‘An extinction level event.’ Federal bailout funds divide struggling restaurant industry

Those with money, Postal said, are able to pay workers more than their competitors, giving them an edge in a tight labor market. They can pay off their debts, pay skyrocketing prices for the cost of goods, and repair their equipment.

Commonwealth employee Galeano Diana took the plates from customers George Henman and Martha Gallagher on July 30.Erin Clark/Globe Staff

Then there are all the others.

Aaron Cohen, owner of Gracie’s Ice Cream in Union Square and Earnest Drinks in Kendall Square, is also concerned. Restaurants that received the funds “can go and pay whatever they want for the staff or the chicken or whatever they want,” he said, while those that didn’t remained attached.

“It’s going to become a competitiveness issue,” he said.

Already, some restaurants cite the failure to secure RRF payments as their downfall. Last week, as he announced that his five breweries would remain permanently closed, BeerWorks owner Joe Slesar told the Boston Business Journal that not getting the RRF was “the last straw” in his attempt to survive the pandemic. He applied on the first day the scholarships opened but his application was never satisfied.

“There will still be other places to fold,” Slesar said.

Chris Coombs, owner of the Boston Urban Hospitality group, fears he is one of them. He battled with the Independent Restaurant Coalition for RRF grants, but failed to score any for his four restaurants: Deuxave, dbar and his two Boston Chops steakhouses. Now he wonders if he’ll be able to keep the doors open at his restaurant in Downtown Crossing.

“For many restaurants, it’s life or death,” Coombs said. “For me personally, that’s the difference between Boston Chops reopening or not.”

Postal predicts something even more serious: “We’re talking about an extinction-level event,” he said, prompting many restaurateurs who had held out hope to throw in the towel.

And because the grants are public knowledge, everyone in Boston’s restaurant business knows who got what. Last month, the Small Business Administration released a comprehensive recipient database. In Massachusetts, they ranged from a handful of large restaurant and catering groups that received $10 million each to food stand operators that received less than $2,000.

When the list of recipients was released, it ricocheted around industry circles like a high school slam book. People pored over the list to see who got how much. This gave rise to some trying conversations. Some owners have described scanning social media posts and seeing industry colleagues take vacations after learning they received funding and feeling green with envy.

And it outraged many who have been left behind, especially when they learned that some restaurants that temporarily shut down during the pandemic received massive subsidies. Other funding mechanisms created by the government, like the Paycheck Protection Program, relied on restaurants staying open and came with strict regulations about maintaining staffing levels or they wouldn’t reimburse employees. ready if not followed. But RRF dollars are grants – with no strings attached – and, for those left behind, it feels like an even greater boon to the chosen few.

“We did everything we were supposed to do, figure out how to keep our staff employed, pivoted to 100% take-out and put our entire menu online,” said Brian Treitman, owner of BT’s Smokehouse in Sturbridge and BT’s Fried Chicken & BBQ in Worcester, which received no relief funds. He said many restaurants that chose to close entirely received help paying their loans and mortgages through other federal programs and because they didn’t have to pay salaries or buy food. food, they weren’t going into debt as deeply as those trying to stay open. to support their staff.

“Yeah, they may have lost personal income, but if they qualify for more than $1 million in RRF, they’re now going to be open and making money like before,” Treitman said. “That money will just stay in their bank account and be backed up; meanwhile, there are all those other restaurants where just a little would help.

Now the restaurants – both the haves and the have-nots – try to regroup again to fill the fund coffers.

In June, a bipartisan group of lawmakers in Congress introduces the Restaurant Revitalization Fund Replenishment Act of 2021, which would add $60 billion to the fund. And last month, a Republican lawmaker introduced the ENTRY law. This plan would also add an additional $60 billion to the industry, but those billions would be drawn from unspent dollars allocated for economic disaster loans and state and local funds from President Biden’s U.S. bailout.

They would also be distributed on a first-come, first-served basis, circumventing the legal issues that arose after white business owners affiliated themselves with right-wing groups have challenged the racial and gender priority system created to help make the distribution of funds fairer, forcing 3,000 minority business owners and women who have been approved for loans to revoke them.

A program that its proponents intended to be inclusive turned out to be far more divisive than expected. And really, fairness is what everyone hopes for, said Jen Ziskin, co-owner of J&J Restaurant Group and head of the local chapter of Let’s talk about womena network of women restaurateurs.

Ziskin feels RRF’s challenges from every angle: One of his restaurants, Heritage of Sherborn, had such sales last year because of its outdoor patio that it didn’t even qualify for subsidies. His new restaurant, Punch Bowl, was not approved and is still in limbo. But La Morra in Brookline saw sales drop 70%. The $400,000 in RRF funds she received there will be a huge help, Ziskin said, especially as she contemplates the surge in COVID-19 cases due to the Delta variant and what she could portend for indoor dining in the coming months.

Now she just wants that same help to distribute to everyone.

“This fund is a lifeline,” she said. “There has to be a way for it to be fair and distributed to everyone who needs it.”

Janelle Nanos can be reached at [email protected] Follow her on Twitter @janellenanos.

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Cecil N. Messick