With the beginning of the new year, Democrats have made it a resolution to renew calls for the replenishment of the Restaurant Revitalization Fund, a fund created to provide emergency financial support to restaurants, bars, and other venues hit hardest by the pandemic.
The Restaurant Revitalization Fund was part of President Joe Biden’s American Rescue Plan Act. It was intended to “provide funding to help restaurants and other eligible businesses keep their doors open.” It provided restaurants “with funding equal to their pandemic-related revenue loss up to $10 million per business.” Restaurants that received the funds were not required to pay them back as long as the funds were used for pandemic-related purposes by March 11, 2023.
This past weekend, New York City Mayor Eric Adams joined many Democrats from across the country requesting Congress to renew the program to help struggling restaurants. However, doing so would be a mistake. The fund has been a bureaucratic and incompetent nightmare. Any renewal would be just another waste of taxpayer money.
The program was plagued by mismanagement from its onset. First, it was designed to prioritize applicants on classifications such as race and gender. The Small Business Administration was ordered to include a 21-day “exclusivity” period during which this prioritization occurred. Then, some restaurants claimed that the Biden administration prioritizing applicants for the fund based on race and gender was unconstitutional and discriminatory. They filed a lawsuit, and a Texas court issued an injunction and ordered payments to be stopped.
Moreover, it has not accomplished what it was created to do. The program was purposely underfunded at $28.6 billion. There were hundreds of thousands of applications from restaurants that did not receive funds. Furthermore, many of the businesses that did were not supposed to.
Hotel chains such as Wyndham Hotels and Resorts, Hilton, and Marriott International were given millions. Such companies are far from the impoverished neighborhood eateries that were forced to shut down.
Another example is Ruth’s Chris Steak House. Its parent company, Ruth’s Hospitality Group, received nearly $6 million from the Restaurant Revitalization Fund. This was in addition to the $10 million it received from the Paycheck Protection Program loan. It was also after the company made $468 million in revenue. Scenarios like this happened way too often and indicate the bureaucratic incompetence that haunts the fund.
According to a study on the program in New York, most money designed to help socioeconomically challenged businesses went to restaurants and bars in high-income neighborhoods. Additionally, while over 100,000 restaurants and bars in New York did receive funding, over 177,000 were denied financial assistance — many of which were in low-income areas and eventually had to go out of business.
The Restaurant Revitalization Fund allowed the government to pick the winners and losers of the program. And too many times, the “losers” were the businesses that needed the loans to survive, while the “winners” were just better politically connected. Despite this, Congress is considering refilling the program without implementing changes requiring more fiscal responsibility in dispersing funds. It should end the program instead.
