Prominent owners of America’s independent restaurants, including some in Charleston, are renewing their case to Congress to be included in specific relief efforts after being among the hardest hit economically from the coronavirus crisis.
Established in mid-March, the Independent Restaurant Coalition is leading the charge to amend the CARES Act’s treatment of these essential small businesses. Along with chef-owners like Marcus Samuelsson, Nancy Silverton, Andrew Zimmern, and Sean Brock, Charleston’s Harry Root, Mike Lata, and Michael Shemtov are part of the leadership team tasked with helping the 11 million people employed by these small restaurants nationwide.
Lata, the chef and co-owner of FIG and The Ordinary, says Root, who operates Grassroots Wines, came to him during the early stages of the group’s development. Root recently spent six weeks in Washington working to reduce the wine tariffs imposed by President Donald Trump. Upon his return, Root met Angela Kouters, who at the time was working for U.S. Sen. Amy Klobuchar’s presidential campaign in South Carolina.
“Angela was the godmother of the goalie on my son’s lacrosse team, and we began discussing the coronavirus and my work on the wine tariffs after we met in the third week of February,” says Root. Those talks turned into deeper discussions involving other restaurant industry folks around the country like Tom Colicchio and well known D.C. chef Kwame Onwuachi.
Kouters, a College of Charleston graduate, has experience on Capitol Hill after serving as the chief of staff for three members of Congress and legislative affairs for several federal agencies, making her the ideal fit as the coalition’s new executive director. Along with Thorn Run Partners to assist in their lobbying efforts, the Independent Restaurant Coalition formulated a plan based on many of the initiatives from U.S. Sen. Marco Rubio’s bill to help small businesses.
Monday, Kouters and the IRC took another step forward by sending a letter to Congress laying out four steps the government should take to ensure some 500,000 independent restaurants nationwide survive the coronavirus.
First order of business? Fixing the problems with the Paycheck Protection Program. “Under the current program, we must bring 90 percent of our employees back by June 30,” explains Lata. “All of the money from the loan forgiveness would go toward paying employees, mortgage, rent, and group health insurance. Because all of that money goes straight to those things, we wouldn’t have enough money to fund existing liabilities like unpaid vendors and tax liabilities.”
Essentially, Lata and the IRC are concerned that funding will run out before restaurants are even permitted to reopen. Naomi Pomeroy, an IRC member and chef in Portland, Ore. put it simply in an IRC conference call Monday: “We don’t want to put businesses at risk by the very thing we are trying to use to help them.”
The U.S. government could also lighten the burden on local restaurants by allowing them to tap into the $500 billion grant for distressed industries like airlines, which are receiving a large chunk of the fund assisting struggling businesses. If a portion was dedicated to a small restaurant stabilization fund, it would allow independent eateries to pay vendors, purveyors, and suppliers essential to not only the industry but the economy as a whole, the group contends.
“The restaurant business is a separate entity that helps out people up and down the supply chain,” says Lata. “A large portion of our revenue goes back into the community to our farmers, bakers, fishermen, and winemakers. The loss of that money chokes out these other businesses.”
“Independent restaurants can spend anywhere from just under 20 percent to more than 30 percent of their revenue on food, alcohol and other goods,” Pete Wells wrote in The New York Times on March 24, illustrating the cascading impact of the failure of the independent restaurant sector — with a few choice words from Root and Abundant Seafood owner Mark Marhefka.
The IRC is also seeking tax rebates that would provide relief for an industry with razor-thin margins.
“We are trying to think about the bigger picture with the tax rebates,” says Michael Shemtov, whose national restaurant portfolio includes Workshop, Butcher & Bee, and The Daily in Charleston. “We’re asking questions like: What does 2020 and 2021 look like when travel is still down and people still aren’t congregating in big groups? If we don’t set up these businesses to survive past this year, then we are wasting the PPP investment that’s being made now.”
According to Root, who refers to himself as “an effective intelligence gatherer and message deliverer for the IRC,” the situation is fluid. Just two days after their letter was sent to Congress, Root says they received word that the government is “trying to add to the PPP program.” Whether this will help their cause is unknown, but Root and others in the IRC remain steadfast in seeking help to save their industry.
“There has to be a carve out somewhere for independent restaurants. There isn’t an industry that faces more uncertainty,” Root says. “We closed the earliest and are one of the most valued industries to get opened back up. Restaurants are the soul of these communities.”
Some might assume the situation at a place like FIG or The Ordinary is more secure, but Lata puts the help these independent restaurants need into perspective: “If we can’t get more assistance, we are going to have to either put mortgages on our own houses or bring on other partners, which would be devastating. It would change everything.”
“PPP is a great start, and it will help us mitigate the damages. But it doesn’t give us any capital to reopen,” says Lata. “We have to speak up or a lot of restaurants will not be able to open back up.”
As of Thursday, more than 22,000 concerned citizens have co-signed the letter to Congress in support of the Independent Restaurant Coalition. Add your name at saverestaurants.com/letter.
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