, and pizza 14.2 percent. All these categories, outside of dessert (66 percent) were north of 73 percent coverage by the time 2021 rolled around.
Restaurants Say Inflation Could Force Them Out of Business
What is a realistic profit margin for a restaurant? Restaurant owners can add the rising cost of food to their growing list of challenges. Inflation is on the rise throughout the country, and independent restaurant leaders say many of their businesses will soon be forced to permanently shut down unless they receive more federal aid from Congress. “Every increase in food prices really throws them for a loop,” says Erika Polmar, executive director of the Independent Restaurant Coalition, a group of more than 100,000 local chefs and restaurant owners that formed last year to advocate for their industry’s pandemic-related needs in Washington. Polmar says Covid lockdowns, and an ongoing labor shortage already had local restaurant owners struggling to catch up. For some restaurants, soaring prices could be the final nail in the coffin. The price of grains was up 93.8% in June when compared to the same period a year ago, according to the US Bureau of Labor Statistics’ latest Product Price Index report released Wednesday. Beef and veal prices have surged 41.4% year over year after shooting up 5.6% in May and 10.5% the month prior. Shortening and cooking oil prices were up 34.8% between June 2020 and June 2021.
Did the Pandemic End the Plant-Based Momentum?
For Restaurants. Plant-based meat was experiencing significant momentum in 2019 before the pandemic grinded innovation to a halt and forced restaurants to significantly pare down their menus. Now the gears of plant-based product development are starting to churn again. Little Caesars, for instance, just announced a “Planteroni” pizza, with the market’s first plant-based pepperoni, while Panda Express is now offering a plant-based alternative to its signature orange chicken, courtesy of Beyond Meat. And just a few short months ago, Beyond Meat announced strategic partnerships with both McDonald’s and Yum Brands. You can’t get a bigger vote of confidence than that. But we’ve also seen major brands–like Dunkin’ and Tim Hortons–move away from plant-based products and such offerings overall represent just 2-to-3% of the menu mix, according to Revenue Management Solutions. That may not be enough to justify a spot-on pandemic-induced slimmer menus.
Restaurant Week Makes a Comeback
New York City Restaurant Week has returned in full force. More than 500 restaurants across all five boroughs are participating in this year’s program, led by NYC & Company, which will run for five weeks, not one, from this week until Aug. 22. “It is so important to support the hard-hit dining industry as our city continues to recover, and this summer, NYC Restaurant Week provides five weeks of opportunity to do so,” Chris Heywood, executive vice president of global communications for NYC & Company, said in a statement. This year’s program hopes to provide some much-needed relief for the city’s food industry. According to Andrew Rigie, executive director of the NYC Hospitality Alliance, 65 percent of the city’s restaurants that applied for the federal Restaurant Revitalization Fund were unable to get money. The industry is “cautiously optimistic, but also fearful and frustrated,” Mr. Rigie said in an interview. “We can’t let the optics of some busy restaurants and bars distract from the reality that many are truly struggling and unsure of how they’ll recover if the federal government doesn’t replenish the Restaurant Revitalization Fund.”
Organizing a Union in the Disorganized World
Of small restaurants. Worried about returning to work during a pandemic and galvanized by the racial-justice protests throughout their city, 17 cocktail-room employees at Tattersall Distilling in Minneapolis told the owners during a staff meeting in June 2020 that they intended to form a union. They wanted personal protective equipment, overtime pay and antiracism training. “We all felt a sense of urgency and, I mean, legitimate fear,” said Krystle D’Alencar, a bartender and server. “Many of us, including me, live paycheck to paycheck.” The owners, Jon Kreidler and Dan Oskey, pushed back on Tattersall’s social media accounts: “We don’t believe a union is necessary, nor is it in the best interest of our employees or our company.” But two months later, after much organizing and the threat of a boycott by customers who supported the effort, the employees voted for a union, 19 to 3. They receive regular requests from restaurant workers around the country asking how to start their own. And Tattersall’s owners say they are working to reach a contract deal as quickly as possible.
Did You Know?
The top 5 successful marketing tips, tricks & tools every restaurant needs to know. Consumers not only have a myriad of restaurant options to feed their needs but now restaurants are getting into the game with in-store dining options and more prepared foods. Heck, even banks now have coffee shops in them! The choices are unlimited. So, what makes somebody choose a restaurant for their next meal and more importantly, what makes them keep coming back? Cue Steve Harvey, “What is the top answer? Good food, convenience, great service, word of mouth …. these are table stakes and something EVERY restaurant, regardless of size, service model or number of units, will tell you they have. The truth is that all of these are a factor, but the way people discover a restaurant is through marketing and advertising. Yes, some people find new restaurants because they walk or drive by one but hoping someone passes in front of your store is not a successful marketing plan.
Low-wage workers now have options, which could mean a raise. The sharp rebound in hiring, especially in service industries, is widening opportunities and prompting employers to compete on pay. The reason? “In January, 8 percent of restaurant operators rated recruitment and retention of work force as their top challenge,” Hudson Riehle, senior vice president for research at the National Restaurant Association, said in an email. “By May, that number had risen to 72 percent.” Restaurant workers — burger flippers and bussers, cooks and waiters — have emerged from the pandemic recession to find themselves in a position they could not have imagined a couple of years ago: They have options. They can afford to wait for a better deal.
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