Why SF restaurants need more federal relief funds

‘They should right the wrongs and tap up the funds’

When the database dropped last month, it was a mad scramble among San Francisco restaurateurs. Everyone wanted to see who got the most federal pandemic relief money.

The federal government had set up a $28.6 billion restaurant revitalization fund back in the spring, giving struggling owners a chance to apply for money to mitigate COVID-related losses. The process was pretty simple — compared to the tortured PPP loans of 2020 — and most everyone in town threw in an application.

Disbursement started in June, but was suspended in July when the dollars ran out and a lawsuit mucked things up. Then the final tallies came across. Everyone clicked on the link provided by the Small Business Administration, which administered the funds, and gasped at the large sums. Gossip and griping ensued. Especially among those who didn’t get a dime.

The resulting awards were complicated and confusing. The early headlines focused on the presence of chains on the list. Why was Panera Bread and Peet’s getting money while some locals got shut out? The answer is complex, having to do with franchisees, and the way the money was doled out. But these large chains employ locals, just like any other dining establishment, so what’s the big deal?

The next level of head scratching involved some of the top recipients on the list. Why did Lori’s Diner get $10 million? And the San Francisco Soup company? $9.9 million. Kokkari and John’s Grill, both popular downtown eateries, walked away with $5 million. Joe’s Coffee Shop on Geary? They got just under $43,000. The sums and distribution seemed all over the map, but were really tied to revenues and outlets and other factors. Confusion reigned, which is the way most everything goes in the mad scramble of pandeconomics.

(Full disclosure: The Examiner’s parent company, Clint Reilly Holdings, owns Credo restaurant in San Francisco and did not receive federal relief funds.)

A number of San Francisco firms received $5 million or more from the federal government’s Restaurant Revitalization Fund. (Courtesy Small Business Administration)

A number of San Francisco firms received $5 million or more from the federal government’s Restaurant Revitalization Fund. (Courtesy Small Business Administration)

The issue got further muddied when a Tennessee restaurant owner sued the feds, claiming the preference given to businesses owned by women, veterans and socially and economically disadvantaged applicants was discriminatory. A Texas circuit court agreed, and put a stay on any further distributions. The money came to a halt, and some recipients were even told the money they were promised wasn’t coming anymore.

“It was very well-intentioned,” said Barry Kurtz, chair of the Franchise & Distribution Practice Group, a Southern California law firm representing primarily franchise restaurant owners. “The priority group carve-out was what created the problems. (Congress) was trying to favor women-owned business and economically challenged business. It was a nice thing to do. But by doing that, they actually caused it to shut down.”

The SBA, which shut down funding on July 14 mainly due to the lawsuit, remains proud of the first effort and crowed about the diversity of recipients.

When contacted by The Examiner, the agency provided the following statement from SBA Administrator Isabel Guzman: “The $28.6 billion Restaurant Revitalization Fund provided desperately needed relief to more than 100,000 restaurants and other food and beverage businesses across the nation with significant funding going to our hardest-hit, underserved businesses. Restaurants are at the center of our neighborhoods and propel economic activity on Main Streets. As among the first to close in this pandemic and likely the last to reopen, many are still struggling to survive. The SBA will continue to work hard to ensure they get the resources they need to recover, rebuild and be resilient.”

According to the SBA, “The RRF program received more than 278,000 submitted eligible applications representing over $72.2 billion in requested funds, and approximately 101,000 applicants have been approved to restaurants, bars and other restaurant-type businesses. Underserved populations received approximately $18 billion in grant awards including:

— Women-owned businesses: $7.5 billion

— Veteran-owned businesses: $1 billion

— Social and economically disadvantaged-owned businesses: $6.7 billion

— Businesses owned by representatives of multiple underserved populations: $2.8 billion.”

Great. Now, the question is: How can Congress open the spigot again?

Just this week, a bipartisan bill in the Senate, carried by Ben Cardin, D-Md., Roger Wicker, R-Miss., and Majority Leader Chuck Schumer, D-N.Y., was introduced to add another $48 billion to pump up the depleted Restaurant Revitalization Fund. Over in the House, Republican lawmaker Blaine Luetkemeyer introduced a similar bill that would add $60 billion. We’ll see how it plays out in Congress, but the fork is on their plate.

Meanwhile, back in San Francisco, restaurants began to pull out of the pandemic funk this summer, until the most recent delta variant put another crimp in the rebound.

Laurie Thomas runs two restaurants in the Cow Hollow neighborhood. She’s had Rose’s Cafe for 24 years and Terzo for 15. Times have been tough during the pandemic, forcing her to open and close repeatedly, as the small-business owner tried to find an equation that would keep them afloat.

“My businesses lost 50 to 60 percent of revenue,” said Thomas. “We were closed because we couldn’t operate. We tried delivery and to-go and lost double our rent.”

Thomas is also the executive director of the Golden Gate Restaurant Association, which has plenty to say about the SBA, the RRF and the rest of Washington’s alphabet soup.

“Hey, restaurants are screwed,” said Thomas, who doesn’t mince. “We provide 15 million jobs across the country. We had asked Congress … way back in March/April of last year for $120 billion.

So, what’s the solution, Laurie?

“We need to acknowledge that $28.6 billion wasn’t going to be enough. That wasn’t rocket science,” said Thomas. “Chuck Schumer said we know it isn’t enough. There’s more demand than there was supply. But it’s always a negotiation in D.C.”

“This is a vital part of the economy. And it’s not like a bailout. Approximately 95 cents on the dollar goes back out the door. Employees. Food vendors. Linen companies. Trash collectors. Putting money into these independent restaurant operators, many of whom are people of color and immigrants, is the right thing to do.”

Amen, Ms. Thomas. San Francisco restaurants need all the help they can get. And it’s time for Congress to do the right thing and dole out the life preservers in an equitable and transparent fashion. Most importantly, they have to do it soon. Time is running out for many of The City’s fabled eateries.

“They should right the wrongs and tap up the funds,” said Thomas. “We’re all freaking out about the delta variant.”


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