U.S. restaurants seek more aid, on track to lose $240 billion by end of 2020

spike

NEW YORK (Reuters) – U.S. restaurants asked Congress for more financial aid on Monday to help weather the coronavirus crisis ravaging the industry, saying they are on track to lose $240 billion by the end of 2020.

FILE PHOTO: An empty Chipotle restaurant is seen in the financial district in lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., April 3, 2020. REUTERS/Mike Segar

The National Restaurant Association said its latest survey showed two-thirds of its workers – more than 8 million people – have been laid off or furloughed as four in 10 restaurants are closed.

But the Washington, D.C.-based lobbying group said existing federal relief programs will not help restaurants prevent more layoffs. Shortcomings with the small business Paycheck Protection Program (PPP) make it untenable for many restaurants to pay back or even use the loans, it said.

On Monday, burger chain Shake Shack Inc (SHAK.N) said it would return the $10 million PPP loan it received – the first major U.S. firm to hand back the money – because it was able to raise capital privately.

But some smaller restaurants did not get a loan before the fund ran dry last week. Congress is working to replenish funds.

The NRA on Monday asked federal lawmakers to restore the 10-year repayment period for the loans, rather than the 2-year period as implemented.

It also requested a $240 billion Restaurant and Foodservice Industry Recovery Fund – after asking lawmakers a month ago for $145 billion in cash relief through such a fund, which was not created.

Such a fund would provide capital to restaurants that lost at least 25% of sales to help them compensate for government-mandated closures, restock inventory, supply safety equipment and rehire workers, the NRA proposed.

The group surveyed 6,500 of its owner members from April 10-16.

The NRA is not alone in asking for fixes to federal programs.

On Friday, the Independent Restaurant Coalition, formed in response to the pandemic, said the origination date of PPP loans should begin when restaurants reopen – not when they receive the money, as it is currently structured.

The PPP loans are designed to help small businesses keep staff on payroll. However, restaurants that are closed completely cannot reopen until health and government officials approve.

Those restaurants that are still offering takeout and delivery are operating with skeleton crews at a loss and cannot yet rehire people even with a loan.

Instead, they need money now to pay rent and vendors, the coalition said.

“Big corporations, they’re happy to take this as a 2-year loan at 1% interest,” said co-founder and chef Tom Colicchio. “We can’t do that.”

Reporting by Hilary Russ; Editing by Chizu Nomiyama and Lisa Shumaker

Source Article

Next Post

Investor groups call for UK firms to provide a virtual AGM

FILE PHOTO: Canary Wharf is seen with the O2 arena, illuminated blue in support of NHS and other key workers as the number of coronavirus cases increases globally, London, Britain, April 2, 2020. REUTERS/Paul Childs LONDON (Reuters) – Britain’s biggest listed companies have been urged to hold ‘virtual’ annual general […]