The National Restaurant Association (NRA) has called on the White House and Congress to provide financial and tax relief for the restaurant industry as the coronavirus pandemic forces operators to reduce their services or shut down entirely.
The NRA’s plan proposes more than $325 billion in relief funds, block grants, insurance and loans to assist the restaurant industry.
In a letter addressed to President Donald Trump, Senate Majority Leader Mitch McConnell and Speaker of the House Nancy Pelosi, the NRA said it anticipates industry sales to decline by $225 billion during the next three months, resulting in the loss of between five million and seven million jobs. It estimated that a three-month shutdown of restaurants would create a total economic impact of $675 billion “since every dollar spent in restaurants generates an additional $2 elsewhere in the national economy.”
The letter notes that the federal government has “taken aggressive steps to promote our public health and provide needed benefits to our nation’s workers. But as you can expect, as an industry that is based on welcoming everyone through our doors, we are uniquely affected by mandates that keep us from serving our customers. We are revising our business model to provide meals in different ways (takeout, delivery, safety-enhanced dine-in), but we are facing economic headwinds that will lead many restaurants to shut down operations, lay off workers and end our service in our communities.”
“The restaurant industry is one of low margins, tight cash flow, and a workforce that depends on us for their livelihoods,” the letter continues. “Without aggressive and immediate action from the federal government, many restaurants that are a staple of local communities will simply never resume service.”
The NRA proposed a number of measures, including:
- Creation of a $145 billion Restaurant and Foodservice Industry Recovery Fund to provide “immediate liquidity to compensate for reduced revenue … in order to pay employees, maintain service operations [and] meet transactional and financial obligations.”
- Allocation of $35 billion for Community Development Block Grants for Disaster Relief assistance. “This targeted financial assistance will allow some businesses to maintain their commitment to their communities and hopefully prepare for a return to normal operations.”
- Assistance in allowing businesses to defer mortgage, lease and loan obligations.
- $100 billion in Federally-Backed Business Interruption Insurance. The letter points out that many businesses have Business Interruption Insurance and Contingent Business Interruption Insurance, but “most policies can deny claims due to a ‘Virus’ exclusion.
- Creation of a federal loan program that would allow a restaurant to “get a loan equal to lost revenue during an emergency three-month period, with the option for extension through 2020. The loan would receive forgiveness as long as the employer keeps its workers on the payroll without reducing their pay, including workers self-quarantining or on paid sick-leave.”
- Access to $45 billion in Small Business Administration-backed loans for small businesses adversely affected by the coronavirus.
- $130 million in Disaster Unemployment Assistance (DUA), “which will help employees with financial benefits during interrupted employment due to closures and other emergency-related hardships.”
The NRA also proposed a number of tax measures to help the restaurant industry, including:
- Fix the Qualified Improvement Property (QIP) technical correction, “so that businesses can (a) amend their returns and receive money back that they effectively overpaid in taxes, and (b) receive the benefit of bonus depreciation as a stimulus measure.”
- Assistance in allowing businesses to delay, defer or forego tax obligations, such as sales and income taxes, property taxes “and other payments that directly impact a small business’s cash flow.”
- Tax credits for businesses that retain their employees.
- Reduced credit card interchange fees
- A Temporary Payroll Tax Cut that would reduce employees’ shares of Social Security payroll taxes from 6.2 percent to 4.2 percent.