Omicron's impact on restaurant industry shows dire need for restaurant relief grants

More than 90,000 restaurants and bars have closed since the pandemic began.

January 14, 2022, 1:29 PM

Although it's a new year, it's the same story of struggle for hard-hit independent restaurants and bars in the U.S. The restaurant industry remains in dire straits as the omicron surge forces further closures this winter, with little to no federal relief in sight.

The pandemic rocked the hospitality industry, with over 100,000 restaurants forced to close in the first year of the pandemic, according to data from the National Restaurant Association. The Small Business Administration tried and ward off the industry's collapse by launching the Restaurant Revitalization Fund in May 2021, but data from the Independent Restaurant Coalition estimates that over 86% of independent restaurants and bars that did not receive funding risk permanently closing.

PHOTO: A person walks past a sign reading "Due to the pandemic, we will be closed on weekdays" displayed at a restaurant, Jan. 12, 2022, in New York City.
A person walks past a sign reading "Due to the pandemic, we will be closed on weekdays" displayed at a restaurant, Jan. 12, 2022, in New York City. The food service industry is experiencing a decline in customers as well as able bodied employees as the COVID-19 pandemic continues.
Alexi Rosenfeld/Getty Images

Now, a new survey also by the Independent Restaurant Coalition found that one in four restaurants without federal funding face eviction, nearly half face bankruptcy, and nearly 60% of restaurants reported a decrease in sales by more than half in December 2021 during the latest COVID-19 wave.

Tyler Akin, chef of Le Cavalier in Delaware, owner and chef of Stock restaurants in Philadelphia and Independent Restaurant Coalition board member, told ABC News, "It really is a critical moment now in the midst of omicron and seasonal January downturn that most restaurants face. It’s just about beyond the pale for a majority of us."

"My hope is this data provides substantiation for what we’ve been saying all along, which is that you’re abandoning us, and we’re not gonna be here on the other side if we continue down this path," Akin said.

The survey collected responses in January from nearly 1,200 members of the independent restaurant and bar community in 50 states, including those who did not receive Restaurant Revitalization Fund grants.

"The broken promises -- specifically Senator Schumer’s that the initial funding of the RRF program was just a downpayment -- those promises have been broken and deferred and has actually exacerbated these outcomes for folks because there’s a hope that the promise is honored and things are made right, but during that time of waiting the problems keep getting worse and worse," Akin said. "It’s tragic. It’s disappointing and a lot of folks are really on the brink of losing hope and that’s just unimaginable how many businesses are going to be lost when that realization sets in that we are actually going to be failed by these folks."

Ron Hsu, co-founder of Lazy Betty in Atlanta, told ABC News that his restaurant was denied an RRF grant.

"We were in dire need of it, but we did not get it," he said. "I know restaurants that closed that didn't get it and others who turned to crowdsource to find money to make it through the pandemic."

He said that the funds also "would have relieved a lot of stress on our staff and us as business owners."

"Omicron kind of devastated Atlanta -- it's imperative that we get it done sooner rather than later so we can plan and have these extra funds to get testing, help staff with sick pay" and other compounding costs and overhead that Hsu and many restaurant owners have incurred.

Other key findings from the survey include:

- Forty-two percent of businesses that did not receive RRF grants are in danger of filing for, or have filed for bankruptcy, compared to just 20% that received RRF grants.

- Twenty-eight percent of businesses that did not receive RRF grants have received or are anticipating receiving an eviction notice compared to just 10% that received RRF grants.

- Forty-six percent of businesses reported an impact on operating hours for more than 10 days in December 2021. 58% of businesses reported a decreased by more than half in December 2021 sales.

- Nearly two-thirds of restaurants report needing to purchase COVID tests, however nearly 65% report trouble finding COVID tests and 38% report pricing of COVID tests increasing during December 2021

Operators who did not receive grants are also taking on more personal debt, according to the survey, with 41% of restaurant and bar owners taking on new personal loans to support thier businesses since Feburary 2020. Also, more than 1 in 4 restaurant and bar owners who didn't receive emergency funding had to sell a personal asset to keep their business afloat since the start of the pandemic.

Like many chefs during the throes of the pandemic, Hsu said "I, unfortunately, could not take out a loan because I'm a chef and didn't really have any assets to put up. Banks were not very warm to giving out money to restaurants during the pandemic, so investors were my only source of capital at that point."

On average, the IRC said, "Businesses that did not receive RRF reported decreasing their staff by 30% since February of 2020. In comparison, businesses that did receive RRF reported decreasing their staff by 21%."

The report findings underscore the fact that RRF grants have played an important role in keeping small restaurants and bars in business and workers employed during the pandemic, industry experts say.

During the latest omicron surge, restaurants and bars were forced again to shift their schedules in order to accommodate testing; work with less staff if employees were exposed or sick; and find alternate ways to stay open.

"RRF is helping businesses keep their staff employed during the Omicron surge. 49% of businesses that did not receive RRF were forced to lay off staff because of a COVID-19 related closure or lack of sales," the IRC found. "This is only true for 33% of businesses that did receive an RRF grant."

"This data makes clear what we’ve been saying all along: independent restaurant and bar owners left out of the Restaurant Revitalization Fund are taking on massive debts, laying off employees, and selling personal assets to stay in operation," Erika Polmar, executive director of the Independent Restaurant Coalition said. "The Omicron surge has pushed many restaurants to the brink, especially those still waiting for Restaurant Revitalization Fund grants. These businesses are filing for bankruptcy and receiving eviction notices after crying out for help for nearly two years. This isn’t surprising -- the IRC hears these stories everyday. Congress and the Biden Administration need to treat this like the crisis that it is and replenish the RRF. The nearly 200,000 restaurants and bars left behind in the first round of funding do not have much time left."

In tandem with the release of their new survey, the IRC is calling on Congress and the Biden Administration to prioritize replenishing the RRF. Last week, the IRC released a letter signed by current and former mayors from 27 cities calling on members of Congress to replenish the RRF.

Those mayors, who represent over 16 million Americans, argue that not giving restaurants relief would be "catastrophic" and stated, "the Omicron variant is causing more strife for restaurants and bars in such peril that they might not survive the winter."

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