It may not seem to be the popular thing to say, but I’m going to say it anyway: Right now it’s good to be in the restaurant business.
The numbers won’t really be known for a while, but it’s likely that 2020 will go down as one of the worst years ever for restaurateurs. The National Restaurant Association (NRA), back in the middle of the catastrophe, reported that about 1-in-6 restaurants (representing nearly 100,000 restaurants) closed either permanently or long-term due to the pandemic. Many others, as I write this, are teetering on the brink.
But, if you believe the NRA’s numbers then that means that 500,000 restaurants remained open and that number will go up as a percentage of those long-term closures will soon be back in business and other startups appear.
I know they’re coming back. I already see them. And so do you. Good for them! These intrepid souls, having survived this catastrophe are now about to reap the rewards. Yes, the bigger chains are poised to benefit the most. But there will be plenty of room for independent restaurateurs. In 2021, it will be good to be in the restaurant business. Why?
For starters, a lot of money is about to come to this industry from the federal government. A lot. To be exact, $29.5 billion. That’s the amount set aside by the last round of stimulus for the Restaurant Revitalization Fund (RRF), which should be rolling up its windows soon. Get in line folks because all you have to do is demonstrate your revenue loss (yes, revenues) between 2020 and 2019 and the Small Business Administration will reimburse you for the difference in the form of a grant that never has to be paid back as long as you use it for operating and other related expenses. What a windfall.
And the RRF isn’t the only money still out there for restaurateurs. They can borrow more money (and receive more grants) under the expanded Economic Injury Disaster Loan program. They can still borrow under the Paycheck Protection Program through May 31 (there are expanded loan amounts for those in this industry) and get forgiveness for funds used to build their outdoor seating (more coming on that).
They can also get forgiveness for up to three months of principal and interest on new Small Business Administration Section 7A and 504 loans, as well as expanded forgiveness if they already have these loans. They can take advantage of grant programs provided by delivery services like Grubhub, DoorDash and Uber Eats or states like California and Illinois as well as the many grants and programs from cities like these programs in Washington, D.C.
Many cities around the country that restricted indoor diners thankfully allowed restaurants to serve their shivering customers outside through the darkest, dimmest days of the winter. Many intrepid restaurateurs seized this opportunity and built structures with flooring, ductwork, heating and seating areas that rivalled their inside setups.
Now, these same locales — like New York, Charleston, Kansas City and San Jose — are either passing or considering laws to make these outdoor seating arrangements permanent. If that happens, many of these restaurant owners will magically find themselves with expanded capacities to serve even more diners going forward for the same rent.
“The streets are going to feel alive!” famed restaurateur Wolfgang Puck recently told the Robb Report after expanding his Beverly Hills eatery with a 6,500-square-foot transparent tent with semi-private dining and enough space to accommodate 109 people while still maintaining social distancing guidelines.
And speaking of rent, many locales continue to offer rent abatement through the end of the year. But my smartest clients in the industry have already been shaking down their landlords for longer term and less expensive leasing contracts knowing full well that it could take years for rents to return to their pre-pandemic levels while offices and companies are still sorting out their work-from-home strategies.
And let’s not forget about technologies. The pandemic changed diners’ attitudes. Many of us found we really like eating from home and so delivery revenues will likely stay strong. For those that enjoy going out, we admit that we kind of enjoy placing our orders using QR codes and paying from our mobile devices. Restaurant owners like these things too, because it helps them cut down on staff and therefore reduce overhead. Other eateries reinvented themselves as “ghost kitchens,” discovering that they can make more money sending food to people in their homes than serving them in-person.
Another report from the National Restaurant Association says that sales at restaurants and drinking places will increase 10.2% in 2021 to $548.3 billion as many people will be dining out after being confined to their homes for almost a year due to the pandemic. This year — and the next few years — will be great for those in the restaurant business.
And you know what? They deserve it. These were the ones who were forced to shut their businesses down over questionable data that led public health officials that unfairly targeted them as one of the primary culprits behind the spread of COVID-19. This industry suffered significantly, to no fault of their own. They deserve better times. And they’re about to enjoy them.
• Gene Marks is a CPA and owner of The Marks Group, a technology and financial management consulting firm that specializes in small- and medium-sized companies.