Massachusetts restaurant industry still reeling despite government aid

The past two years have been a disaster for restaurateurs in Massachusetts. The pandemic has led to closures and bans on indoor dining, causing a major loss at the restaurant. And even though government help has arrived, the industry still faces big challenges, according to the Massachusetts Restaurant Association.

MRA data showed that since March 16, 2020, when indoor dining was banned, nearly 16,000 restaurants have closed. Although outdoor dining and limited indoor dining were reinstated in June 2020, more than 3,200 of them never reopened.

MRA Vice Chairman Steve Clark said that apart from permanently closed restaurants, many others were barely surviving and the outlook for the restaurant industry in the state was “bleak”.

“Restaurants in Massachusetts have faced too many challenges,” he said. “Even after the indoor dining ban was lifted, other restrictions were still suffocating them.”

He pointed out that restaurants are largely dependent on local people and tourism, but during the pandemic, the former had limited access to restaurants and its number was reduced, and the latter has all but disappeared.

He used the Boston area as an example.

“A lot of restaurants in Boston and other nearby cities depend on schools and businesses,” he said. “When many people choose to work remotely, some restaurants could lose 50-60% of their revenue. And many seasonal restaurants that had tourists had to close, because of the long winter, and we had no tourists at all.

“Now some students have come back, which is good news. They might go to restaurants. But tourism and many businesses were still not back,” he added.

Inflation has also shaken the restaurant industry. The annual inflation rate in the United States jumped to 6.8% in November, the highest since November 1990, according to data from the United States Department of Labor. Meanwhile, energy and food costs have both risen significantly, further unnerving restaurateurs.

“It wasn’t all the challenges, unfortunately,” Clark said. “The delta virus, eviction orders, rising transportation costs…they could all impact restaurants.”

Recognizing the challenges restaurants faced, the US government launched numerous small business support programs, the most prominent of which were the Paycheck Protection Program and the Restaurant Revitalization Fund.

The first allowed restaurant owners who had started their business before February 15, 2020 to apply for loans, and the second mainly targeted restaurants, allowing owners to apply even if they had started their business during the pandemic and received the loan. PPP.

According to the Small Business Administration, the funds were distributed to eligible Massachusetts applicants under its supervision.

However, although PPP and RRF together provided more than 10,000 loans to restaurant owners, this was only a drop in the ocean compared to the industry’s huge losses.

The MRA estimated that only a third of applicants received PPP or RRF funds, and the rest spent their time waiting for a response, until the PPP announced its closure on May 31. Although the RRF lasted two more months, the $993 million allocated in Massachusetts was a peanut.

“The funding helped some restaurants, but it wasn’t enough,” said Clark, who was monitoring the financial aid, “because the money ran out quickly and we don’t know if there will be a additional funding Those who did not receive money still struggled constantly.

Some restaurateurs, especially those who have not received any federal grants, acknowledge Clark’s statements.

Bill Zheng, manager of the Poke Boys, a restaurant serving cold rice and seafood bowls, said his business was constantly threatened with closure because it received no subsidies and insufficient funds prevented him from hiring and improve quality.

The Poke Boys at Allston’s Super 88 Food Hall opened at a difficult time. Zheng’s friend took over the restaurant in March, was disqualified for PPP applications, and the RRF was difficult for him to access due to his inexperience in handling government records.

“I never thought it could be so difficult,” Zheng said. “My goal was to start making a profit by September, but to lose money every month. I tried to get the RRF, but when I finally figured out how to do it, they told me that the application was closed.

Zheng added that the Chinese example (both traditional and simplified) of the RRF application form has a misleading translation error. On page 4, when question 4 asks “is the applicant currently bankrupt”, the first box is “no”, and the following explanation in brackets says: “The applicant is eligible” in the English version, then that in the Chinese version, the sentence in parentheses reads: “Applicant is not eligible”.

“It’s very misleading for applicants whose preferred language is Chinese,” Zheng said.

Temporarily, Zheng might skew the Poke Boy numbers against student orders, but when the holidays roll around and the students leave town, he might suffer even bigger deficits and be down for the tally.

For owners who haven’t received a PPP or RRF, business and hospitality experts have suggested certain things should be prioritized to better deal with the difficult situation.

Seth Gerber, an instructor at Boston University’s Hospitality Administration School and MIDA partner, said improving the fundamentals is key to helping restaurants survive, including quality services and products.

Gerber, who has been in the industry for 11 years, said: “It can be tough, but the best strategy for these restaurants without subsidies was to get better food and better service. People always want to go out and eat, so restaurants should do their best to give them what they want.

He stressed that restaurant management should pay attention to the mental well-being of staff and avoid putting too much pressure on them to provide better services.

Michael S. Kaufman, associate professor of business administration at Harvard University Business School, pointed out that individual restaurants, with or without subsidies, should properly manage their costs during the revitalization phase.

He said restaurant owners should prioritize negotiating with owners for better terms and finding suppliers with more economical deals.

“If owners can cut costs well, they’re more likely to get away with it,” Kaufman said.

Both said it would be unwise to wait for additional funds from the federal government.

“It could take months or years to pass the federal funds,” Gerber said. “Each restaurant should focus on its own revitalization plans now. There is still a long way to go.

Mutian Qiao writes for the Boston University Statehouse Program Gazette.

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Cecil N. Messick