TRAVERSE CITY — The final round of funding from the Small Business Administration brought $8.5 million in federal dollars to help Traverse City restaurants rebound from the pandemic.
The money was the last of its kind from the federal restaurant lifeline, which was refilled with another $28.7 billion under President Joe Biden’s American Rescue Plan. This pot was called the Restaurant Revitalization Fund, and was the third such source of relief directed at restaurants since pandemic lockdowns forced cataclysmic changes in the service industry in March 2020.
Still, some restaurant owners said the influx does little to stop the bleeding from months of shuttered business, as well as to defend against future losses in a town that traps much of its economic windfall in the summer.
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The money in the RRF was earmarked for restaurants run by women, veterans, and members of underserved communities. Across the country, roughly two-thirds of the fund actually went to business owners from those groups. In Traverse City, 58 percent of restaurants to receive money were owned by members of those groups.
Local top recipients were Mode’s Bum Steer, $734,000; Trattoria Stella, $669,000; and The Flying Noodle, $479,000.
The Cherry Capital Gift shop at the Traverse City’s Cherry Capital Airport also received more than $500,000.
Nationally, the average size of grants issued from the fund was $283,000, however the average allotment for Traverse City restaurants was closer to $195,000. The loan size was calculated by restaurant personnel who submitted their estimated losses beginning from Feb. 15, 2020.
The money does not need to be repaid so long as owners use it for eligible costs, which includes lingering rent, utilities, payroll costs and even outdoor seating expenses.
Golam Rabbani opened his restaurant, Taste of India, in January 2020. Just two months into operations, the pandemic drastically changed his business, shrinking his customer base and driving up costs.
A good day used to see 100 customers come in for his staple dishes, like butter chicken and tikka masala. But Rabbani said that during the pandemic, he’d see 40, maybe 50 customers at most.
Other expenses rose too, he said. Where once he could buy a bulk 40 lb. shipment of chicken for between $35-39, he now found himself paying $70-80, sometimes even over $100, for the same order.
And Rabbani says he never raised his menu prices.
“Some months I lost $7,000. Some months I lost $3,000,” said Rabbani.
Those expenses exacerbated an industry already known for its razor-thin profit margins for owners.
That includes the switch to delivery, which, for many restaurants, was the principle back-up plan to keep kitchens open. Rabbani said that with the 30 percent commissions charged by services like DoorDash, UberEats and GrubHub, he barely made any profit from online orders.
“These challenges are not actually new challenges, but they look more painful due to what’s happening now,” Rabbani said. “I’m just trying my best to continue my business.”
Some restaurants in Traverse City also received early waves of funding last spring under the CARES act, the first federal relief package.
CARES drew criticism from many restaurant industry experts, however, for delivering a majority of funding to a small percentage of well-connected restaurants. Less than 5 percent of restaurants applying for that pot nationwide were written government checks.
The RRF has had similar problems. When the fund opened on May 3, thousands of restaurants across the country scrambled to apply. But the fund dried up almost instantly, with some restaurants hearing back within hours that the fund had evaporated. The fund officially closed on July 2.
7 Monks Taproom on Union Street was one restaurant that didn’t receive funding from the Revitalization Fund. Owner Matt Cozzens says he’s still waiting, hoping that another federal program might pop up, or that the fund might be refilled.
Cozzens said that business recently has been good, particularly over the months of June and July.
But he still wished 7 Monk’s received funds from the latest round, which would have helped recoup from the losses of the pandemic.
“We’re hanging in there,” said Cozzens. “It’s very rosy and happy thoughts right now, but when you think about it, we haven’t been able to operate at full capacity for the past year.”
And Cozzens is still trying to unlock the puzzle of staffing shortage, which has made it difficult for restaurant owners to hire. Generally, staffing shortages push up wages, which raise overall restaurant operating costs. Cozzens said he felt the crunch when hiring for kitchen jobs in particular.
Several other local restaurant owners remarked that RRF money was still not enough to make them whole. One owner estimated that he was at least $210,000 in the red from business over the past 18 months, and estimated that he would take further hits in the fall.
He said his business also did not receive any money from the RRF.