The RESTAURANTS Act Is the Wrong Way to Save the Restaurant Industry

Workers in the restaurant industry are in dire straits all across the country. But the RESTAURANTS Act proposed in Congress is a $120 billion handout to industry owners with no substantive guarantees for the workers who are suffering immensely right now. We can’t trust celebrity chefs and CEOs with trickle-down relief.

Somewhere between two and three million servers, cooks, hosts, and dishwashers remain unemployed due to COVID-19. (Dolapo Falola / Flickr)

On December 27, President Donald Trump signed a new $900 billion coronavirus relief bill that includes $600 individual stimulus checks, $300 weekly unemployment benefits extended through March, $284 billion for more Paycheck Protection Program (PPP) business loans, $82 billion in school funding, $45 billion to aviation and transportation, and $15 billion for failing entertainment venues. Absent, however, is any targeted relief to another struggling industry: restaurants. And the restaurant lobby is not happy.

The Independent Restaurant Coalition (IRC) slammed the bill for falling “woefully short.” The IRC, an up-and-coming rival to the older National Restaurant Association (NRA), warned that “restaurants and bars will continue to close without additional relief this winter, leaving millions more out of work.”

The IRC is right to sound the alarm. Mismanaged at every level of US government, the pandemic is now deadlier than ever. Cities and states have introduced new, necessary restrictions on indoor dining, and cold weather is making most outdoor dining impossible. The upshot is an existential crisis in food service. A hundred thousand restaurants have already gone out of business due to COVID. Somewhere between two and three million servers, cooks, hosts, and dishwashers remain unemployed.

It’s only getting worse: 40 percent of food and drinking establishments expect to shut their doors forever in the next six months, jeopardizing the industry’s ten million remaining jobs. “I have over a decade of experience, and this whole situation is beyond demoralizing,” Crystal Maher, a furloughed server in Austin, told me. “I’m being told that I’m only eligible to receive $70 per week in unemployment benefits, and also due to an error, they overpaid me $400 and they would like that back. How do you survive on $70 a week?”

It wasn’t part of the latest round of stimulus, but a big-ticket bailout to rescue the restaurant industry is gaining steam in Congress. The “RESTAURANTS Act” calls for an immediate infusion of $120 billion in grants to restaurants and bars. The IRC’s small business version passed in the House in October, while in mid-December the NRA won a fifty-third cosponsor for its chain-friendly Senate bill. The IRC’s public #SaveRestaurants campaign has also received fanfare in the pages of the New York Times. With an emerging consensus among elites in both parties, President-elect Joe Biden indicates his administration might back the plan.

Federal relief could save millions of jobs in restaurants that are failing through no fault of their own. But there’s a big problem with the RESTAURANTS Act: it was written by and for restaurant owners.

Following in the worst tradition of American bailouts, the bipartisan bill is a massive handout to celebrity chefs and CEOs with no strings attached. Nothing in the bill guarantees bailout money will go toward saving workers’ jobs or subsidizing their income as consumers.

Introduced by Rep. Earl Blumenauer (D-OR), H.R. 7197 would establish a “Restaurant Revitalization Fund” within the Treasury Department. This fund would shell out $120 billion to eating and drinking establishments based on the gap between their 2019 and 2020 revenue. Unlike PPP loans, these are direct grants with no expectation of repayment. This is the kind of aid needed during a pandemic — except that the fund places zero clear restrictions on how the money is to be spent.

The ten-page bill states that restaurants can use the funds on payroll, mortgages, rent, utilities, maintenance, supplies, food, prior debts, and “any other expenses that the [Treasury] Secretary determines to be essential.” In other words: whatever business executives want.

Compare that to PPP, under which restaurants receive forgivable loans when at least 60 percent goes to maintaining payroll. Even better, the CARES Act’s $32 billion Paycheck Support Program exclusively paid for continuing wages, salaries, and benefits in the airline industry.

In short, Congress plans to fork over $120 billion to restaurant owners and just hope they save the industry. But it’s naive to think culinary bosses won’t put their own short-term profits first. If Congress sets no conditions for the grants, restaurant owners can simply pocket the money, lay off their staff, and ride out the pandemic until it is profitable to fully reopen, treating the payment as their own personal payout rather than a lifeline to the many workers who work under them. As “stimulus,” this would spell disaster for workers, their families, and the wider US economy.

We can’t trust restaurant owners and their investors with trickle-down relief. That’s why Restaurant Workers United — a coalition of worker-activists from UNITE HERE, the Democratic Socialists of America (DSA), and elsewhere —  has launched an online petition and is demanding House Democrats fix the bill. DSA’s national Restaurant Organizing Project is also planning a town hall and direct actions in the new year to demand Congress amend the RESTAURANTS Act or any future relief package to mandate that restaurant owners spend the bailout money on their employees. Anything less, and we’re laying out a free buffet to the rich.

Pro-labor lawmakers should heed this call. Members of the House Financial Services Committee could offer amendments to the RESTAURANTS Act, and other electeds could shake up the Capitol consensus on the bill. Socialist and progressive politicians can amplify the movement and give it a bigger platform, too, as Rep. Ilhan Omar (D-MN) did when she headlined an organizing training for food and beverage workers in October.

Above all, restaurant employees need to organize. The pandemic has sparked new activity among workers fighting for their lives out of sheer necessity, but only 1.4 percent of eating and drinking establishments are unionized today. This is a far cry from the powerful culinary unions of the not-so-distant past. More workers must take risks and fight.

At the same time, better-resourced groups like DSA, labor unions, and worker centers should develop durable structures that can bolster and widen this bottom-up organizing. We’ll never build the power to defeat business lobbies like the NRA and IRC any other way.