Restaurant industry in Mass. still reeling despite government relief

  • Jorge Naranjo of Roberto’s Pizzeria in Greenfield cuts a potato and bacon pizza at the Federal Street shop. Although government assistance arrived to help restaurants in the wake of the COVID-19 pandemic, the industry still faces great challenges, according to the Massachusetts Restaurant Association. Staff Photo/Paul Franz

For the Recorder
Published: 1/9/2022 8:04:14 PM
Modified: 1/9/2022 8:03:23 PM

The past two years have been a disaster to Massachusetts restaurant owners. The pandemic led to lockdowns and bans on indoor dining, causing a significant loss to restaurants. And though government assistance arrived, the industry still faces great challenges, according to the Massachusetts Restaurant Association (MRA).

Data from the MRA shows that since March 16, 2020, when indoor dining was initially banned, nearly 16,000 restaurants have closed. Although outdoor dining and limited indoor dining was reinstated in June 2020, more than 3,200 of them never reopened.

Massachusetts Restaurant Association Vice President Steve Clark said that aside from restaurants that closed permanently, many others were barely surviving.

“The restaurants in Massachusetts faced too many challenges,” he said. “Even after the indoor dining ban was lifted, other restrictions were still stifling them.”

He pointed out that the restaurants largely rely on the local population and tourism, but during the pandemic, the former had limited access to restaurants and its number reduced, and the latter basically disappeared.

He used the Boston area as an example.

“A lot of the restaurants in Boston and other towns nearby rely on schools and businesses,” he said. “When many people choose to work remotely, some of the restaurants could lose 50% to 60% of their income. And many seasonal restaurants that hosted tourists had to shut down, because of the long winter, and we got no tourists at all.

“Now some students have come back, which is good news. They could patronize the restaurants,” he added.

Inflation has shaken the restaurant industry as well. The annual inflation rate of the U.S. surged to 6.8% in November, the highest since November 1990, according to data from U.S. Department of Labor. Meanwhile, energy and food costs both rose significantly, troubling the restaurant owners even further.

“These were not all the challenges, unfortunately,” Clark said. “The delta virus, the eviction orders, the increasing transportation cost … they could all impact restaurants.”

Recognizing the difficulties that restaurants were facing, the U.S. government initiated many programs supporting small businesses, among which the biggest ones were the Paycheck Protection Program (PPP) and the Restaurant Revitalization Fund (RRF).

The former allowed restaurant owners who started business prior to Feb. 15, 2020 to apply for loans, and the latter mainly targeted restaurants, allowing the owners to apply even if they started businesses amid the pandemic and received the PPP loan. According to the Small Business Administration, the money has been distributed to eligible Massachusetts applicants under its supervision.

However, although PPP and RRF altogether granted more than 10,000 loans to restaurant owners, it was a drop in the ocean compared to the industry’s losses. The MRA estimated that only one-third of the applicants received PPP or RRF funds.

“The funding did help some restaurants, but it was not enough,” said Clark, who has been keeping his eyes on the financial assistance, “because the money ran out fast, and we are not sure if there will be additional funding. Those who did not get money were still constantly struggling.”

Seth Gerber, an instructor at Boston University’s Hospitality Administration School, said improving fundamentals are essential to helping restaurants survive, including quality services and products.

Gerber, who has been working in the industry for 11 years, said, “It can be difficult, but the best strategy for those restaurants without subsidies was to get better food and service. People still want to go out and eat, so the restaurants should just try their best to give them what they want.”

He pointed out that the management of restaurants should pay attention to staff’s mental well-being, and avoid putting too much pressure on them to provide better services.

Michael Kaufman, a senior lecturer of business administration at Harvard University Business School, pointed out that restaurants, with or without subsidies, ought to manage their cost properly during the revitalization phase. He said restaurant owners should prioritize negotiating with landlords for better terms, and searching for suppliers with more economical deals.

“If the owners can cut the cost well, they have a greater chance to get through this,” Kaufman said.

Both of them said that waiting for additional funding from the federal government would not be wise.

“It could take months or years to pass federal funds,” Gerber said. “Each restaurant should focus on their own plans to revitalize now. There’s still a long way to go.”

Mutian Qiao writes from the Boston University Statehouse Program.


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