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Without aid, indies are facing bankruptcy, new survey says

Independent operators are being pushed to the brink and are taking on mounting personal debt, according to survey results released by the Independent Restaurant Coalition, which is pressing Congress for more funding.
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Greg Leon, owner of a small Spanish-Portuguese restaurant in Milwaukee, said he is barely keeping his head above water, especially with the latest COVID surge.

He has cut his menu, slashed his wine list, and, most significantly, reduced his days of operation to just three to keep Amilinda afloat with his limited staff.

“We’re one piece of equipment malfunctioning from having zero money in our accounts,” Leon said.

Thousands of independent restaurant owners are in similar positions to Leon’s right now, with many on the verge of bankruptcy and taking on growing personal debt.

A survey released Friday by the Independent Restaurant Coalition found that 42% of businesses that did not receive Restaurant Revitalization Fund (RRF) grants this year are in danger of declaring bankruptcy or have already done so. About one in five of those who did receive the limited RRF money said they might go bankrupt.

The $28.6 billion RRF quickly disappeared last year, providing aid to only about a third of total applicants.

Further, 41% of independent restaurant owners who didn’t receive RRF grants said they had taken out new personal loans to support their businesses and more than 25% said they’ve had to sell a personal asset to support their restaurant during the pandemic.

Like Leon, those who did not receive RRF money said they’d been forced to cut their payroll by 30%, the survey found.

The 1,200 restaurants surveyed said the recent omicron surge was having a dire impact on their operations, with 58% saying their sales dropped by more than half last month and 46% saying they had to cut operating hours on more than 10 days in December.

In normal times, Leon might do 60 covers on a Friday night in January. With COVID surging and many canceling or not booking reservations at all, he had 22 tables scheduled this Friday.

His biggest fear, currently, is what would happen if he contracted COVID.

“I’ve gone a couple of pay periods without paying myself,” he said. “We’ve always had a very small staff. When we’re open, I’m on the line cooking. If I get sick, I have to close down. There’s nobody to cover my shifts. And that is my biggest concern. Not necessarily getting it and getting ill.”

More than 90,000 restaurants and bars have closed since the pandemic began in March 2020, according to data from the National Restaurant Association.

The IRC has been lobbying Congress to replenish the RRF.

Currently, a bipartisan Senate group headed by Small Business Chairman Ben Cardin (D-Maryland) is mulling a bill that would offer roughly $40 billion in aid to restaurants.

“The omicron surge has pushed many restaurants to the brink, especially those still waiting for Restaurant Revitalization Fund grants,” IRC Executive Director Erika Polmar said in a statement. “These businesses are filing for bankruptcy and receiving eviction notices after crying out for help for nearly two years.”

The lobbying group is planning a National Day of Action to Save Restaurants on Tuesday to demand that Congress replenish the RRF.

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