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The Restaurant Revitalization Fund was underfunded and oversubscribed. Why didn't it spread the wealth better?

Jenn Ladd, Christian Hetrick, Aseem Shukla, The Philadelphia Inquirer on

Published in Business News

All is not rosy in restaurant land. Nationally, 90,000 spots have closed permanently or long term. Locally, employment in food-service and accommodation is down by 33%, and the number of businesses behind on their bills rose by 66%. Sales are slowing, labor and food costs are growing, and winter is on the horizon again as the pandemic plows on.

The bleak forecast is yet another cause for concern for the industry, one of the hardest hit by the pandemic. That’s why Congress singled it out in March’s American Rescue Plan, earmarking $28.6 billion for restaurant relief.

The pot of money was pitched as a lifeline for businesses large and small, from swanky steakhouses to halal carts and holes in the wall. For many, the Restaurant Revitalization Fund (RRF) was just that, helping 101,000 businesses recover their financial losses.

But the federal program left many more eateries unfunded, frustrating bar and restaurant owners trying to stay afloat. With barely enough money to meet the needs of the struggling industry, the fund was besieged by litigation and drained within weeks.

Philadelphia’s RRF distribution reflects a national trend: Half of the total funds sent to the region went to just under 10% of recipients, according to a Philadelphia Inquirer analysis of Small Business Administration data.

While advocates defend the program’s design, critics have questioned why the funds weren’t distributed more equitably.

 

Among the big winners was the eight-establishment Schulson Collective, which applied for seven discrete grants through assorted LLCs. In total, the Philadelphia restaurant empire received roughly $17 million in RRF grants by properly filling out the paperwork and complying with the rules, the SBA confirmed.

”Our restaurants went through the required processes and paperwork to be considered and were fortunate to receive funds,” Schulson said in a statement.

One of those restaurants, Via Locusta, opened mere months before the pandemic hit; it received almost $350,000.

“That was real shocking to me,” said Chad Todd, owner of Sulimay’s Restaurant in Philadelphia's Fishtown neighborhood. “I don’t understand how you have a three-month-old restaurant get that.”

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