North Texas restaurants have received at least $ 473 million in federal loans, but is it enough to save them?
Of the thousands of businesses in North Texas that got federal help under the Paycheck Protection Program, restaurants have received at least $ 473.5 million in bailout loans.
Recently published data of the Small Business Administration shows that restaurants accounted for 1,049 loans out of the more than 15,000 North Texas businesses that obtained loans over $ 150,000.
Local restaurants that have been approved for PPP loans include M Crowd Restaurants, the group behind Mi Cocina, Taco Diner and The Mercury, which received $ 5-10 million; TGI Fridays, which received $ 5-10 million; Mesero Restaurant Group, which received between $ 2 million and $ 5 million; Babe’s Chicken Dinner House, which received $ 5-10 million; and Flavor Hook, the restaurant group of Neighborhood Services, Town Hearth, Montlake Cut and Desert Racer, which received between $ 2 million and $ 5 million.
The SBA released range amounts only for loans, so it’s unclear exactly how much each company received. The SBA also released limited data on companies that received loans under $ 150,000, but these companies were not named by the SBA. But previous Dallas Morning News reports named restaurants such as Lucie and Macellaio, as good as Seafood from TJ, who received smaller federal loans.
Nick Badovinus, owner of Dallas-based Flavor Hook, said the loan program has helped keep his restaurants open. He wouldn’t say how much his restaurants got in federal aid or if all of that money was used up, but he said the $ 2-5 million loan allowed him to bring back all of his staff, pay the owners. and power companies, and track other operating expenses.
“We were able to do all of these things without reducing the money available in the company to zero. Reopening is expensive. You are reinventing; you recycle yourself; you do all of these things, and what they all have in common is that they are expensive, ”he said. “Without access to this program, I can’t say we couldn’t have done it, but it would have been very, very, very, very different. It would have taken a business that is already in its nature very difficult, and for us would have turned it into an almost impossible mission.
As helpful as the PPP loan has been in overcoming closures and reopenings of its dining rooms, the future of its restaurants will ultimately depend on market demand, Badovinus said.
National restaurant chain TGI Fridays, which has received a $ 5 million to $ 10 million loan for its restaurants, including its D-FW locations, said in a prepared statement that the federal loan came at a time when sales of the company fell sharply.
“Overnight, we had to close our dining rooms and bars and only operate take-out and curbside deliveries. We were only generating 10-20% of sales with the new restaurant regulations. The Payment Protection Program has allowed us to invest in new layers of growth to protect our business, retain and rehire employees on leave, continue partial payment to our owners, and provide for our local communities, first responders, essential workers and more, ”the release said.
While the program provided vital support to many restaurants, a large number of small independent restaurants without relationships with major lenders were excluded from the rescue loan program, said Emily Williams Knight, CEO of the Texas Restaurant Association. Restaurant owners without access to big banks, such as large restaurant groups and restaurant chains, were “the last in line,” she said.
For this reason, and the fact that many restaurants are in a more difficult financial situation than they were when the first round of PPP cash was distributed, the Texas Restaurant Association is pushing for a second round of d PPP aid is allocated specifically to the restaurant. industry.
The association proposes that funds be distributed on a loss basis rather than a first-come, first-served approach that favors businesses with banking relationships. Under this proposal, restaurateurs who demonstrate a sustained loss of 50% of their sales would be eligible.
“I think the fair way to do it wouldn’t be to find out who has and who doesn’t have a lender history, it would be for you to have to certify the losses you have suffered. From a taxpayer’s perspective, that money should go to those who have been hit hardest and to those who have not been able to recover, ”Knight said.
According to data from the National Restaurant Association, restaurants across the country have increased their payrolls in the past two months, and Texas led the charge by adding 185,800 jobs in May, more than any other state.
Despite this positive membership growth, the majority of independent restaurants in Texas are still in critical condition. Knight estimates that Texas is still down about 650,000 restaurant jobs.
“In order to get people back to work, we need to use the PPP mechanism, pay it back, put extra money into it, target it on the industries that have been hit hardest and give them a lifeline until the end of the process. year, ”she added.
To really help the restaurant industry where it needs it most, Knight said, the program needs to be reworked to get money for small restaurants on the brink of collapse.
“It turns out to be a matter of the haves and have-nots,” she said. “If you’re a fast food restaurant with three drive-thru lanes, you’re crushing it. … It is the small independents who have invested even more personal money to survive, and that is why we implore our lawmakers in Washington to do so.