Local owners say they need more relief during pandemic
Congress failed Friday to finalize a $900 billion coronavirus relief package, and to local restaurant owners’ frustration, also failed to address any problems concerning the hospitality industry.
There will be $300 billion in Payroll Protection Program funding if the bill can be passed after the government shutdown, but some argue that it’s not enough to get restaurants through the winter.
The Independent Restaurant Coalition, a group of small restaurant owners that formed during the pandemic, is pushing Congress to pass the RESTAURANTS Act, a bill that would provide $120 billion in grants to smaller bars and restaurants, according to national media reports.
While this bill received support of 50 sponsors in the Senate and more than 200 in the House, it was left out of the conversation and replaced with PPP loans.
Sherry Villanueva owns a host of restaurants in Santa Barbara, including The Lark, Lucky Penny, Loquita, La Paloma, Santa Barbara Wine Collective, Pearl Social, Helena Avenue Bakery and Tyger Tyger. Five of those are still open for takeout, but three were forced to close.
“My biggest issue is the way the PPP plan was calculated was to provide payroll relief for what surmounted to be about a 10-week solution and now we’re in month 11 of the crisis,” Ms. Villanueva told the News-Press. “A 10-week solution to a 10-month crisis just doesn’t work.”
She said she supports the RESTAURANTS Act because the one thing restaurants don’t need is debt, which is what the loans ended up creating.
“I think it’s harder with the independent restaurant industries because it’s not centralized … We’re talking about millions of businesses and 16 million workers, so it’s a much more nebulous industry to get your arms around, and I don’t know if that’s why Congress is having so much trouble figuring out what a fair solution is, but it’s very dire.”
She added that without any sort of relief, the fate for many independent restaurants is closure, which will have a ripple effect on entire cities.
At her restaurants, Ms. Villanueva said 100% of all PPP loans were spent on payroll, which did not help any of the other expenses associated with restaurants such as rent, utilities, insurance, taxes and more. In addition, spending tens of thousands of dollars on outdoor dining equipment and construction to stay open and then being forced to close, she said, did not help.
“We’re willing to close and jump through hoops, but if we’re going to do that to support the nation, the nation needs to support the industry’s back,” she said. “We’ve done everything right.”
Dario Dell’Anno is the general manager for S.Y. Kitchen and Nella Kitchen & Bar in Santa Ynez and Los Olivos, respectively. Both restaurants were forced to close completely, even without take-out, and Mr. Dell’Anno told the News-Press Friday that it’s hard to say how much money from the government would even be enough.
“I think they should mobilize not just restaurants, but restaurants, nail salons, everything that’s in the group that had to close and maybe do a different stipulation for restaurants, because payroll is a lot higher in restaurants than those other businesses,” he said. “The profit is very low compared to revenue in restaurants, so that’s why restaurants are hurting so much right now — very little profit and high rent.”
Nella Kitchen & Bar received PPP funding in the first round, but again, 100% of it was spent on payroll, according to Mr. Dell’Anno.
“That PPP money wasn’t even enough back then,” he said.
The restaurants tried to offer take-out service when the most recent lockdown was ordered, but Mr. Dell’Anno said it only lasted for three or four days.
“We had to reach a certain number weekly and we weren’t even halfway to that number we needed to reach,” he said. “We were considering staying open and losing a little bit of money just to keep our name and our staff employed, but the number was so low that it was not sustainable for us to stay open. We were just digging ourselves a bigger hole.”
The manager hopes both restaurants can reopen full force on Dec. 28, but he said the uncertainty of the next few months is the issue.
“If people are still scared to go out, we won’t get even close to the revenue projected, so I think the government should do more for restaurants, but right now, it’s unpredictable,” he said. “We don’t know what we’re standing up to.”
He added that he doesn’t know if Nella’s PPP loan in the first round will be forgiven, or if S.Y. Kitchen will qualify for a PPP loan this time since it’s only been open for a little over two months, adding onto the uncertainty.
“I think they should reopen back like we were, and I would even consider it with a limited capacity inside,” Mr. Dell’Anno said. “That’s what most of the other states are doing — opening with limited capacity inside and all the rest outside.”
Solvang and Santa Barbara restaurateur Aaron Petersen said he’s also been struggling with his three Solvang restaurants and especially his two recently opened restaurants on the Santa Barbara Harbor. He, too, closed two of his restaurants completely rather than offering take-out.
He said that the first go around with the PPP loans “was designed with good intentions, but a little confusing,” citing the time frame provided for owners to spend the money. He believes a loan or an outright grant for fixed costs of restaurants would help out a lot, considering the special circumstances restaurants are faced with.
“The only place you go for business where you need to take your mask off is a dentist’s office and a restaurant,” Mr. Petersen told the News-Press. “I think it justifies a focused relief bill, and I hope that they do talk to some of the restaurateurs when they try to come up with the program, not the major chains. They’re in totally different situations than us — McDonald’s is set up for to-go food. We are not.”
However, he said that he doesn’t believe corporations such as McDonald’s should be penalized because they’re large “any more than a little restaurant on State Street.”
“They don’t even have the inside. If they do, nobody really does that,” Mr. Petersen said. “There are some industries that don’t need PPP or the bailout. It should be on a need basis.”
SALTY at the Beach and CHOMP on the Rocks, the two restaurants he owns on the harbor, are much more about the dining experience, which he said is precisely the problem. He hopes the desire to dine in person with music, wait service and views doesn’t go away completely.
“I think everybody would agree that as long as there’s some funding out there for our employees, fixed costs and maybe helping us owners out … We’ve just got to get through it.”