Last week, the federal government quickly hit its limit on the first wave of payroll protection plan (PPP) loans, a $349 billion program intended to support small businesses as part of the CARES Act coronavirus relief package passed on March 27. Reports soon surfaced that some not-so-small businesses, notably Ruth's Chris Steak House and Potbelly sandwiches, had snagged millions of dollars ($20 million for Ruth's Chris, $10 million for Potbelly), and that even some hedge-fund companies had managed to get a piece of the pie.
The majority of independent restaurants, though, have reported very different outcomes. The Colorado Restaurant Association just released the second of its coronavirus impact survey results (read about the first CRA coronavirus survey here), offering details of restaurant closings and revenue over the past several weeks. The new survey was conducted from April 10 to April 16, and covers the time period from the end of the first survey (March 22) to April 10.
This time, the CRA asked its member restaurants whether they applied for and received PPP money. Of those responding, 85 percent that had applied for the loans (which the feds will forgive as long as the money is spent on specific payroll-related expenses) did not receive them.
The Economic Injury Disaster Loan was also created by the CARES Act, but only 2 percent of Colorado restaurant applicants received funds through this program, according to the CRA's survey.
But even with just 15 percent of restaurant applicants receiving PPP funds, Colorado may have gotten off easy. The National Restaurant Association did a similar survey of more than 6,500 restaurants around the country, and even fewer applicants reported receiving funds. As it turns out, only 9 percent of the PPP loans went to hotels and restaurants, even though the hospitality sector has accounted for the majority of layoffs since the COVID-19 crisis began.
Another round of PPP loans was approved by Congress on April 21, which could help.
But in the meantime, the CRA reported, 91 percent of the state's restaurants surveyed have laid off staff; a total of 81 percent of the workers employed by the responding restaurants had been let go. Sales are also way down as a result of dining-room closures; the organization estimates that the restaurant and food-service industry will lose more than $975 million in sales in April if the downward trend continues.
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Without financial assistance, many restaurants won't make it until the shutdown orders are lifted and they're able to bring in customers again; 2 percent of the survey's respondents have already closed permanently, another 12 percent say they will close for good if the stay-at-home order extends to mid-May, and 23 percent say they'll be forced to close if the order extends until the end of May.
The restaurant and bar closures were originally scheduled to be lifted on April 30 in Colorado and May 11 in Denver, but during an April 20 press conference, Mayor Michael Hancock stated that "the order will be extended; you can bet on that." Both Hancock and Governor Jared Polis have indicated that restaurant and bar reopenings will happen slowly and at reduced capacity, putting even more strain on the industry.
So once bars and restaurants eventually reopen, you may find yourself dining next to a taped-off table or in a dining room with half as many chairs as it had before.
Denver's restaurant landscape will definitely look different than it did before the pandemic, when the industry was riding a wave of record sales and popularity. Some of our favorites, such as Euclid Hall and the Market, have already closed for good, and many more are sure to follow.