R.I. delegation urges SBA to provide financial assistance to still-struggling hospitality industry

BOB BURKE, back row at left, owner of Pot au Feu Restaurant in Providence, says that while local restaurants are back to being full after the COVID-19 pandemic impacted operations, the costs for restaurants to operate has risen due to inflation and supply chain problems. / COURTESY POT AU FEU
BOB BURKE, back row at left, owner of Pot au Feu Restaurant in Providence, says that while local restaurants are back to being full after the COVID-19 pandemic impacted operations, the costs for restaurants to operate has risen due to inflation and supply chain problems. / COURTESY POT AU FEU

PROVIDENCE – The state’s congressional delegation is pushing the U.S. Small Business Administration to provide financial assistance to restaurants in both Rhode Island and other states still struggling to recover from the COVID-19 pandemic who had been shut out of the federal Restaurant Revitalization Fund.

Back in July 2021, the SBA announced that 442 Rhode Island-based restaurants received $105.6 million in recovery funds from the program. The national program, which offered $28.6 billion to restauranteurs across the U.S. between May 2021 and July 2021, provided grants to restaurants dealing with pandemic-related effects regarding payroll, mortgage and rent payments, outdoor seating, food and beverage costs and other operating expenses.

However, in an Aug. 11 letter to SBA Administrator Isabella Guzman, Sens. Jack Reed and Sheldon Whitehouse, and Reps. James R. Langevin and David N. Cicilline, D-R.I., said only 30% of Rhode Island restaurants who applied for Restaurant Revitalization Funds received relief monies. That, the delegation wrote, is the lowest awards rate in the U.S., citing a U.S. Government Accountability Office report released last month on the fund program.

Additionally, the GAO’s report noted that there is still $180 million in unobligated Restaurant Relief Fund monies remaining. Reed, Langevin, Whitehouse and Cicilline wrote to Guzman that those funds should be prioritized to applicants from states, such as Rhode Island, that received “disproportionately low levels” of awards relative to applications submitted within the state.

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“Awards on that scale could make a transformative difference for the numerous restaurants still struggling with aftershocks from the pandemic’s economic crash,” the delegation wrote.

Rhode Island Hospitality Association Senior Vice President of Advocacy and General Counsel Sarah R. Bratko told Providence Business News the Restaurant Revitalization Fund came out as “very unfortunately underfunded” and the restaurants who were had their program applications rejected were due to “bad luck.” She said the hospitality businesses who had their Restaurant Revitalization Fund applications denied were seeking a combined $208 million from the program, and the need in Rhode Island is more than what the SBA could now offer.

“Even if we got 100% of the $180 million in unspent Restaurant Revitalization Fund money, we would still have almost [$30] million in unmet need,” Bratko said.

Bob Burke, owner of Pot au Feu Restaurant in Providence, was one of the lucky ones who did receive Restaurant Revitalization Fund monies. While he declined to disclose how much he received, Burke said the funds were used for keeping the restaurant’s staff and labor, with some employees working at Pot au Feu for at least 20 years, intact.

Both Bratko and Burke said the restaurant industry revenues are doing well, but doing business currently is another big problem. While restaurants and hotels are full of customers, they say operating costs, such as labor, utilities and food, have increased because of inflation and supply chain problems, and it is impacting profit margins.

“It’s been a 1-2 punch,” Burke said. “Restaurants are all high users of utilities; it takes a lot of gas to do that cooking. We also had to do a lot of upgrades in ventilation systems because of COVID-19, and they are now more expensive to run. People say ‘thank God you’re back to full,’ but we’re not.”

Bratko said the state-level relief programs, such as R.I. Commerce Corp.’s Take It Outside grant initiative, directed to businesses who didn’t receive Restaurant Revitalization Fund monies have helped. However, Bratko said the state funds available wasn’t enough to match the restaurants’ unmet needs that the Restaurant Revitalization Fund program offered. She said the federal program offered grants on average of hundreds of thousands of dollars, while the state program’s grants were at most $50,000.

Bratko also said the state allocated approximately $32 million in relief to small businesses, including $8 million specific for hospitality businesses. Plus, state leaders approved $100 million of American Rescue Plan Act monies into the state’s unemployment trust fund, Bratko said, that will help all industries, including hospitality. But, many interest groups around the state are all looking for their share of the large ARPA pie, Bratko said.

Bratko said the hospitality association, which asked the congressional delegation for assistance, is unsure how the remaining $180 million federal restaurant relief funds will be allocated out. But, the hospitality association, Bratko said, wants to make sure that when the SBA appropriates the funds, Rhode Island restaurants are “treated fairly.”

“We don’t want to be left out in the cold,” Bratko said.

James Bessette is the PBN special projects editor, and also covers the nonprofit and education sectors. You may reach him at Bessette@PBN.com. You may also follow him on Twitter at @James_Bessette.

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