Van Golemis, who owns and operates Tops Diner in East Newark, N.J. – once named the “Most Famous Restaurant in New Jersey” by the Press of Atlantic City – was allocated first and second round Paycheck Protection Program loan funds through his relationship with ConnectOne Bank.
Golemis said there was a lot of confusion around the first round of PPP, and that it was challenging to find accurate information in the beginning. However, his regional bank, ConnectOne in Englewood Cliffs, N.J., was helpful.
Golemis noted that the bank quickly shared information on how to apply, and in just a few weeks, Tops Diner was given its first round of PPP, which provided peace of mind that the restaurant would stay in business. “We were able to refocus to a takeaway model in the meantime, which helped us survive and hire back employees,” said Golemis.
Read more: Ivy Mix is on a Mission to Save the Industry
The second round of PPP was significantly easier for Golemis and Tops Diner, largely because they had gone through the first round and understood the process. Additionally, Golemis said ConnectOne Bank upgraded its application portal, which made it even more straightforward to apply.
The funds from the second round allowed Tops Diner to rehire even more employees. Fortunately, they've been able to add staffers, contactless technology and position their business for the long run.
A Catalyst to Reviving Restaurants
Moving beyond the critical PPP loans, President Joseph R. Biden, Jr. recently signed the American Rescue Plan Act into law, creating the $28.6 billion Restaurant Revitalization Fund (RRF). It occurred a year after the first restaurants were ordered to close and after the first two rounds of the PPP loans, which many restaurants across the country, like Tops Dine in New Jersey, accepted. Since then, U.S. foodservice sales have fallen $255 billion and 110,000 restaurants have closed, per the National Restaurant Association.
“The creation of the Restaurant Revitalization Fund will be a catalyst to reviving restaurants and saving jobs across the country,” said Tom Bené, president and CEO of the National Restaurant Association in a statement. “Our focus from the beginning of this crisis has been on ensuring that our favorite local restaurants could access the assistance they would need to survive. This fund is a win for the smallest and hardest hit restaurants that have sacrificed and innovated to continue to serve their communities.”
The RRF will create a new federal program for restaurant owners with 20 or fewer locations, according to the National Restaurant Association. Operators can apply for tax-free grants of up to $5 million per location, or up to $10 million for multi-location operations. The grant amount is determined by subtracting 2020 sales from 2019 revenues. See a breakdown of the Restaurant Revitalization Fund here.
Funds from the grants can be spent on a wider range of expenses than previous relief programs, including mortgages or rent, utilities, supplies, food and beverage inventory, payroll, and operational expenses. Five billion dollars of the fund will be set aside for restaurants with gross receipts under $500,000 and, for the first three weeks of the application period, the Small Business Administration will prioritize awarding grants for women-, veteran- or socially and economically disadvantaged-owned businesses.
Blair Motl, owner of Payroll Vault in East Dundee, Ill. – a process payroll company that offers a variety of services and support to small and medium-sized business, such as restaurants – said the latest bill is great because it’s turned its focus on restaurants and small businesses that were previously overshadowed by large corporations.
“Restaurants can now benefit by getting a 3.5 month multiplier of payroll expenses rather than the 2.5 for everyone else,” said Motl. “The banks were also limited to giving out small loans for two weeks, so they had a chance of getting funded. Restaurants are now also able to include the cost of PPE [personal protective equipment] and perishable food costs to the nonpayroll portion of the loan. For our clients, we've sourced over $6 million in credits in just over eight weeks. The program is definitely working."
Guidance for Bars & Restaurants
Mark Moeller, owner and president of Westport, Conn.-based The Recipe of Success – a consultancy firm that works with new and struggling restaurants across the country – has been hands-on with his clients throughout the pandemic. Here’s a breakdown of Moeller’s key thoughts and advice on U.S. government aid and what it all means for restaurant operators:
Some Areas Will See More Benefit Than Others – “The Restaurant Revitalization Fund will impact restaurants differently state to state and location to location,” said Moeller. “Cities like New York City and Los Angeles, where there were extended lock downs, will see the greatest benefit since their revenue was down significantly in 2020 vs. 2019. Outlying areas that saw a shorter window of closure may see their benefit shrink especially after reducing the amount by the PPP loans.”
The Government Aid Can Be Detrimental to a Restaurant If It’s Not Forgiven – “Loans like the PPP can be helpful in the short term but detrimental in the long run if a restaurant owner cannot get them forgiven,” noted Moeller. “Like all loans, a cost benefit analysis should be done to understand the impact both short and long term. The problem is that the funds were necessary to attempt to stay in business and hope to come out on the other side of the pandemic.”
Evaluate Your Eligibility Now – “The Restaurant Revitalization Act grants do not have to be paid back and restaurants should be evaluating if they are eligible,” said Moeller. “These grants, used correctly, will help restaurants pay current expenses so their incoming revenue can go to past expenses. This may allow a struggling restaurateur to right the ship coming out of the pandemic. We work with operators to focus on their profit and loss statement and be critical on how they spend their revenue.
Overall, according to Moeller, a lot of good has been done within the bar and restaurant industry through these government aid programs. “The greatest issue is that no one was prepared for this to happen,” said Moeller. “Everyone was in reactionary mode and so the initial guidelines were the best they could be with minimum information. As time went along, and everyone from the government to the operators to the public learned to truly understand what the lasting impact of the pandemic would be, great steps were made to make the loans forgivable and opened up the categories within the eligible expenses to help better support restaurants.”
Follow us on Facebook and Instagram to stay up-to-date on the latest industry news.