After bakery co-owner Allyson Yaecker went through the application process for the Restaurant Revitalization Fund in early 2021, she received a notice from the U.S. Small Business Administration (SBA) that her business would receive a grant.
Yaecker’s Downtown-based Fatty’s bake shop encountered several roadblocks before the pandemic even started. After it opened in fall 2018, nearly a year of surprise road construction made it virtually impossible for customers to access the storefront. Then, once that wrapped up, all non-essential businesses were ordered to close to mitigate the spread of COVID-19.
Baked goods at Fatty’s
The revitalization fund (RRF) grant would have been a lifeline. Established through the American Rescue Plan Act, the program was designed to help businesses recover from pandemic-related revenue losses. But Fatty’s never received it, after a group of mostly white and male business owners sued the federal government—accusing the RRF program of discrimination because it gave priority to applications from women, people of color and veterans—and won. The SBA notified thousands of businesses that the grants they were in line to receive were being revoked as a result of court rulings.
“As a woman business owner, it’s ridiculous,” Yaecker says. “How many more restaurants are they willing to let close before they fix this? All of us small businesses, especially restaurants, are in danger of closing.”
She says she has been calling lawmakers daily, urging them to pass legislation that would give many restaurants a second chance. She thinks it’s the least Congress can do, after about two-thirds of businesses that applied for the first round of RRF grant money, didn’t receive any.
According to SBA data, 278,304 restaurants and bars applied for RRF grants in spring 2021, and 101,004 were approved. Among nearly 2,500 Nevada establishments that applied, about 30% of those applications were approved. After lawsuits shook out, the SBA awarded more than $267 million to 763 restaurants across the state.
Congress is now considering a bill that would give more money to the RRF program. The House of Representatives in early April passed the Relief for Restaurants and Other Hard Hit Small Businesses Act of 2022, which would allocate $42 billion for the RRF and $13 billion for other small businesses.
From April 25-27, the National Restaurant Association convened in Washington, D.C., for the “industry’s largest grassroots lobbying event,” as the association describes it. Like Yaecker, that organization is calling on Congress to pass legislation that would direct more money to the RRF and grants for other small businesses.
According to recent estimates from the association, 90,000 restaurant locations nationwide have temporarily or permanently closed since 2020. As of March, eating and drinking establishments employed about 820,000 (about 6.6%) fewer people than they did pre-pandemic.
The state restaurant association agrees that the industry was “decimated” by the pandemic. Businesses that survived and are still recovering, are struggling with new issues that have cropped up since the pandemic—increased costs for food and rent, supply chain logistical issues and workforce shortages. According to a 2022 nationwide survey of nearly 1,200 restaurants, 80% that applied and did not receive a RRF grant say they are on the verge of permanent closure.
Dan Krohmer’s west-side restaurant Other Mama received an RRF grant and a Paycheck Protection Program loan from the SBA in 2021. He says prudent spending has allowed him to “maximize” the money, which he has used mainly to keep employees on the payroll and cover the costs of rent and ingredients.
Like many restaurants, Other Mama is dealing with increased costs and staffing challenges. But Krohmer says he feels like he can get by without further government assistance, so that a second round of funding can go to the businesses that need it most.
“We feel very lucky that we got it. I know so many people that didn’t and also don’t have that kind of support, like I did. And I think these things are meant to go around,” he says, explaining that he doesn’t plan to apply for a second RRF grant, if the legislation passes. “We’re fortunate that business is great right now. People are really coming in and being really supportive.”
To deal with increased costs, Other Mama had to raise menu prices, Krohmer says. And he’s paying kitchen staff about 50% more than when the restaurant opened in 2015, he adds. “It’s so hard to even get an apartment or a home in Las Vegas right now. So I’m thinking about, what is our average employee making? And is that the kind of money you can live on?”
According to a 2022 Independent Restaurant Coalition survey, 89% of restaurant operators say they’ve had to increase menu prices, and 84% report raising wages in response to hiring difficulties. Reviving the RRF program could offset those and help keep more restaurants afloat.
Keeping restaurants open helps not only those businesses but also the economy as a whole, says Erika Polmar, executive director of the coalition, which has been driving advocacy for RRF legislation. According to U.S. Census data, small business employees accounted for about 43% of jobs in Nevada in 2019.
“When restaurants and bars close, suppliers lose their clients, further damaging the already-fraught supply chain,” Polmar says. “Restaurant Revitalization Fund grants allow businesses to continue serving their communities, and keep their workers employed through COVID-19 uncertainties. This relief also allows businesses to hire at competitive wages and offer better benefits.”
The Senate will deliberate the Relief for Restaurants and Other Hard Hit Small Businesses Act and proposed levels of funding therein. While they do, many businesses remain on the line, waiting for relief.
For Yaecker, it has been a “game of chess” to try to keep the door open at her bakery. “We changed everything in our restaurant just to bring people in,” she says. “We’re a bakery, and we had to expand into doing sandwiches to bring people in.”
If her business were to receive a RRF grant, she says, she might have a chance to finally catch her breath—and catch up.
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